Government considers Polluter Pays Principle for cladding

This principle comes from Part IIA of the Environmental Protection Act 1990 which provides a framework for identifying contaminated land and allocating responsibility for remediation to the person who caused or knowingly permitted it. 

The draft Polluter Pays amendment essentially proposes that:

• Landlords will apply to a local authority to determine whether their building was compliant with building regulations in force at the time of its construction.  On the current wording this would potentially apply to residential buildings of any height.
• The local authority must then make a determination on compliance.
• If the building is determined to be non-compliant then the local authority must apportion liability for remediation costs (or to appoint an adjudicator to make an apportionment) between “appropriate persons” which includes any party who:
  • built or designed, or contributed to the building or designing of the building;
  • supplied materials used in the construction of the building;
  • performed any function under the Building Act 1984 in relation to the design or construction of the building.
• The local authority will then serve a contribution notice on every appropriate person specifying their share of the costs of remediating the external walls and common parts.
• The procedure will override any limitation periods in the Limitation Act 1980 and also:
  • “any agreements to the contrary”;  
  • “any admissions to the contrary”;  
  • “any rule or principle of common law or in equity”.

The consequences of such an amendment would be far reaching.  Developers, contractors, all designers, all involved in the building process, suppliers and even (potentially) those who carry out building control functions could have liability directly apportioned to them and be required to contribute to remediation costs.  It could also mean that any settlements could potentially be reopened depending on whether the above wording is enacted and on the courts’ interpretation of it.

The Building Safety Bill is currently at committee stage which is where amendments are discussed.  It has been heavily criticised to date for failing sufficiently to protect leaseholders from the costs of cladding remediation works.  In response, the Polluter Pays amendment has gained significant support and was tabled by Dr Liam Fox in April 2021.  Representatives of the group proposing the Polluter Pays amendment met with government officials early in September 2021 and spoke at the Public Bill Committee on 14 September 2021.       

In light of this, there is still the scope to add a further amendment to the draft bill.  However, we consider that the wording set out above is very wide and unlikely to be enacted without further, and probably quite significant, amendment itself.