UK cladding pledges raise £2bn but leave questions for Gove

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The UK housing secretary is set to claim an important victory in his battle to resolve England’s building safety crisis this week, having pressed developers into setting aside more than £2bn to fund critical repairs.

Michael Gove’s hardball approach towards builders has paid off, with all publicly listed developers committed to a government pledge to fund necessary repairs of risky blocks they have built.

But questions linger over the safety of mid- and high-rise blocks. Residents are in effect trapped in properties they cannot sell, many of them fearful for their safety.

Even with large commitments from listed builders, Gove is only halfway to the £4bn the government estimates is needed to bring all 11m-18m tall buildings up to safe standards. It is not yet clear where the remainder of the funding will come from.

This week Gove is expected to announce the progress of negotiations, as he attempts to untangle the crisis brought to light by the Grenfell tower fire in 2017 that killed 72 people after flames ripped through the building’s cladding.

Doing so remains an urgent priority for Gove, who is also responsible for the government’s Levelling Up agenda, a prospectus for reducing inequality across the UK.

Gove has asked 53 developers to sign the pledge, which commits them to assess and, where necessary, fix tall blocks that they have built over the last 30 years and not tap government funds in order to do so.

He has threatened to freeze developers that refuse to sign out of the planning system and government housing funds, a contentious move that would in effect destroy their ability to build.

England’s biggest builders, including Barratt Developments, Persimmon, Berkeley Group, Bellway, Taylor Wimpey and Redrow signed up last week and committed to bump up their funding for repair work by more than £1bn, taking the total committed by listed builders to about £2bn. 

Other problems remain unresolved. There is uncertainty over how many buildings are affected, how much it will cost to fix them and who will pay the bill.

David O’Leary, policy director at industry body the Home Builders Federation, said it was feasible that his membership had built half of all 11m-plus blocks constructed in the past 30 years. Those developers, as well as some others that sit outside the HBF would be traceable and, therefore, billable by the government.

But the remainder are builders that have since gone bust or are untraceable, leaving behind so-called orphan buildings, and a headache for Gove.

“That’s the bit that’s outstanding. I don’t think [the government] will resort to the taxpayer for orphan buildings, I expect another industry levy,” said Aynsley Lammin, an analyst at Investec, a consultancy.

Going after developers will add another layer of frost to a relationship which has cooled since Gove took over as housing secretary last September, and which has previously proved expedient to a government aiming to substantially boost housing output.

At least one private developer, with a big presence in London, is unlikely to sign the pledge because the cost of repair work would be crippling, according to people familiar with the discussions.

Such a move would test Gove’s threat to cut recalcitrant builders out of the housing market, action that would require secondary legislation.

O’Leary said it would be “disappointing” if Gove tapped the sector for further cash. “That will be the third or fourth time we’ve been asked to pay,” he said.

Some developers have complained they have been unfairly singled out. “Gove is going after the low-hanging fruit: UK taxpaying companies. He also has to address other parts of the market and supply chain related to the buildings in question,” said Matthew Pratt, chief executive of FTSE 250 housebuilder Redrow, which has committed £200mn to fix its buildings.

Pratt said that developers based overseas but operating in UK subsidiaries via special purpose vehicles should be chased for funds, as well as manufacturers of cladding materials such as those used on Grenfell.

Gove announced in February that he would target those manufacturers, but as yet has not extracted similar concessions from them.

The Grenfell inquiry has exposed a string of failures in building safety over the last 30 years which go far beyond faults by individual developers.

Industry cost-cutting and the role of government deregulation have been long-running themes of the inquiry, which has also highlighted the alleged abuse of safety tests by cladding and insulation manufacturers.

The inquiry is currently evaluating the role of successive governments in the fire. Last week, former housing secretary Eric Pickles contested claims that a drive to cut regulation had affected fire-safety rules but was criticised by Grenfell survivors for what they described as his disrespectful attitude.

In response to questions from Richard Millett QC, lead counsel to the inquiry, the former housing secretary said: “Can I respectfully remind you that you did promise we will be away this morning, and I have changed my schedule to fit this in. I do have an extremely busy day meeting people . . . so I would urge you to use your time wisely.”

Pickles later apologised for being “discourteous”.

With the inquiry in its fifth year, the extent of the building safety crisis is still not apparent and, even with significant funding commitments, work will take a long time to complete, warned Pratt from Redrow.

“It will take a number of years to conclude due to the complex nature of many of these projects and the number of parties involved,” he said.

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