Facing up to the cladding crisis

Posted: September 7, 2020 | Author: julesbirch | Filed under: Construction industry, Fire safety, Leasehold |Leave a comment

Originally published on September 7 as a column for Inside Housing.

All through the cladding saga, the government has dragged its feet and resisted spending money before finally being forced to act.

Think back to the way ministers resisted any kind of fund for replacement of Grenfell-style ACM cladding, then insisted private building owners should pay, then denied the need for any help for non-ACM cladding and you see a pattern repeating itself.

It took the government almost a year after Grenfell to announce a £400m fund for the removal of ACM on social housing blocks, almost two years to find £200m for private blocks and almost three years to announce the £1bn Building Safety Fund for the removal of non-ACM cladding.

All this while the cladding scandal continued to escalate, dragging in more and more blocks and more and more residents and eventually wrecking the whole market in recently built flats.

Inside Housing readers will need no reminder, and the latest edition alone gives a good idea of the growing pressure for more action:

• One property manager alone has registered claims for 450 buildings that would cover 90 per cent of the Building Safety Fund
• London mayor Sadiq Khan writing to 47 building owners that have failed to start work on cladding removal despite having funding approved
• Supposedly safe window panels fitted after the Lakanal House fire in 2013 having to be replaced again because the government failed to tighten standards at the time.

In the national media, LBC has been running a series of stories and interviews with tower block ‘prisoners’ caught up in the scandal.

Closer to home for ministers, The Spectator, the house magazine of the Conservative Party, had a huge response from readers to a feature on ‘the new cladding scandal that could bankrupt a generation’.

Closer to home for housing associations, the journalist who wrote it is a shared owner who says she ‘made the mistake of joining a government-backed housing scheme’.

At first glance, the government’s response to a critical report from the Housing, Communities and Local Government Committee looks like more of the same complacency in the face of an escalating crisis.

This was the report, remember, that accused ministers of trying to fix a £3bn non-ACM problem with a £1 billion fund and recommended that funding should be increased to address all fire safety risks in high-rise and high-risks buildings at a cost that could eventually be £15bn.

The Ministry of Housing Communities and Local Government (MHCLG) response looks, on the face of it, no different from all the others that have rejected or ignored inconvenient recommendations from impertinent select committees and breezily assured MPs that everything is in hand.

At one point in this one the MHCLG accuses the committee of getting its facts wrong about the number of buildings with potentially unsafe non-ACM cladding, clarifying that the latest estimate is a mere 1,700 over 18m in height.

Government funding should not be the only means of remediating them it says, with both the social and private sectors expected to play their part:

‘Building owners should meet the costs without passing them on to leaseholders wherever possible; through their own resources, or by recovering costs from applicable warranty schemes – or from the developers or contractors who were responsible for the installation of unsafe cladding.’

However, it sidesteps completely the committee’s point that, on the government’s own estimate, the total cost of remediating non-ACM buildings will be not £1bn but  £3-3.5bn.

The government says it is ‘clear and unwavering in its view that it is unacceptable for leaseholders to have to worry about the cost of fixing historic safety defects in their buildings that they didn’t cause’.

Needless to say, it also ignores the committee’s estimate that the total cost of fixing all fire safety defects on the buildings could be £15 bn.

So far, so as expected, but the next two paragraphs of the response are more interesting:

‘We have made £1.6 billion available to support the remediation of unsafe cladding. This will protect leaseholders from the vast majority of these costs and will deal with some of the highest risk and highest cost safety defects in our existing high- rise stock. However, we recognise that there are wider remediation costs which will need to be met to ensure the safety of existing blocks of flats.

‘Michael Wade, senior adviser to the Cabinet Office, will accelerate work on identifying options for financing historic remedial works that are not covered by the £1.6 billion funding. We must remove barriers to fixing historic defects and identify financing solutions that protect leaseholders from unaffordable costs; but we must also ensure that the bill does not fall on taxpayers.

Read between the lines and perhaps the sidestepping of the committee’s recommendations becomes more significant – because it also means they have not been ruled out.

The committee recommended the government should actively seek to recover funds from those responsible for affected buildings and then review taxes, including a temporary levy linked to the sale of new-build properties to help fund the rest of the works. 

That’s pretty much what happened – and what seems to have worked – in Australia (although with differences for apartment owners because it does not have leasehold). 

If it is going to get ahead of the cladding scandal, the government here needs to find a way to fund the remedial work to existing buildings that does not fall on taxpayers and rescues leaseholders whose flats are worthless as well as dangerous.

Friday brought a hint of the scale of state intervention that may be required with news about enforcement action by the Competition and Markets Authority against four leading housebuilders over the parallel leasehold scandal in the sale of new homes.

The time for half-measures from government and appeals to others to ‘do the right thing’ over the cladding scandal is long gone.

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