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Campaigners are “cautiously optimistic” over cladding move as construction firm shares plummet

Directly threatening developers over the cladding crisis, the Government today told companies who put “sheets of petrol encased in metal” on tall buildings they face the courts if they refuse to fund removal. Following this news, housebuilder share values fell by £1 billion in value today.

Confirming plans for a £4 billion pot funded by developers to remove dangerous cladding from tower blocks, the Secretary of State for Levelling-up warned non-compliance would result in a developer’s tax. In a statement to the House of Commons, Michael Gove said he was keen to take the burden off leaseholders who faced heavy bills for safety following the Grenfell Tower disaster. A spokesperson for the End Our Cladding Scandal group said they were “cautiously optimistic” about the plan.

Shares in house building companies fell today as the news was announced. Stewart Baseley, Executive Chairman of the Home Builders Federation, said housing associations and councils should contribute to costs. In response to the Government review into building regulations after Grenfell found a “race to the bottom” in safety practices, Mr Gove admitted the Government had got “stuff wrong”. But he told LBC that “you would be hard-pressed to say that putting, essentially, sheets of liquid petrol encased in metal on the side of a tower block was the right thing to do.”

Leaseholders in buildings between 11 and 19 metres in height will no longer have to cover the costs of work. Instead, developers will have to agree to start contributing cover the “full outstanding cost” of remedial work, estimated at £4billion.

A spokesperson for Taylor Wimpey said: “There are many organisations involved in the issue of fire safety, including large business in our supply chain and indeed Government themselves, and so the proposed response must recognise this.”

Speaking to Sky News, Mr Gove said “we want to say to developers, and all those who have a role to play in recognising their responsibility, that we want to work with them”

“But…we will use legal means and ultimately the tax system in order to ensure that those who have deep pockets, those who are responsible for the upkeep of these buildings, pay, rather than the leaseholders who in the past were being asked to pay with money they didn’t have for a problem that they did not cause.”

Final Thought:

Campaigners are right, it is good news to see the Government finally provide a solution to the ongoing cladding saga. However, it is extremely difficult to build new homes and without wishing to prejudge the inquiry, this was not a problem solely caused by developers. By not asking for a contribution from councils and housing associations, the Government is gambling that developers will contribute. It is likely that most developers will contribute however it is galling to see how the government is putting blame on developers.

From leaked statements over the weekend, the Treasury was quite clear that there would be no new money provided. Whilst campaigners are cautiously pleased with the announcement of a £4 billion pot, this does not mean the pot will overflow quickly, leaving many leaseholders stuck in limbo until building work is complete. Combined with a shortage of construction workers, this could leave many stuck for years. This may sound like encouraging news, but we suspect that in the medium-long term, campaigners may call for progress to increase in pace and for new money to be found.

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