UK
Developers 'must foot £4bn cladding bill or face exclusion from government schemes'

Harry Yorke
Sun, January 9, 2022

Government proposals come more than four years after the Grenfell Tower fire which killed 72 people - TOLGA AKMEN

Michael Gove will tell developers they must cover £4 billion worth of new cladding costs or face being excluded from Government-backed property schemes.

The threat will include blocking firms from the Help to Buy scheme for first-time buyers, with ministers also understood to be looking at a new levy on profits.

The Levelling Up Secretary will issue the ultimatum to the sector at a crunch meeting in the coming weeks, having decided to offer greater protection to flat owners who need to remove dangerous cladding from their buildings in the wake of the Grenfell Tower fire.


In a statement in Parliament on Sunday, Mr Gove will also confirm that he is shelving plans for a loan scheme which would have forced leaseholders in flats between 11 and 18 metres tall to shoulder the costs themselves.

Michael Gove, the Levelling Up Secretary, will tell developers they must foot a £4 billion bill for new cladding - Leon Neal

Instead, the costs of the major remedial works on thousands of flats across the country will be met by developers and firms responsible for the scandal.

The Government estimates the funds required to do so will total £4 billion, on top of the £5 billion already provided in grants to strip unsafe cladding from buildings over 18 metres tall.

A Whitehall source confirmed on Sunday that Mr Gove would tell developers that they will initially be given the opportunity to propose their own solutions for meeting the additional costs.

However, should they fail to do so, he will warn that the Government will be forced to legislate to raise the funds, either through new levies or taxes on the industry.

Alongside this, officials pointed out that they had a range of “tools” available to force concessions from the developers, including the ability to freeze them out of Government-backed property and finance schemes.

This includes the Help to Buy scheme, which provides first-time buyers with the opportunity to secure a 20 per cent low-interest equity loan - rising to 40 per cent in London - meaning they only need a five per cent deposit.

The Government has already announced that developer Rydon Homes will be excluded from the scheme due to its sister company being the lead contractor of the Grenfell Tower refurbishment.

Workmen remove the cladding from a building in Paddington, north London - Aaron Chown /PA

Making clear that others could soon join the developer, an ally of Mr Gove told The Telegraph: “We don’t claim to have all the answers to this crisis yet but this is an important step. We will be guided by three principles - the polluter must pay, leaseholders must be protected and common sense and proportionality must be restored.

“Developers now have the chance to come forward and do the right thing. If not, we will impose a solution in law.”

The proposals to alleviate the scandal that has trapped leaseholders in unsafe and unsellable homes come more than four years after the Grenfell Tower fire in June 2017, in which 72 people were killed.

According to a draft of Mr Gove's Commons statement, he will warn developers: "I am putting them on notice. If you mis-sold dangerous products like cladding or insulation, if you cut corners to save cash as you developed or refurbished homes, we are coming for you."

While the move is likely to trigger a backlash from the industry, officials have pointed out that Britain’s biggest developers have amassed huge profits since the blaze.

Whitehall sources highlighted that the chief executives of the country’s four biggest building companies have received at least £50 million in pay, bonuses, shares and dividends since 2017.

Meanwhile, Barratt, Persimmon, Taylor Wimpey, Berkeley, Bellway, Redrow and Vistry have made £16 billion in profits over three years.