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Cladding and insulation manufacturers must pay for remediation on mid-rise blocks, Gove says
The housing secretary has asked cladding and insulation manufacturers to fund partly the remediation of unsafe cladding on buildings between 11 and 18 metres tall.
In a letter to the chief executive of the Construction Products Association (CPA), a trade body that represents construction product suppliers in the UK, Michael Gove gave the industry from now until March to agree a financial settlement to cover some of the cladding costs.
He warned that the government would limit any “culpable company” from selling their products in the UK in future if they failed to pay.
Their contributions will be alongside those Mr Gove has asked of developers to cover the cost of removing unsafe cladding from medium-sized blocks, which the government estimates to be £4bn.
Last week developers told the housing secretary that they should not be the only ones to pay, and that freeholders and the companies that sold combustible materials must help cover remediation costs.
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Gove asks FCA to investigate ‘crippling’ insurance costs for leaseholders caught in cladding scandal
This latest move follows a series of government announcements aimed at tackling the building safety crises and protecting leaseholders.
They include giving statutory protection to leaseholders from non-cladding costs, asking developers to pay into the £4bn pot, and a new online service that allows leaseholders to track building owners’ progress on applications to the Building Safety Fund.
In the letter to Peter Caplehorn, chief executive of the CPA, Mr Gove said that the government has “reset” its approach to building safety and the industry “who caused the crisis will now pay to fix it instead of innocent leaseholders”.
He said that the cladding and insulation sector has an “unquestionable responsibility” for contributing to the remediation of their unsafe cladding products and “must now come forwards with proposals to account for this”.
“Without prejudicing the results of the Grenfell Inquiry, there is no doubt that the documentary evidence that has been published relating to the culture and practices of major cladding and insulation manufacturers has been extremely alarming.
“There are a number of cladding and insulation companies whose products or services have contributed to the need for remediation of 11m+ buildings on fire safety grounds.
“I am offering a window of opportunity, between now and March, for the sector to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and secure an appropriate contribution from the sector,” he said.
Mr Gove said that in the four years after the Grenfell tragedy, profits made by the UK arms of the three cladding and insulation firms most closely associated with the tower’s refurbishment “total over £700m”.
The housing secretary said he expects a funding commitment by early March and warned: “I am prepared to do whatever it takes to deliver our objective including using our regulatory framework to limit any culpable company from operating and selling products in this country in the future; and I will pursue those individuals and firms liable for building defects who are unwilling to do the right thing now.
“There is no future for those companies and directors who are not fully committed to upholding the safety of residents and fixing past wrongs.”
He said that any deal must include “a commitment to provide comprehensive information on all buildings over 11 metres which have historic fire safety defects to which these companies have supplied products or services”.
The housing secretary said he will schedule a meeting “shortly” with the sector.
A spokesperson for the CPA: “We have had the benefit of several meetings with the minister’s Residents Voice and the Building Safety Levy team over the past weeks, that have helped them understand the complexity of the issues and market participants involved.
“That team has nonetheless made clear the minister’s ambitions and has requested our cooperation in planning a meeting with him and some relevant construction product manufacturers to discuss the matter further.”
They added that the CPA has asked for a separate meeting to “clarify the details” behind the government’s proposals.
“With all this in mind we are happy to work with government and our members in the spirit of cooperation to address these issues,” the spokesperson added.
The housing secretary’s letter to the CPA
As you will be aware, the government has reset our approach to building safety. As I set out to the House of Commons on 10 January, the industry who caused the crisis will now pay to fix it instead of innocent leaseholders. I have already written to and met with major UK property developers setting out the contributions they will need to make to fund the remediation of medium-rise buildings, which we currently estimate to be £4bn, as well as to fix the buildings they are responsible for constructing.
I am writing to you to set out the contribution that cladding and insulation manufacturers will need to make to fixing the crisis. My starting point is that it is clearly unjust that innocent leaseholders should be landed with bills to remove cladding products from their buildings they had no reason to suspect were dangerous. The range of past practices in the industry – across its approach to manufacturing, marketing and testing – has rightly been a source of huge concern to parliament and the public.
Without prejudicing the results of the Grenfell Inquiry, there is no doubt that the documentary evidence that has been published relating to the culture and practices of major cladding and insulation manufacturers has been extremely alarming. There are a number of cladding and insulation companies whose products or services have contributed to the need for remediation of 11m+ buildings on fire safety grounds. I am offering a window of opportunity, between now and March, for the sector to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and secure an appropriate contribution from the sector.
A new deal must include a clear commitment from the sector that they agree to make financial contributions in this year and in subsequent years as we have already asked developers to do. The total contribution from the cladding and insulation sector must represent a significant portion of the total remediation costs, caused by the dangerous products sold by some of your members. The current estimated cost to remediate unsafe cladding on 11-18m and over 18m buildings is £4bn and £5.1bn respectively. I note that from publicly available sources profits made in the four years after the Grenfell Tower tragedy by just the UK arms of the three cladding and insulation firms most closely associated with the refurbishment of the Grenfell Tower total over £700m.
The cladding and insulation sector has an unquestionable responsibility for contributing to the remediation of their unsafe cladding products and must now come forwards with proposals to account for this. Any deal must also include a commitment to provide comprehensive information on all buildings over 11m which have historic fire-safety defects to which these companies have supplied products or services.
I will schedule a meeting to open discussions shortly. My officials in the interim will send more detailed requests for additional data regarding the products sold across the industry, and I expect full co-operation on this. I will also be working closely with leaseholders and those affected by the Grenfell Tower tragedy throughout this process and will bring them to the table to assess and discuss solutions at appropriate junctures.
Your industry’s contributions will sit alongside the significant financial provision government has already made for remediation costs, through its ACM remediation programme and the Building Safety Fund. I expect a public funding commitment from your sector by early March, which would be made available to the public and to affected leaseholders. I am sure you are as committed as I am to fixing this broken system, and I hope we can work together to do that. But I must be clear, I am prepared to do whatever it takes to deliver our objective including using our regulatory framework to limit any culpable company from operating and selling products in this country in the future; and I will pursue those individuals and firms liable for building defects who are unwilling to do the right thing now.
There is no future for those companies and directors who are not fully committed to upholding the safety of residents and fixing past wrongs. Our home should be a source of security and pride. For too many of the people living in properties your industry’s products helped build in recent years, their home has become a source of misery. This must change. I would be grateful if you can share this with your members and look forward to working with you over the coming weeks to deliver a just deal for industry, leaseholders and the taxpayer.
With every good wish,
Rt Hon Michael Gove MP
Secretary of state for levelling up, housing and communities
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