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Cladding crisis could cost more than £50bn, contractor says
Remediation costs for cladding issues in the UK could top £50bn, 10 times the amount made available by the government, a specialist contractor has estimated.
Colmore Tang Construction, a Midlands-based cladding specialist, said that based on the cost of 20 recent remediation projects it has led on, the true cost of the cladding crisis is likely to be £50bn.
That equates to one third of the annual output of the whole construction industry.
So far the government has made £5bn available to fund cladding remediation works, while the Housing, Communities and Local Government Select Committee has said costs could be closer to £15bn.
Both estimates are eclipsed by the analysis from Colmore Tang, which suggested that costing methodology from professionals submitting bids to the £1bn Building Safety Fund often did not accurately reflect the full scope of works.
Based on the firm’s pricing, the cost of remediation for the estimated 5,000 buildings taller than 18m requiring an External Wall System (EWS) certificate could reach £25bn if all required cladding removal and replacement.
A further 35,000 blocks between 11m and 18m could amount to costs of £70bn, taking combined costs to £95bn.
But Colmore Tang said it has taken an “optimistic view”, leaving the total at £50bn.
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It also highlighted added costs relating to Value Added Tax (VAT).
The organisation said “revisions from industry experts and political representatives have put question marks over the government’s arrival at £5bn as a realistic budget, which also fails to account for the irrecoverable 20% VAT and which Colmore Tang believes will ultimately be borne by the unfortunate occupiers”.
Colmore Tang said initial Building Safety Fund submissions do not fully account for logistical challenges, permits, rising costs of materials and scarcity of resources.
It highlighted one bid: made by a developer in Birmingham which asked for £3m despite the true cost of the project reaching nearly £10m.
Steve Underwood, chief operating officer of Colmore Tang, said: “The bottom line is that the true cost of remedial works has been severely underestimated and meaningful progress won’t be made until politicians and industry professionals develop a clearer understanding of funding and logistical challenges at hand here.
“Our estimates are not plucked out of thin air but are based upon real-life scenarios which we see day in, day out.
“We’re seeing developers and surveyors quoting budgets that are nowhere near where they should be and we’re sleepwalking into a scenario in which that only becomes apparent half way through the remedial works.
“That’s bad news for everyone.”
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