Government threatens developers with new tax if they fail to fund cladding fix

Michael Gove said it was a blunt instrument but the Government would not hesitate to act.

Geraldine Scott
Monday 10 January 2022 10:54
Housing Secretary Michael Gove (Liam McBurney/PA)
Housing Secretary Michael Gove (Liam McBurney/PA)

The Government will not hesitate to introduce a developers’ tax to hit those responsible for dangerous cladding if firms do not voluntarily step up to fix safety defects, Michael Gove has said.

The Housing and Communities Secretary said it was time for those with “the big bucks, the big profits” to act to remedy the fire safety risks, as he announced developers must agree a £4 billion plan to fix dangerous cladding on low-rise flats by early March or risk new laws forcing them to act.

But he admitted it was still not clear how many properties were affected.

Grenfell Tower in west London (Steve Parsons/PA)

Mr Gove told Sky News the Government would use “use legal means and ultimately, if necessary, the tax system” to ensure developers live up to their responsibilities to fix dangerous cladding.

And he said: “We want to say to developers and indeed all those who have a role to play in recognising their responsibility that we want to work with them.

“But if it’s the case that it’s necessary to do so, then we will use legal means and ultimately, if necessary, 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, the individuals, who in the past were being asked to pay with money they didn’t have for a problem that they did not cause.”

Leaseholders in buildings between 11m (36ft) and 18m (59ft) tall will no longer have to take out loans to cover the costs of remediation work despite no new money coming from the Treasury.

Instead, Mr Gove told developers to agree to start contributing this year to cover the “full outstanding cost”, which he estimates to be £4 billion.

Mr Gove said “some of the most egregious cases” had already been tackled.

Communities Secretary Michael Gove (Steve Parsons/PA)

The Housing Secretary told BBC Radio 4’s Today programme: “So, one of the companies responsible for the cladding that was used on Grenfell Tower, Kingspan, was about to enter into a commercial relationship with Mercedes.

“The Grenfell community were quite rightly outraged by that. I intervened, I talked to Toto Wolff at Mercedes, he appreciated – and not least because of Lewis Hamilton’s own sympathy with the Grenfell United community – and so that contract ended.

“Similarly, one of the companies that was responsible for the maintenance of Grenfell, Ryden, also has been benefiting from taxpayer funding through the Help to Buy scheme; that funding has ended.

“So we’ve already taken action, just two cases, but we’ve shown that we are prepared to ensure that the power of government is there in order to ensure justice is done.”

But he admitted there had been a “particular problem in the system” which “means that people have themselves to come forward and say ‘We believe that this building needs work’.”

This had resulted in him not knowing the precise number of properties that still needed work.

Leaseholders take part in a demonstration in London to demand an end to the “cladding scandal” (Harry Scoffin/PA)

He told LBC: “We can’t be absolutely precise about the exact number in scope. That is one of the things that I hope that we can do in conversation with owners and with developers at the moment.”

In the letter to the residential property development industry being sent on Monday, Mr Gove set a deadline of “early March” to publicly accept his ultimatum and provide a “fully-funded plan of action”.

They were also ordered to provide comprehensive information on all buildings taller than 11m that have fire-safety defects and they helped construct in the past 30 years.

Campaigners tentatively welcomed the plans as they trickled out over the weekend, but developers said they should not be the only ones responsible for the costs.

Reece Lipman said while he welcomed the “firmer tone”, the Government must recognise that the cladding crisis is actually a “full-blown building safety crisis”.

The 32-year-old, who lives in a flat in Romford east London of which he owns 25%, said he is currently liable for “100% of fixing all the costs”.

He told the PA news agency: “I think it is very positive that we seem to, after four years of changing housing secretaries, that we seem to have a Housing Secretary who has got the rhetoric right and is now talking with a much firmer tone, which is very encouraging to see, and obviously any money to help with the crisis is going to be incredibly welcome.

“But I do think it’s really important to state that, even after all this time, the Government is still talking about just cladding, and it’s not just a cladding crisis, it hasn’t been just a cladding crisis for many years now.”

He said the Government is currently taking action akin to bailing “water off the Titanic with pots and pans”.

He said: “It’s no good just replacing the cladding. If the money isn’t there to fix all the other issues, then the money cannot be given to fix the cladding.”

Mr Gove admitted the Government “did get stuff wrong” in the cladding scandal.

But he said some of those that argued they were abiding by building regulations at the time did not have a “strong case”.

Leaseholders take part in a demonstration in London to demand an end to the “cladding scandal” (Harry Scoffin/PA)

He told LBC: “It’s also the case that there were lots of steps that were taken which put people at risk, and without wanting to pre-empt what the independent inquiry into Grenfell will conclude, I think it is… 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.”

He added: “I think it’s fair to say that, actually, those who argue that they were compliant in doing that, I don’t think have a very strong case.

“I think you’d have to be a very, very, very selective reader of the evidence there in order to draw that conclusion.”

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