Committee Calls on Government to Scrap Cladding Loan Scheme and Establish Comprehensive Building Safety Fund

Posted by The Property Institute on 14th May 2021 -

The Housing, Communities and Local Government Committee has urged the Government to re-commit to the principle that leaseholders should not have to pay for the removal of unsafe cladding from their homes and calls on the Government to establish a Comprehensive Building Safety Fund that addresses the true scale of fire safety issues. Finance for the fund should be provided by Government and the building industry.

 

In a report published today, the Committee finds that existing arrangements for remediation of cladding that base funding support on building height and materials should be changed so that financial support is targeted where residents’ safety is most at risk. Proposals to fund cladding remediation on buildings below 18 metres through a loan scheme, requiring leaseholders to pay up to £50 a month, should also be abandoned. 

The Committee calls for an enhanced Comprehensive Building Safety Fund paid for by Government and industry. This would be open to all buildings with existing fire safety issues with no barriers based on height, types of tenure or the nature of fire safety defects. Priority should be given to buildings where residents are most at risk, assessed through holistic, evidence-based processes.  

 

Chair of the Housing, Communities and Local Government Committee, Clive Betts MP said: 

“While the extra funding for cladding removal is welcome, it will be swamped by the sheer scale of fire safety issues in multi-occupancy buildings. In the years since the Grenfell tragedy, we have been shocked by the reality of the danger that flammable cladding poses, by how pervasive these materials are in modern buildings and by the frequency with which fundamental fire safety measures, including fire breaks and sprinkler systems, are simply not there. £5 billion in funding is significant, but just cannot match the ongoing legacy of these fire safety failings. 

“Most importantly, the Government’s recent proposals fail to adhere to the fundamental principle that leaseholders should not have to pay to fix these problems. That is why we have called on the Government to enhance support and develop a Comprehensive Building Safety Fund that targets support to where occupants are most at risk, rather than the current height- and product-based approach. Proposals to implement a loan scheme for leaseholders to pay for cladding remediation on buildings below 18 metres should also be abandoned. 

“We call on the Government to revisit its proposals and develop a scheme that truly matches the scale of fire safety issues. It must prioritise support to where the safety risk is greatest and rebalance the financial burden so that it falls on the Government and industry, and not on leaseholders.” 

 

Nigel Glen, CEO of ARMA said: "We warmly welcome the report from the Commons Select Committee with its sensible demand of the establishment of a Comprehensive Building Safety Fund, covering full remediation and associated works of affected buildings regardless of tenure, risk based rather than determined by height, and thereby shielding leaseholders from life changing bills.

"Bringing building insurance premiums under control, an area which ARMA has been working tirelessly in, is also highlighted and we look forward to a hopefully speedy resolution, perhaps even using the ARMA solution."

 

Key findings and recommendations

Understanding the scale of the problem  

The Government is not collecting sufficient data to understand the full scale of remediation needed for buildings. Without better, information the Government cannot know the true cost of remediation, the timescale for all buildings to be made safe, or the capacity of the industry to carry out the work. 

As a matter of urgency, the Government should collect and publish more data on the number of buildings awaiting remediation work. This data should include buildings between 11m and 18m, as well as buildings above 18m. 

 

Comprehensive Building Safety Fund 

The additional £3.5 billion funding towards cladding remediation announced in February is welcome but significantly more money is needed to meet the costs of fire safety remediation. 

The Government should establish a Comprehensive Building Safety Fund that moves away from the current approach, based on height and material, towards one that prioritises occupants most at risk. Leaseholders are no more responsible for non-cladding fire safety defects than for the presence of combustible cladding. The costs for remediating non-cladding defects, such as fire breaks or sprinkler systems, could be as high as for cladding. Social housing providers should also have full access to funding, whether the Building Safety Fund continues as now, or if further funding mechanisms are established. 

 

The Committee calls for a Comprehensive Building Safety Fund that: 

• Applies to all high-risk buildings of any height, irrespective of tenure 
• Covers all fire safety defects, including combustible insulation 
• Covers all associated costs 

 

Loan scheme 

The Government’s proposed loan scheme, whereby leaseholders contribute up to £50 a month to pay for cladding remediation works on buildings between 11m and 18m high, fails to satisfy the principle that leaseholders should not have to pay for fire safety remediation work.  

The loan scheme should be abolished. Instead, costs should be fully met by the Comprehensive Building Safety Fund, paid for by the Government and the industry. 

 

Developer Levy 

The introduction of a new developer levy and tax to ensure developers contribute towards the cost of remediation is welcome. The Committee also recognises the steps that some developers have already taken in committing millions towards remediation funds. 

The Committee has previously said that the cost for addressing all fire safety defects could be up to £15 billion. Developers can and should be expected to make a greater contribution to the costs of remediation. 

The developer levy tax should be extended and serve as an additional contribution to the Comprehensive Building Safety Fund. The Government should also work with stakeholders to ensure that no costs recovered through this scheme are passed on to house buyers, including housing associations. 

Further work should also be carried out to examine how other sectors of the wider building industry, such as product manufacturers and suppliers, can contribute to the costs of fire safety remediation. 

 

Social Housing 

The exclusion of social housing landlords from the Building Safety Fund risks negative consequences for the wider social housing sector. Alongside full access to funding support, either the existing Building Safety Fund or the Committee’s preferred expanded scheme, the social housing sector should also be able to utilise the waking watch relief fund. An impact assessment should also be undertaken on the impact of cladding remediation on maintaining existing social homes and building new social homes. 

 

Health of Residents 

The Government is not doing everything it can to support the physical and mental health of residents of affected buildings. The Government should work with local authorities to ensure that affected residents have access to the physical and mental health support they need.