14th February 2022

As presaged in our previous note[1] the Secretary of State for Levelling Up, Housing and Communities, the Rt Hon Michael Gove MP, gave an updating statement to the House of Commons in relation to building safety on 10 January 2022.  Six steps were identified:

  • Reviewing Government schemes and programmes, such that there will be “commercial consequences for any company that is responsible for this crisis and [is] refusing to help to fix it”
  • Replacement of the Government’s consolidated advice note with new BSI guidance for assessors, to avoid an overly cautious approach to building safety in buildings which are safe
  • A commitment (without explaining what that might entail) to “press ahead with the building safety fund”
  • Indemnifying assessors for the cost of undertaking external wall assessments and auditing those assessments to ensure “expensive remediation is being advised only where it is necessary to remove a threat to life”
  • Securing powers to review the governance of the Royal Institution of Chartered Surveyors – the aim of which appears to be to encourage a “more proportionate approach”
  • Abolition of the previous proposal (made in February 2021) for loans to be given to leaseholders of 11-18m buildings with a view to finding alternative ways to “relieve the burden that has been unfairly placed on leaseholders”.

The rhetoric employed by Mr Gove made clear that he has “developers and construction product manufacturers” in his sights; he announced that he was beginning a process of engagement with developers, affording them “a chance to do the right thing”.   The gauntlet was, however, being laid down.  Mr Gove went further:

I can confirm to the House today that if they do noy, we will impose a solution on them, if necessary, by law”.

In parallel with his statement to the House of Commons, the Rt Hon Michael Gove MP wrote an open letter[2] to Developers in relation to 11-18m buildings, announcing a consultation period (between January and March 2022) for “the industry as a whole to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and ensure the industry that caused the problem pays to fix it”

In addition to requests for the provision of data in relation to all buildings over 11m which have historic fire safety defects, residential developers have been advised that they will be expected:

  • to make financial contributions to a £4bn fund dedicated to remediating unsafe cladding on 11-18m buildings; and
  • to fund and undertake remediation of any building over 11m in which they had “played a role in developing”.

On 22 January 2022 a similar open letter was also issued to the Construction Products Association[3].  Pointing to £700m of profits made by three cladding and insulation firms associated with the refurbishment of the Grenfell Tower, the Rt Hon Michael Gove MP explained his view 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” and that there was an expectation of “a public funding commitment from your sector by early March”.

In recent weeks the Department for Levelling Up, Housing and Communities has signalled an intention to make a public announcement in mid-February 2022 of the commitments which developers and product manufacturers have made.  On 3 February 2022 a further letter was issued:

  • making clearer that those “Developers” eligible to join the scheme are those with profits from the development of residential land in excess of £10m per annum;
  • explaining the Department’s intention to codify six commitments that Developers would be asked to make;
  • inviting views on how contributions between participants to the fund might be apportioned; and
  • proposing the mechanism by which contributions to the fund would be collated (including an initial float amount and annual contributions to be made thereafter).

The tone of the Department’s letter of 3 February 2022 is significantly less trenchant than that which was issued on 10 January 2022.  Developers are, however, mindful of the warnings issued by the Rt Hon Michael Gove MP in his speech to the House of Commons and in his open letter to Developers of the same date.  He has warned that “I am prepared to take all steps necessary to make this happen” and these warnings have not been taken lying down.  The likes of Persimmon (who are reported to have made provision for £75 million to remediate its own buildings[4]) have reportedly secured advice from Lord Pannick QC in relation to the legality of the threats made[5] and have issued their own rebuttal warnings to the Department for Levelling Up, Housing and Communities.  Further developments are highly likely to be seen over the next month, before a further statement is made to the House before Easter.

Author: Jennie Gillies

[1] Building Safety Bill in January 2022: New Year, New Minister…New Plans?

[2] Letter to Residential Property Developer Industry

[3] Letter to CPA from DLUHC

[4] The Times – Builders not alone in cladding scandal

[5] The Times – Gove threats are unlawful, say builders

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