Cladding Remediation—Follow-up Contents

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Conclusions and recommendations

The scale of the problem

1.We are concerned that, despite our previous recommendation on this issue, the Government still lacks data on the full scale and extent of remediation needed for buildings both below and above 18m. In order to know how much it will cost to remove unsafe cladding from multi-storey buildings once and for all, how long it will take, and whether the industry has the capacity to carry out these works, the Government needs to be collecting and publishing these data as a matter of urgency. (Paragraph 9)

2.We reiterate our recommendation from our June 2020 report that in the same way as it has done for buildings with ACM cladding, the Government should publish a monthly data release on the number of buildings with non-ACM cladding and other serious fire safety defects awaiting remediation. This data release should also explicitly include buildings between 11m and 18m as well as buildings 18m and above. (Paragraph 10)

Who pays for remediation?

3.We welcome the additional £3.5 billion funding towards cladding remediation for buildings 18m and above in height, which is a significant increase on the £1.6 billion already committed. However, we are concerned about perceived and real restrictions to the Building Safety Fund which affect residents’ safety, and the approach to allocating funds. In addition, significantly more money is needed; as we concluded in our June 2020 report, the costs of all fire safety remediations could be up to £15 billion. (Paragraph 18)

4.The Government should establish a Comprehensive Building Safety Fund for full remediation works of affected buildings. In allocating funds from the Comprehensive Building Safety Fund, the Government should move away from the current height- and product-based approach and should instead take a holistic, risk- and evidence-based approach that prioritises occupants who are most at risk. To support that approach, the Government should consider establishing a more formal process for identifying and prioritising risk holistically and report back to the Committee on the best way to achieve this, along with the evidence. (Paragraph 19)

5.A building that is half-safe is a building that is unsafe. Leaseholders are no more responsible for non-cladding fire safety defects than they are for the presence of combustible cladding on their homes. The costs of non-cladding related remediation could be just as high as the costs of cladding remediation. Leaseholders should not be expected to pay for these any more than they should be expected to pay for cladding remediation. We call 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; and
• covers all associated costs. (Paragraph 20)

6.The Comprehensive Building Safety Fund should be fully funded by Government and industry, and the Government should establish clear principles regarding how the costs should be split between the two. Total contributions should not be capped, given that, as we have already highlighted, the full scale of remediation needed is not yet fully known. (Paragraph 21)

7.Social housing providers should have full and equal access to government funds for remediation, whether through the existing Building Safety Fund or our proposed Comprehensive Building Safety Fund. Our proposed Comprehensive Building Safety Fund would cover all necessary remediation, including relating to non-cladding fire safety defects, but if the Government does not accept this recommendation and continues to fund only cladding-related works, it should:

• update the Building Safety Fund contract to make clear that funding does not need to be in place for non-cladding remediation works in order for any recipient to access funding for cladding remediation works; and
• engage with relevant stakeholders to ensure that any confusion regarding this issue is resolved. (Paragraph 22)

8.It is disappointing that 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, does not satisfy the previously agreed principle that leaseholders should not pay. Leaseholders of buildings below 18m are no more responsible for fire safety defects, and no more able to pay, than leaseholders of buildings above 18m. The Government appears to be prioritising certainty for lenders above fairness for leaseholders. We are particularly worried by how little detail about the loan scheme has been established. (Paragraph 28)

9.The Government should abolish the loan scheme. We reiterate our call on the Government to re-establish the principle that leaseholders should not pay anything towards the cost of remediating historical building safety defects. Instead, as we have stated, costs should be fully met by the Comprehensive Building Safety Fund, to be funded by Government and industry. (Paragraph 29)

10.The Committee welcomes the introduction of a new developer levy and tax to ensure that developers contribute towards the costs of remediation. We recognise and welcome the fact that some developers have already committed millions towards remediation funds. We also recognise the need to encourage the building of new homes, and that not all members of the construction industry are responsible for fire safety defects. Notwithstanding, we consider that developers can and should be expected to make a greater contribution to the costs of remediation. The developer levy and tax should be extended and should serve as an additional contribution to the Comprehensive Building Safety Fund, in line with principles to be set out by the Government, as we have recommended, about how the full funds for remediation should be split between industry and Government. The Government should also consult with all relevant stakeholders to design the gateway 2 developer levy in such a way so that costs are not passed onto house buyers, including housing associations. (Paragraph 32)

11.We also ask the Government to consider how others, including product manufacturers and suppliers, can contribute to the costs of fire safety remediation, in line with principles set out by the Government about the proportion of costs to be met by industry. (Paragraph 33)

12.We welcome the introduction of the waking watch relief fund, which shows the Government recognises that intervention is needed to support leaseholders with interim fire safety costs. However, the scheme does not go far enough. It does not cover the costs of installing alarms in all affected buildings, and there can still be ongoing costs for leaseholders who do have alarms installed. Funding should be extended—either through the relief fund or through the Comprehensive Building Safety Fund—to cover all interim fire safety costs in all high-risk buildings (as defined by our recommended risk-based approach), including those below 17.7m. (Paragraph 36)

13.We are concerned by the lack of progress on keeping residents’ building insurance costs reasonable during the period when their buildings are being remediated. The Government has been engaging with the insurance industry for months, and all the while leaseholders are seeing their premiums skyrocket—yet another cost they are facing for a problem not of their making—or worse, living in uninsured buildings. The time has come for the Government to consider setting a deadline for the insurance industry to act. If that deadline is not met, the Government should intervene to require industry to resolve the problem of eye-watering building insurance premiums. (Paragraph 40)

The wider impacts of the cladding crisis

14.The new guidance on EWS1 forms alone is not sufficient to mitigate the short-term and long-term impacts that the underlying uncertainty around building safety is having and will have on the wider housing market. We ask the Government to report back to this Committee with its assessment of the impact of fire safety remediation on the wider housing market. The Government should ask the Prudential Regulation Authority to assess the impact of fire safety remediation on banking capital ratios. (Paragraph 44)

15.We are concerned that the exclusion of social landlords from the Building Safety Fund and waking watch relief fund except in specific circumstances is having negative consequences for the wider social housing sector. While the £12 billion Affordable Homes Programme is welcome, any funds diverted from building new social homes to pay for cladding remediation will still result in fewer, much-needed, new social homes being built. In addition to our recommendation that social housing providers should have full and equal access to the Building Safety Fund, preferably our proposed Comprehensive Building Safety Fund, the Government should:

• ensure that social housing providers have full and equal access to the waking watch relief fund; and
• carry out and publish an impact assessment on the knock-on effects of fire safety remediation on maintaining existing social homes and building new social homes. (Paragraph 47)

16.We do not think the Government is 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. The Government should make it an explicit requirement that the information that the “accountable person” is required to share with residents includes signposting to support services for residents worried about their safety, financial situation, and physical and mental health. In the interim, the Government itself should supply this information to residents. (Paragraph 50)