‘Neither fair nor proportionate’ – industry reacts to £4bn cladding clawback

New government plans to claim £4bn from construction and property businesses to fix cladding could harm SMEs and is not “fair and not proportionate”, trade bodies have warned.

Companies will have to contribute around £4bn to replace dangerous cladding on medium-height buildings, housing minister Michael Gove said yesterday. But groups representing those in the construction industry have said it could place an unfair burden on some.

Finishes and Interiors Sector (FIS) chief executive Iain McIlwee said it was right to take the remediation burden off leaseholders, but that pushing costs onto developers, contractors and manufacturers would “run the risk of derailing future work”. He warned the policy could lead to years of legal disputes as well.

“The only winners will be the lawyers and the administrators and the real losers will be the small and medium-sized contractors and subcontractors, who are bound by heavily amended contracts and are operating in exceptionally difficult circumstances,” McIlwee said. ” will be left holding the bill when the music stops.”

The FIS said a levy-based Building Safety Fund could be a better alternative.

Gove invited builders, developers, material suppliers and others to meet with him by the end of March to reach an agreement on fixing unsafe buildings, but said that he was prepared to take “all steps necessary” to secure the funds from companies, including restricting access to government procurement and funding, and taking individual companies to court.

He said he was also prepared to table a new law to collect money from firms. The new fund covers aluminium composite material (ACM) cladding on buildings in the UK, and does not stretch to other material remediation. The new fund comes on top of the £5.1bn allocated to remediate ACM on buildings above 18 metres in height.

The National Building Specification (NBS) also backed the commitment to support leaseholders, but said collecting money from developers and construction companies for the remediation would delay work. “Given the revelations from the current phase of the Grenfell Tower Inquiry, and the confusion over the regulations, the government should also do the right thing,” a spokesperson for the group said. “That is to resolve the current chaos for leaseholders now and sort out the bills later.”

The National Federation of Builders (NFB) warned the new policy would “likely impact the number of homes built” by the industry, by directing funds towards paying for remediation. The government has set a target of building 300,000 new homes every year.

“Another construction industry-related tax is neither fair nor proportionate and industry will be dismayed at this scattergun approach to fixing an issue that several governments set the regulation for,” Rico Wojtulewicz, head of housing and planning policy at the NFB said.

“Perhaps all MPs will sacrifice a percentage of their salary and pensions to help fund remediation, as the real responsibility lies with legislators?” he added.

The government also released guidance yesterday on collaborative procurement to improve building safety. It wants to promote procurement based on best value rather than lowest cost.

Within the guidance, the Department of Levelling Up, Housing and Communities recommends a two-stage procurement process that focuses on early provisional tender appointments, which are then assessed and improved before the final contract is awarded.

The department also urged early supply chain involvement as a way to reduce risk, and a commitment to Dame Judith Hackitt’s ‘golden thread’ principle as ways to improve procurement within fire safety.