The full report and PAC chair’s statement can be accessed via the links at the top of this email
Progress is being made in removing dangerous cladding from high-rise residential buildings following the Grenfell Tower fire. However, the pace of works has been faster in some types of building than others and progress in the private residential sector has been slower than the government expected, according to today’s report by the National Audit Office.
In the wake of the Grenfell Tower fire, the Ministry of Housing, Communities & Local Government (the Department) established the Building Safety Programme (the Programme). One of the Programme’s main objectives is to ‘oversee and support the remediation of high-rise residential buildings that have unsafe aluminium composite material (ACM) cladding’.1 In May 2018 the Department announced £400 million to fund remediation in the social housing sector in England. In May 2019 it announced a further £200 million for the remediation of equivalent buildings in the private housing sector.
By April 2020, 149 of the total 456 buildings which are 18 metres and above and have unsafe ACM cladding systems had been fully remediated, leaving 307 where remediation was not yet finished, of which work had not yet begun on 167.2
The pace of remediation has been fastest in the student accommodation and social housing sectors, but slowest in the private residential sector. By April 2020, 66.7% of student accommodation blocks and 46.8% of social housing buildings had been fully remediated, compared to 13.5% of private sector residential buildings. Progress in the private sector has been slower because those legally responsible for private buildings have been difficult to identify and have required more support than expected. By the end of April 2020, the Department had paid out £1.42 million (0.7%) from the £200 million private sector fund and £133 million (33.3%) from the £400 million social sector fund.
The Department estimates that all buildings within scope of its funding will be remediated by mid-2022, with over 95% completed by the end of 2021. This is later than the expectation set in July 2019 by the then Secretary of State, that “other than in exceptional circumstances, building owners should complete remediation […] by June 2020.”3 This does not take account of the impacts of COVID-19: there are early signs that the epidemic has slowed the pace of remediation, with up to 60% of projects that were under way paused by April 2020. The Department had not at the time of this investigation assessed how its timeframe for completing remediation will be affected by the pandemic.
Not all buildings with dangerous ACM cladding fall within scope of the government’s existing funding schemes for the social and private housing sectors. This includes high-rise hotels, student accommodation, and build-to-let blocks, as well as buildings below 18 metres. The Department is aware of seven build-to-let properties over 18 metres with unsafe ACM cladding which are not eligible for funding, because the private sector funding scheme is designed to avoid the costs of remediation being passed on to leaseholders. In the case of build-to-let properties, the Department believes that building owners have a clear legal and financial obligation to pay for remediation themselves.4
The Department’s Independent Expert Advisory Panel has advised that the most dangerous forms of ACM cladding are unsafe on buildings of any height, and that risks are increased in buildings with elderly and vulnerable residents. The Department estimates there to be around 85,000 buildings in England between 11 and 18 metres, but does not know what cladding systems they have, nor whether there are any care homes under 18 metres with unsafe cladding. It will begin collecting data on buildings between 11 and 18 metres in summer 2020.
To access the funding schemes, building owners must demonstrate they have made a reasonable attempt to meet or recover costs without having to charge leaseholders – for example, by paying from their own resources, or through insurance, warranty claims or legal proceedings. The Department expects it could take building owners several years to recover costs in legal proceedings in many cases. By February 2020, the Department had recouped £0.8m from the private sector, and a further £6.4m from the social sector where building owners had successfully reclaimed costs from original contractors.
The Department expects to pay for 94 projects (out of 208) in the private sector, where the developer or building owner has not agreed to fund remediation themselves. The owners of 84 private sector residential buildings have committed to fund remediation, with a further 23 self-funded through warranty claims. Seven buildings have not agreed a funding route. In the social sector, the Department has committed to fund 139 (out of 154) residential buildings.
The Department announced a further £1 billion funding in March 2020 for the remediation of unsafe non-ACM cladding on high-rise buildings in the social and private residential sectors. It has not yet established how many buildings over 18 metres have unsafe non-ACM cladding, but has used a rough initial estimate of around 1,700 such buildings as a working assumption. The Department intends to commit the £1 billion in full by the end of March 2021, but the administration of this new scheme may present significant challenges given how demanding it has been to manage the existing ACM funding schemes, which are just over half the size of the new fund.
Gareth Davies, the head of the NAO, said today:
“MHCLG has made progress in overseeing the removal of dangerous cladding from many buildings, particularly in the social housing sector. However, the pace of progress has lagged behind its own expectations, particularly in the private residential sector. It has a long way to go to make all high-rise buildings safe for residents.
“Going forward, it is important that the Department successfully manages the administrative challenges of funding building owners to carry out remediation work, particularly given its intention to commit a further £1 billion in full by the end of March 2021.”
