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Now it’s gloves off

IN an escalating exchange of letters with the CPA, Michael Gove, has indicated he has his sights set on construction manufacturers over the cladding scandal. How will this end?

A TESTY exchange of letters between government and the construction industry, represented in this case by the Construction Products Association (CPA), has led to fevered speculation about how far Michael Gove, secretary of state for the department for levelling up, housing and communities (DLUHC), will go in pursuing construction product manufacturers over the cladding scandal.

Gove has already found two sources of funds to deal with the crisis: a 4% profits tax to sort cladding issues on tower blocks more than 18m high (which should net £3bn over a decade), and a £2bn promise to fix properties built above 11m. But it’s his latest gambit to charge housebuilders for an additional £3bn by extending the Building Safety Levy that’s caused an outcry: is Gove doing it because he knows it’s politically savvy to hit the construction sector’s widely perceived bulging profits?

Alistair Osbourne of The Times, renowned for its sober analysis on current affairs, concedes Gove deserves ‘huge credit’ for finding the cash to sort the cladding problem, but asserts he’s sending an ‘awkward message’ to UK business – ‘that big, easy targets will be on the hook, even for other people’s mess’.

Osbourne doesn’t give manufacturers a free ride either, saying Gove’s frustration is understandable and that the CPA’s replies ‘have been endless excuses’. But he points out two problems with Gove’s levy: that housebuilders may try to pass it on, and that Gove ‘keeps going after the same target: not the real developers of 7,000 ‘orphaned’ buildings or the rest of the cladding supply chain’.

How have things gotten to this point, and where do we go from here? In order to understand why we’re here, it’s necessary to go back in time to the genesis of the cladding scandal.

Almost five years ago to the day, the UK was rocked by a devastating high-rise fire at the 24-storey Grenfell Tower block of flats in North Kensington, London. As smoke billowed high into the sky, news emerged several people were dead. It would turn out to be the country’s deadliest structural fire since the Piper Alpha oil-platform disaster and the worst residential fire since World War II, with a total of 72 deaths and 70 people being injured.

Even before the shock dissipated, the race was on to find out how the fire had started in order to prevent a reoccurrence in other buildings. An investigation found a malfunctioning fridge-freezer on the fourth floor was the cause and that it had quickly spread up the outside of the tower. Fire and smoke infiltrated all residential floors. The reason was down to Grenfell’s cladding and the external insulation as the air gap between them enabled a ‘stack effect’.

Three months after the fire, an inquiry was initiated; its results were released in October 2019 and confirmed Grenfell’s exterior didn’t comply with regulations and was a main reason the fire spread.
All over the country, local authorities began to look at other tower blocks to find cladding similar to that used at Grenfell. This process hasn’t always been smooth.

Fast forward to a cabinet reshuffle on 15 September 2021 which saw Gove being appointed secretary of state for housing, communities, and local government and given responsibilities for government’s levelling up agenda, the union, and elections. Within days his department was renamed the department for levelling up, housing, and communities, and his title changed to secretary of state for levelling up, housing and communities.

Gove certainly has detractors, inside and outside the political bubble; his reputation suffered when he ruthlessly turned on his Brexit ally Boris Johnson after the EU referendum in 2016, and was subsequently removed from cabinet by the-then new PM, Theresa May.

Speculation was rife May had axed him because she was appalled by his treachery, even though it hadn’t been against her. ‘If I’d been in her shoes, I would’ve sacked me too,’ Gove told the BBC. In fact at the time, an act of betrayal became popularly known as ‘doing a Gove’.

But there were probably two reasons Boris Johnson, when he became PM in July 2019, brought Gove back into the cabinet and gave him lots of work to do. The first was that he didn’t want his old frenemy on the backbenches, potentially stirring up dissent and plotting another Tory coup d’état; the second reason was that Gove has a formidable reputation for getting things done. Even his critics concede he’s one of the most competent politicians of his generation.

Love him or hate him, once Gove sets his sights on an objective, he usually doesn’t stop until he’s achieved it. As education secretary during the Conservative-Lib Dem coalition under David Cameron, for instance, he unleashed the most significant change to the structure of the education system in decades by allowing schools to convert to academy status. Clearly, he’s not an enemy that construction manufacturers need.

Now, under Gove’s remit comes the Building Safety Bill which is intended to ensure building safety is a top priority and to address issues with a lack of accountability during the lifecycle of a building. It creates an independent building safety regulator which will be established by the Health and Safety Executive (HSE).

WHILE the removal of aluminium composite material (ACM) cladding, the material Grenfell Tower was wrapped in, has been paid for by the Building Safety Fund, the £3bn that will be raised over the next 10 years using the 4% profits tax may not be enough, say activists. They want a total £8bn.

Paul Afshar, a campaigner with End our Cladding Scandal, told GB News on 20 April that his message to Gove was: ‘Bring all the developers to the table, by any means necessary, otherwise government needs to stump up the funding and get it back from the industry.’

And therein lies the real problem for construction manufacturers: if Gove is already inclined to raid their treasuries for more gold, it won’t take much pressure from activists to stiffen his spine – if that’s even necessary.

In an article headlined ‘Cladding scandal: now it’s time to go after the manufacturers’, Steve Day, a campaigner, and architect of the ‘polluter pays’ bill, was quoted in The Times as saying: ‘If the construction industry paid more, these exclusions could be removed.’

Day became a campaigner when he received an invoice for £40,000 to sort the flammable cladding on his apartment at Royal Artillery Quays, a development of eight towers on the Thames and told his neighbours: ‘We’ve got to become something that builders fear.’

A series of letters starting in January this year culminated in the strongly-worded message from Gove to the CPA on 13 April. The starting gun was fired on 10 January when Gove warned developers they must pay to fix the cladding crisis that they caused as he overhauled government’s approach to building safety. Gove wrote to industry giving them a deadline of early March to agree a fully funded plan of action including remediating unsafe cladding on 11-18 metre buildings, currently estimated to be £4bn.

He warned he’d take all steps necessary to make this happen, including restricting access to government funding and future procurements, the use of planning powers, and the pursuit of companies through the courts. He adds that if industry fails to take responsibility, government will if necessary impose a solution in law.

In a letter to CPA on 22 January, Gove told Peter Caplehorn, ceo of the CPA: ‘There are a number of cladding and insulation companies whose products or services have contributed to the need for remediation of 11m+ buildings on fire safety grounds. I’m offering a window of opportunity, between now and March, for the sector to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and secure an appropriate contribution from the sector.’

In its response the CPA pointed out that products can be incorrectly procured, installed, and maintained by the builder/contractor in such a way as to make the building as a whole unsafe. ‘Products are also routinely substituted by the builder/contractor without clear records, again making the process of ensuring the building is safe difficult and protracted.’ Nonetheless, the association emphasised that ‘both ourselves and our members are fully committed to changing the practices and culture within our sector and the wider construction industry that will be just as critical in the longer-term’.

In further correspondence on 17 March, and after consulting more widely, the CPA set out its concerns to Gove: ‘At this point in time, the construction supply chain has made it clear to the CPA that, given the uncertainties and lack of clear information, a consensus is lacking for any model of remediation funding beyond a ‘polluter pays’ model that is limited to the cladding and insulation sector. Once key information and clarification can be provided… we can assist government further in this endeavour.

‘The bad practices and poor behaviours highlighted in the Grenfell inquiry must be addressed by everyone in the construction supply chain, including product manufacturers. To that end, for over four years the CPA has been heavily focused on work to ensure such practices and behaviours are consigned to the past.’

But then came a marked escalation in tone. On 13 April Gove wrote to Caplehorn: ‘In January, I asked property developers and construction product manufacturers to make a public funding commitment by early March. Unlike the approach taken by developers, manufacturers have failed to make any such commitment. This is simply not good enough.

‘Your letter (Gove is referring to earlier correspondence from Caplehorn) proposes several reasons why making such commitments would be challenging or require years of preparatory work.

Leaseholders do not have the luxury of waiting years for every building to be assessed before funding is committed, and five years on from the Grenfell tragedy, there is little in your letter to suggest that manufacturers are ready to show leadership and play their part in bringing this unacceptable situation to an end. The scale of this injustice should have spurred manufacturers into doing more, at speed, and it is disappointing that the sector appears instead to be using it as an excuse to do nothing, slowly.’

Continued Gove: ‘It is unacceptable that there has been no clear acknowledgement that actions taken by cladding and insulation manufacturers have contributed to the problem, and that manufacturers have individually and collectively failed to come forward with a proposal for playing their part in addressing it.

‘As such, I now consider our negotiations to have concluded. I have instructed my officials to do whatever it takes to make sure that construction product manufacturers are held to account through the powers that I am establishing in the Building Safety Bill. My new recovery unit will pursue firms that have failed to do the right thing, including through the courts. I will consider carefully how to use other powers at my disposal to ensure there are significant commercial and reputational consequences for those firms that have not stepped up.’

‘Gove comes for construction suppliers on safety agenda’, said the Housebuilder & Developer in response.

After several months of discussions between DLUHC and members of the construction products and housebuilders sectors Caplehorn expressed his ‘professional disappointment’ an agreement hasn’t been reached. In the letter sent to Gove, he highlighted where further clarity is required from government over lack of details for the work required. Caplehorn said CPA members had voluntarily agreed to pay for costs because of defects from their own funds as part of the housebuilder’s remediation programme.

He added: ‘Our members do understand the urgency of finding a solution and have been working hard with us to try to find a suitable formula. We should stress however that many are troubled by the lack of detail in terms of scope and definitions for the work and the lack of support from valuers, insurers, and the mortgage sectors.’

Additionally, the CPA has ‘politely asked government’ to refer to the recommendations from the select committee report, most notably these three points:

  1. To establish a clearer understanding at the building level to avert further confusion and delay for leaseholders
  2. Involve other sectors of the industry in the discussion because in the design, procurement, construction, and maintenance of any building there’ll have been a complex set of interactions leading to the final built asset
  3. The CPA has long advocated (prior to these specific discussions with DLUHC) that a wider remit of works must be considered – beyond simply cladding and insulation – to ensure every one of the buildings in question is made fully safe for leaseholders. If this entire discussion around funding is to gain the support it requires, then government and industry must be doing all they can to ensure building safety defects are addressed in any remediation programme.

The CPA also said it feels it’s wrong for Gove to characterise the position of those highlighted in his letter as making ‘excuses’ and ‘not acting’, as ‘our members and other manufacturers have been proactive in their approach to come to an amicable solution with this situation’.

Finally, the CPA said that it and the stakeholders involved are keen to learn on the proposals government would like to put forward as they await a response. ‘In the meantime, we’ll carry on working on the reform and cultural change in the industry to benefit the homes of the future in a safer environment.’

Where this situation ends is anybody’s guess. The only thing that’s clear is that it’s not going away anytime soon, and construction product manufacturers may have to accept that they’ve already been condemned in the court of public opinion – whether they’re guilty or not.

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