Michael Gove has warned property developers to voluntarily stump up to replace dangerous cladding on flats still in place years after the Grenfell disaster or face punitive taxes to pay for the work.
The Housing Secretary has confirmed plans for a £4 billion fund to remove dangerous cladding from tower blocks in the wake of the deadly 2017 fire in west London.
The cash will help tens of thousands facing huge repair bills through no fault of their own.
On a broadcast round earlier this week, Mr Gove said it was time for those with ‘the big bucks, the big profits’ to act to remedy the fire safety risks.
Later, addressing MPs in the Commons he said firms that did not act would face ‘commercial consequences’ for their inaction while ‘blameless’ leaseholders have been ‘shouldering a desperately unfair burden’.
The Communities Secretary told MPs: Those who knowingly put lives at risk should be held to account for their crimes, and those who are seeking to profit from the crisis by making it worse should be stopped from doing so. Today I am putting them on notice … we are coming for you.’
Leaseholders in buildings between 11m (36ft) and 18m (59ft) tall will no longer have to take out loans to cover the costs of remediation work despite no new money coming from the Treasury.
Campaigners tentatively welcomed the plans as they trickled out over the weekend, but developers said they should not be the only ones responsible for the costs.
Mr Gove met with leaseholders groups today ahead of his statement in the House of Commons.
However, while the action was welcomed there was also criticism that it does not go far enough.
Reece Lipman, 32, who lives in a flat in Romford, east London, said: ‘It feels like the Government keep trying to bail water off the Titanic with pots and pans and that’s great, some people will be saved, but the ship is still going down and we haven’t yet addressed that problem.’
The Housing Secretary confirmed plans for a £4 billion fund to remove dangerous cladding from tower blocks in the wake of the Grenfell fire
He added: ‘I think it is very positive that we seem to, after four years of changing housing secretaries, that we seem to have a housing secretary who has got the rhetoric right and is now talking with a much firmer tone, which is very encouraging to see, and obviously any money to help with the crisis is going to be incredibly welcome.
‘But I do think it’s really important to state that even after all this time, the Government is still talking about just cladding, and it’s not just a cladding crisis, it hasn’t been just a cladding crisis for many years now.
‘It is a full-blown building safety crisis.’
Labour warned that money earmarked for levelling-up schemes or housing projects could be ‘raided’ if talks fail to ensure developers stump up for fire safety improvements.
Shadow communities secretary Lisa Nandy highlighted a letter from Treasury minister Simon Clarke which she said cast doubt that a new tax on those responsible was the backstop.
Ms Nandy told the Commons: ‘(Michael Gove) was told ‘you may use a high-level threat of tax or legal solutions in discussions with developers’ … ‘but whether or not to impose or raise taxes remains a decision for me (the Chief Secretary) and is not a given at this point’.’
She added: ‘It appears what he’s told the public – that tax rises are the backstop – is not what he’s told the Treasury. This letter says ‘you have confirmed separately that DLUHC budgets are a backstop for funding these proposals in full should sufficient funds not be raised from industry’.
‘That is not what the Secretary of State told the House a moment ago. So can he clear this up: has the Chancellor agreed to back a new tax measure if negotiations fail or is he prepared to see his own already allocated budgets, levelling-up funding or monies for social or affordable funding raided?
‘Or is his plan to go back to the Treasury and renegotiate and legislate if he fails in March? If that is the case, it’ll take months and there’s nothing to stop freeholders passing on the costs to leaseholders in the meantime.’
Earlier, Mr Gove told Sky News: ‘We want to say to developers and indeed all those who have a role to play in recognising their responsibility that we want to work with them.
‘But if it’s the case that it’s necessary to do so, then we will use legal means and ultimately, if necessary, the tax system in order to ensure that those who have deep pockets, those who are responsible for the upkeep of these buildings, pay rather than the leaseholders, the individuals, who in the past were being asked to pay with money they didn’t have for a problem that they did not cause.’
In the letter to the residential property development industry today, Mr Gove set a deadline of ‘early March’ to publicly accept his ultimatum and provide a ‘fully-funded plan of action’.
They were also ordered to provide comprehensive information on all buildings taller than 11m that have fire-safety defects and they helped construct in the past 30 years.
A leaked letter from Treasury chief secretary Simon Clarke authorises Mr Gove to use a ‘high-level ‘threat’ of tax or legal solutions’ to get developers to pay up.
The move has been welcomed by campaigners for those facing huge bills for repairs, many of whom are unable to move home because banks won’t offer mortgages against their properties.
Developers will be barred by law from clawing back the money via inflated service charges.
And leaseholders will be granted the right to sue builders over defective flats for up to 30 years – a five-fold rise in the current six-year limit.
However, campaigners have criticised an apparent loophole in the scheme which means it will cover only remedial work relating to cladding, rather than all fire safety work, such as repairing faulty firebreaks or dangerous balconies.
Rachel Loftus, of End Our Cladding Scandal, said: ‘You have to do all of what the experts say is required, but the Government is saying there is funding for only some of them.’
A Whitehall source said Mr Gove was in discussions with banks and insurers about ensuring that post-Grenfell repair bills are ‘proportionate’ and not inflated by demands to fix other building problems that do not directly affect safety.
The new scheme will directly help those living in buildings under 18 metres (59ft) who have missed out on previous grants and been told to take out huge loans to fund repairs.
Those living in properties above 18m are already able to access government grants from a £5 billion Building Safety Fund.
Mr Gove has employed forensic accountants to track down those responsible for fire-risk flats.
A dossier compiled by the Department for Levelling Up, Housing and Communities found that companies involved in the Grenfell fire have gone on to make huge profits since the June 2017 disaster which claimed 72 lives.
It found that 12 firms connected to the fire have since made pre-tax profits of £6.7 billion, paid out dividends of £3.1 billion and awarded pay packages and bonuses to directors worth £335 million.
Mr Gove is expected to say that those who knowingly put lives at risk should be ‘held to account’.