Britain’s biggest housebuilding companies have told the government they must not be the only ones to pay the potential £4bn cost of fixing fire safety problems in apartment blocks.
At a crunch meeting with Michael Gove on Thursday, they said the government and companies that sold combustible materials must shoulder some of the blame.
The summit between senior executives from 20 building firms and the secretary of state for levelling up, housing and communities was described as producing “constructive dialogue” but failing to make significant progress on resolving the building safety crisis affecting tens of thousands of leaseholders.
Gove is understood to have made clear his resolve that leaseholders should not pay, that “those with the broadest shoulders must pay”, and that the negotiations must be resolved “at speed”. Attendees included executives from Barratt Homes, Taylor Wimpey, Persimmon, the Berkeley Group and Bellway.
One source said there was frustration on the housebuilders’ side that the government did not have a firm grasp of the size of the bill to be divided up.
Last week the government said there was £4bn in outstanding costs but developers believe that is an overestimate and both sides agreed to delve deeper into the cost. Such negotiations are likely to frustrate leaseholders urgently seeking an end to their plight.
“These firms have all got shareholders,” the source said. “They are not going to come out and say: ‘Here’s £4bn’.”
The meeting was held after Gove told parliament he was “coming for” developers and that “those who manufactured dangerous products and developed dangerous buildings have shown insufficient contrition”. Gove and officials said developers who did not cooperate could be hit by restrictions through the planning system, supply of public land and taxation.
During the meeting an official highlighted how one of the developers in attendance had drawn £40m from the public building safety fund to fix combustible cladding but had contributed nothing yet from its own profits.
Gove said that by March he hoped to have obtained funding promises from the developers to fix hundreds of thousands of homes found to have fire safety defects since the Grenfell Tower disaster in 2017.
He said he expected those responsible for affected buildings with annual profits from housebuilding of at least £10m to pay for all remediation of fire safety defects in buildings between 11 metres and 18 metres high. The government has already earmarked more than £5bn of public money for repairs to combustible cladding on buildings over 18 metres.
The major housebuilders said they believed it was “not equitable” if only they were taxed more heavily. They suggested that because the government set the building regulations under which all the works were carried out, it must bear some responsibility.
That argument may gain strength when former government ministers face questions at the Grenfell Tower public inquiry starting next month over their role in promoting a “bonfire of red tape”, which included failing to tighten up fire regulations after the fatal Lakanal House fire in south London in 2009.
Stuart Baseley, the executive chairman of the Home Builders Federation, said the industry lobby group had made its position clear at the meeting and would continue to engage constructively with the government. “We absolutely agree that leaseholders should not have to pay to remediate buildings. However we firmly believe that any further solutions must be proportionate.”
He said the bill should be shared with “other companies, sectors and organisations”, including “freeholders and the materials providers who designed, tested and sold materials that developers purchased in good faith”.
“As we made clear to the government, we do not believe it should fall to responsible UK housebuilders to fund the remediation of buildings built by foreign companies, developers no longer trading, or other parties.”
A spokesperson for the Department for Levelling Up, Housing and Communities said Gove “set out the government’s expectations for industry to cover the costs of fixing unsafe buildings and he reiterated that nothing was off the table. [The] roundtable was attended by senior executives from the country’s biggest developers, and these representatives agreed leaseholders should not pay. We continue to engage with them to ensure they deliver a fully funded action plan by early March.”
