Building firms must take responsibility

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The principle of “polluter pays” is a long established means of recouping costs and ensuring that the taxpayer does not pick up the bill for the shortcomings of others. It also helps protect those who face serious financial difficulties to clear up problems for which they were not responsible. The cladding scandal that arose out of the Grenfell Tower fire disaster in 2017 is a case in point. Thousands of leaseholders living in high and medium-rise buildings were left in fear for their safety and in despair for their financial wellbeing. Until the cladding is removed, many of their homes are at risk and unsellable.

These leaseholders face huge bills through no fault of their own. Under an earlier attempt to address this unfairness, no one living in a high-rise block would have to pay for the removal and replacement of cladding, while leaseholders in lower-rise buildings were to be offered low-interest loans capped at £50 a month. Michael Gove, who assumed the housing brief last year, has taken a different approach. He says the costs should fall much more heavily on the construction industry — a policy shift that saw £1 billion wiped off property company shares yesterday.

He has given builders just a few weeks to come up with a scheme to contribute £4 billion to a fund that will repair unsafe buildings between 11 and 18 metres high (the Government has already committed £5  billion of public money to remove cladding from taller buildings, backed by an industry levy). Mr Gove threatened them with a new tax if they failed to comply.

It should not be necessary to use such a heavy-handed approach. The construction industry has done well in recent years, benefiting from taxpayer-subsidised help to buy schemes, and should be prepared to reach an accommodation to help the cladding group. Mr Gove is principally after those who mis-sold cladding but since many have gone out of business, this might be impossible to do other than through a further levy on the entire industry.

There are obvious holes in the plan, including what happens to people living in buildings under 11 metres and who pays for other non-cladding measures now being demanded by lenders, such as fire breaks and insulation. Mr Gove was right to say using the tax system was “a blunt instrument”. But if the builders won’t recognise their responsibilities, he may have no option.

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