Andrew Dismore

Recommendations:

 

• The Ministry for Housing, Communities and Local Government (‘The Department’) should, within six months:

1. a) be working with the new Building Safety Regulator, begin vigorous enforcement action against any building owners whose remediation projects are not on track to complete by the end of 2021; and
2. b) begin publishing monthly updates of projected completion dates for all remaining high-rise buildings with ACM cladding, to increase transparency of progress without identifying individual buildings.

• The Department should, within three months:

1. a) publish its impact assessment of the safety risks and financial impacts on private leaseholders and social landlords (including knock-on impacts on house building and maintenance of existing stock) arising from only funding a fraction of the estimated costs of replacing non-ACM cladding from high-rise blocks; and
2. b) write to us, outlining its assessment of the risks to public money of committing all £1 billion of the Building Safety Fund by the end of March 2021, and how it will monitor and mitigate these risks.

• The Department, working with the Care Quality Commission and local authorities, should make it a priority for its forthcoming data collection exercise to identify any care homes below 18 metres which have dangerous cladding. The Department should write to us by the end of 2020 setting out progress on this and on its wider data collection.
• The Department should write to us within three months, setting out what specific steps it will take to provide greater transparency for residents throughout the application and remediation process, and how it will ensure that building owners meet a standard of service in communication with residents.
• The Department should ensure that cross-sector work to resolve issues with the External Wall Fire Review process progress at pace. As part of this cross-sector work, the Department must ensure that professionals can acquire indemnity insurance, and leaseholders are not facing escalating insurance premiums. The Department should write to us within three months setting out its assurance that these processes are operating effectively.
• The Department should, within the next three months, assess the capacity of specialist fire safety skills within the sector and set out what the impact is on delivery of its timetables for the removal and replacement of unsafe cladding. It should include in this assessment options to tackle the skills shortage so that this does not become a barrier to remediation work continuing at pace.

 

Key Findings:

 

Pace of Remediation:

• Only a third (155 out of 455) of high-rise buildings with clad with unsafe aluminium composite material (ACM) panels have had their cladding replaced with a safe alternative
• 5% of student accommodation and 50.3% of social housing in need of remediation have had cladding remediation work. However in the private sector only 14.1% of buildings have seen ACM cladding replaced.
• The Department has responded to this gap by offering bespoke technical and financial support, to assist private building owners in managing these projects.
• Previously The Department expected that all cladding would be replaced by June 2020. It has revised this to all work having begun by the end of 2020 and all replacement work to be completed by the end of 2021. This may change as there is uncertainty about the potential for COVID-19 to cause prolonged disruptions.
• The Department accepts responsibility for the regulatory system when it came to reforming it. It is hoping to introduce range of new measures to enhance building safety, including the establishment of a new Building Safety Regulator, to be introduced through its Building Safety Bill

 

It is unacceptable that, three years on, Grenfell-style cladding remains on hundreds of residential buildings.

• The Department estimates there over 20,000 homes in around 240 high rise building still in need of remediation with cladding similar to that used on Grenfell Tower.
• In addition it estimates there are a further 1,700 high-rise buildings with other forms of unsafe cladding
• There are an unknown number of buildings with unsafe cladding not classed as high-rise (below 18 metres)
• Private leaseholders face the financial strain of costs passed onto them by their building owner. These often include meeting the interim fire safety measures such as waking watches.
• The National Audit office has found that cladding inspection has revealed other significant flaws in construction and fire safety in many cases. Any additional costs beyond the work to remove and replace dangerous cladding are not covered by the £1.6 billion funding schemes.

 

The Department is not fully funding the replacement of forms of dangerous cladding which are different from that used on Grenfell Tower, nor is it prioritising spending according to greatest risks or need.

• In March 2020 the Chancellor announced a £1 billion Building Safety Fund to finance the replacement of such cladding in the private leasehold and social housing sectors. The Department was clear that a key reason for this funding, as in its funding to remove ACM cladding in the private sector, was to protect leaseholders from facing “unacceptable costs, in the tens of thousands of pounds”
• The Department intends for the £1 billion Building Safety Fund for non-ACM cladding to be committed in full by the end of the 2020–21 financial year, although the National Audit Office believes this will pose significant challenges to The Department and would require an acceleration in administration.
• The Department stated that one of the main lessons it had learnt from the ACM fund, and which gave it confidence it could commit the much bigger Building Safety Fund in full by the end of March next year, was the need to provide extensive support to applicants. This suggests the Building Safety Fund will also be resource-intensive to administer
• The Department told the PAC that estimated the costs of replacing this cladding as between £3 billion and £3.5 billion; the new £1 billion fund would therefore be expected to only cover up to a third of these costs.
• The fund is intended to focus on those cases where affordability to leaseholders was the greatest barrier to cladding replacement. Private building owners who can afford to pay for cladding replacement are expected to do so. Similarly social landlords who can afford to pay for the work are expected to do so.

 

The Department has no knowledge of how many care homes below 18 metres in height have dangerous cladding.

• In January 2020 the Department published advice from its independent expert advisory panel that buildings of any height with residents who need significant assistance to evacuate exacerbate the risks presented by dangerous cladding.
• Bluntly, the Department does not know how many care homes, sheltered homes or hospitals (ie building with residents who need significant assistance to evacuate) are under 18 metres and in need of remediation work.
• In addition The Department has not explicitly said it will prioritise the identification of buildings under 18 metres in height with elderly or vulnerable residents in need of remediation.

 

The Department has not done enough to address spiralling insurance costs and ‘nil’ mortgage valuations.

• Leaseholders are having their properties valued at nil, leaving them ‘mortgage prisoners’ and unable to sell or remortgage.
• While leaseholders have been unable to move or remortgage, some have seen their insurances premiums rise significantly. For those in buildings with serious fire safety defects, there are examples of premiums rising by over 400%
• The External Fire Wall Process was introduced in December 2019 to address this.
• However the process has not been working as intended:

1. It is expensive and only lasts five years
2. Demand for the work has outstripped the supply of professionals able to do it

• Professionals have struggled to get indemnity insurance in order to undertake the work.

1. The insurance industry were not consulted prior to the creation of the EWS1 form.
2. The process may also be being used on buildings under 18m.

• The Department has been asked about two separate issues with insurance (Professional Indemnity Insurance and spiralling costs for leaseholders). They are now working with the Fire Industry Association and Institute of Fire Engineers to address the issue of indemnity insurance. The British Association of Insurers has stated they are working with the Department to address the issue of premiums.

 

There is a shortage of specialist skills to support the remediation of buildings with unsafe cladding.

• The National Audit Office found that there has been a shortage of skills or personnel needed to complete remediation work.
• The Local Government Association stated that there is a “chronic shortage of fire engineering and safety expertise, both in the enforcement and inspection field and in the private sector”.
• The Department recognises that the timescale for completing all remediation work before the end of 2021 will be ‘challenging’ with the current skills capacity.

The Department informed PAC that it was surprised at the lack expertise and competence among building owners to conduct the projects with the previous two funding schemes, and that the introduction o