The statement made by Robert Jenrick, the Secretary of State for Housing, Communities and Local Government, in the House of Commons on 10 February 2021.
With permission, Mr Speaker, I want to make a statement on housing and building safety. Beyond the covid-19 pandemic, the Government want to build back better—better homes, better infrastructure and better communities. The foundation of those ambitions, and the mission of my Department, is safety and fairness. We have all been moved by the stories we have heard and the people we have met—homeowners placed in difficult and sometimes impossible situations through no fault of their own. I appreciate the frustration, the worry and the despair that at times they feel. I share their anger at the errors, the omissions, the false promises and even the outright dishonesty, which were built up over many decades but which this Government are determined to tackle.
That is why today I am announcing an unprecedented intervention—a clear plan to remove unsafe cladding, to provide certainty to leaseholders, to make the industry pay for its faults of the past, to create a world-class building safety regime and to inject confidence and certainty back into this part of the housing market. First, we will finish the job we have started on remediating unsafe cladding. After the tragedy of Grenfell Tower, the expert advice that this Government received identified aluminium composite cladding, or ACM—the material on the tower—as by far the most unsafe form of cladding. It should never have been used, and our independent expert advisory panel recommended that it should be the focus of our remediation work.
Thanks to a considerable effort, including during the pandemic, almost 95% of all high-rise buildings with unsafe ACM cladding identified by the beginning of last year have been remediated, or workers are on site now doing the job. That rises to 100% in social housing. Guided by expert advice, the work to remove other types of cladding that are also unsafe—albeit less so than ACM—where they pose a genuine risk to life is also under way.
It has always been our expectation—our demand—that building owners and developers should step up to meet the cost of this work. Where they have not, or where they no longer exist, the Government have stepped in, providing £1.6 billion to remediate unsafe cladding. However, it is clear that without further Government intervention many building owners will simply seek to pass these potentially very significant costs on to leaseholders, as this is often the legal position in the leases that they signed. That would risk punishing those who have worked hard and bought their own home, but who have, through no fault of their own, found themselves caught in an invidious situation. Importantly, it would also risk slowing down the critical works to make these homes safer.
I am therefore making an exceptional intervention today on behalf of the Government and providing certainty that leaseholders in high-rise residential buildings will face no cost for cladding remediation works. We will make further funding available to pay for the removal and replacement of unsafe cladding for all leaseholders in high-rise residential buildings of 18 metres and above, or above six storeys, in England. We continue to take a safety-led approach, and this funding will focus on the higher-rise buildings, where the independent expert advisory panel tells us time and again the overwhelming majority of the safety risk lies, in line with the existing building safety fund and the anticipated scope of the new building safety regulator that we are establishing and will shortly be legislating for. This will ensure that we end the cladding scandal in a way that is fair and generous to leaseholders.
Secondly, for lower and medium-rise blocks of flats, the risks are significantly lower and the remediation of cladding is less likely to be needed; in many cases, it will not be needed at all, but where it is, costs can still be significant for leaseholders. That is why I am announcing today that the Government will develop a long-term scheme to protect leaseholders in this situation with financial support for cladding remediation on buildings of between four and six storeys. Under a long-term low-interest scheme, no leaseholder will ever pay more than £50 a month towards the removal of unsafe cladding, many far less.
Taken together, this means the Government are providing more than £5 billion, including a further £3.5 billion announced today, plus the significant cost of the very generous financing scheme, which will run for many years to come, to ensure that all leaseholders in medium and high-rise blocks face no costs or very low costs if cladding remediation is needed. Where it is needed, costs can still be significant for leaseholders, which is why we want to take these important steps. We want to ensure that the Government develop this long-term scheme, which will protect leaseholders with financial support. Taken together, this means that the Government are helping leaseholders to move forwards with greater certainty and more confidence about the future.
Thirdly, while the problem is not one of leaseholders’ making, it also cannot be right that the costs of addressing these issues fall solely on taxpayers, many of whom are not themselves homeowners and can only dream of getting on the housing ladder. The Government have always expected the industry to contribute towards these costs, and some have done so. Today, I am announcing that we will introduce a gateway 2 developer levy, which will be implemented through the forthcoming Building Safety Bill. The proposed levy will be targeted and will apply only when developers seek permission to develop certain high-rise buildings in England, helping to ensure that the industry takes collective responsibility for historical building safety defects. In introducing the levy, we will continue to ensure that the homes our country needs get built and that our small and medium-sized builders are protected.
In addition, a new tax will be introduced for the UK residential property development sector in 2022. This will raise at least £2 billion over a decade to help to pay for cladding remediation costs. The tax will ensure that the largest property developers make a fair contribution to the remediation programme in relation to the money they make from residential property, reflecting the benefit that they will derive from restoring confidence to the UK housing market. The Government will consult on the policy design in due course.
Fourthly, I know there are many people across the country who are concerned about the safety of their home. In the actions we have taken and those we take today, we have already very clearly prioritised public safety. However, it is also important that we put the risk of a fire, and in particular the risk of a fatal fire, in context—it is low. Last year, the number of people who died in fires in blocks of flats over 11 metres was 10—an all-time low—and fire-related fatalities in dwellings in England have fallen by 29% over the past decade. By way of comparison, more than 1,700 fatalities were reported on our roads in 2019.
Of course, any death is one too many, and the tragedy of Grenfell Tower lingers with us and demands action. That is why it is right that we address safety issues where they exist and are a threat to life, but we must do so proportionately, guided at all times by expert advice. That is the approach that we are taking through the Building Safety Bill, the new building safety regulator, the Fire Safety Bill and the new national regulator for construction products, which I announced in January. I am determined that we will have a world-class building safety regime.
We need everyone to follow this sensible, proportionate approach so that this part of the housing market can move forward and homeowners are not disproportionately impacted. The Royal Institution of Chartered Surveyors has consulted on new guidance for valuers on when an EWS1 form should be required. The Government endorse its work to ensure that assessors have a stronger basis on which to make good, proportionate judgments about valuation risk. Lenders have welcomed the progress on that guidance, which will help to ensure that more than half a million leaseholders in blocks of flats over 11 metres will not need a separate EWS1 assessment to get a mortgage. That builds on the interventions we have already made to create and train many more assessors, and we are doing more so that they can access professional indemnity insurance to get on with the job.
Today, in addition to providing certainty to leaseholders, we are providing confidence to lenders. Following discussions that my right hon. Friend the Chancellor and I have had with lenders, we expect all the major banks and building societies to strongly support today’s intervention, which will provide greater certainty to the market and help to restore the effective lending, purchasing and selling of properties as soon as possible.
Taken together, this exceptional intervention amounts to the largest-ever Government investment in building safety. We believe in homeownership, and today we firmly support the hundreds of thousands of homeowners who need our help now. I commend this statement to the House.