Government doesn’t have the power to force foreign developers to play cladding remediation costs, MPs warn

The government has admitted that it has limited powers to compel foreign companies to pay remediation costs for buildings with unsafe cladding and other fire safety defects.

Speaking to the Levelling Up, housing and communities select committee, Michael Gove failed to spell out how foreign and offshore firms could be forced to pay, saying that he wouldn’t “want to show too much of our hand”.

What is the government’s solution to the cladding crisis?

The government is currently moving forward with plans to address the injustice faced by leaseholders across the UK stuck in unsafe, unsellable houses, due to a litany of fire safety defects.

The government has announced its intention to protect the vast majority of leaseholders from the cost of remediation related to external cladding.

A series of amendments to the Building Safety Bill introduced by the government last week will prevent leaseholders paying for cladding costs, and limit the amount they spend on non-cladding to £15,000 in London, or £10,000 in the rest of the country.

The capped contributions will only come into effect when the cost isn’t met by the developer, building owners and other parties such as product manufacturers.

The government’s plans would allow them to prevent housebuilders that do not recognise their responsibility to cover these costs from building and selling houses, by denying planning permission.

A government source told Inside Housing: “[house builders] thought we couldn’t do anything to force them to pay, but that was with our existing toolbox. This would give us the power to basically shut down their ability to build and sell houses.”

However, of the thousands of buildings thought to be affected by the ongoing fire safety crisis, many are ultimately owned by firms based off-shore.

In a select committee session on cladding remediation with Gove, the Secretary of State for Levelling Up, Housing and Communities MPs, committee chair Clive Betts asked whether foreign companies will be included in the scheme.

Gove said the range of options the government has “obviously come to bear with more force” on firms based in the UK, than foreign firms.

For foreign-owned buildings he said there are “other levers we can use to identify who the ultimately responsible building owner is, and make it clear they have a responsibility to cover the costs.”

Betts, the Labour MP for Sheffield Attercliffe, pushed Gove on this point, asking whether the government has any mechanisms to enforce the scheme for foreign companies.

“If they say no,” he asked, “what can you do?”

Seemingly referring to domestic companies, Gove said there are some measures set out in the amendments brought forward last week, but conceded that “it is easier” to engage with UK-based companies.

He said: “I don’t want to show too much of our hand. Some of the tools are there and apparent in the amendments that have been brought forward, particularly when dealing with determined actors, we don’t want to show every bit of our hand.

He added: “Its a statement of truth that companies that are domiciled and do business in the UK are companies which it is easier to be clear and engage with, and easier to be clear about what the consequences of non-engagement might be.”

What about product manufacturers?

Gove also said that some of the most “egregious transgressors” when it comes to manufacturers of cladding and other fire-safety products are based outside the UK.

Bob Blackman MP said that product suppliers should also be asked to contribute toward the cost of replacement, or replace products at no charge.

Blackman, the Conservative MP for Harrow East, said: “There are all sorts of products that are built into buildings right across the country. It seems to me perfectly reasonable that the product suppliers who were warranting that these were fit for purpose should either replace them free of charge or contribute toward the cost”.

Gove said: “Some of most egregious transgressors are those based outside the UK, there are therefore practical difficulties in pursuing them in the way we’d want to.

He added that the government does want to demonstrate that these firms “can’t evade these responsibilities”.