Imagine you run a company. There you are, quite literally minding your own business. When suddenly, a man from the Government appears on your doorstep. Your industry is full of bad people, he says, who have done bad things. So pay up, right now. Or he’ll shut down your firm.
That doesn’t really sound like 21st century Britain, does it? More like Putin’s Russia or Erdogan’s Turkey. But that is what is happening to the housing sector.
In the wake of the awful fire that consumed Grenfell Tower, we have all become uncomfortably aware that many high-rise buildings were insulated with material that turned out to be extraordinarily flammable. This needs to be fixed. Doing so is vastly expensive.
The solution reached by Michael Gove has, essentially, been to strong-arm Britain’s housebuilders. The Government has imposed a new 4% Corporation Tax surcharge on the sector, set to raise £250m a year over 10 years. It has introduced a Building Safety Levy, which is intended to raise another £3bn. And now it is requiring them to make a massive one-off payment of a further £2.5bn to fix the cladding on properties they themselves built, even though they followed all the rules in place at the time.
“Many of the cladded properties were built by foreign companies, who so far aren’t paying a penny”
This may seem like it’s only fair – someone has to pay, after all, so why not the people who built the buildings? But it isn’t quite that simple. Many of the cladded properties were built by foreign companies, who so far aren’t paying a penny. Nor are the firms that actually made and installed the cladding – including the cladding on Grenfell Tower itself. Firms are also being asked to fix 30 years’ worth of buildings, potentially paying 100% of the costs even if they originally only owned part of the building. On top of which, Gove himself admitted to The Sunday Timesthat ‘faulty and ambiguous’ government guidance was partly to blame.
