INDUSTRY AFFAIRS

RESOLVING THE BUILDING SAFETY AND CLADDING CRISIS

ASFP Technical & Regulatory Affairs Officer Niall Rowan reviews the latest Government announcements on building safety and discusses their implications for the construction industry.

Since the start of the year there has been a raft of new announcements from the Department for Levelling Up, Housing and Communities (DLUHC) on building safety and the cladding crisis. In particular, these have focused on how and who should pay for remedial actions needed to make buildings safe. Initially, in January, announcements were made in relation to making developers pay for defective buildings, with subsequent declarations in February and March.

Letter from the Secretary of State - 1

Michael Gove’s 10th January letter to developers stated:

“I am now offering … open and transparent negotiations to agree a settlement that will restore confidence and ensure the industry that caused the problem pays to fix it… you should:

1. Agree to make financial contributions this year and in subsequent years to a dedicated fund to cover the full outstanding cost to remediate unsafe cladding on 11-18m buildings, estimated currently to be £4bn;

2. Fund and undertake all necessary remediation of buildings over 11m that you have played a role in developing (i.e. both 11-18m and 18m+). Any work undertaken by developers themselves on 11-18m buildings will reduce the total cost of cladding remediation that has to be paid for through the proposed 11-18m fund...”

Quite how these discussions and deliberations will be made is not clear. How many buildings? How many developers? Should all developers pay, or just those that installed defective cladding? (See ‘The elephant in the room’ red box on page 26). How much should each developer pay, and how should that be decided and so on.

In a later letter from Richard Goodman Director-General – Safer and Greener Buildings, he asks of developers:

“I would be grateful if you could start creating a fuller return with all 11m+ buildings that you have developed so that we can match these against our database of buildings that need remediation where we do not have developer information.”

What happens if you simply don’t reply, or state ‘no buildings over 11m’? How do they check? How is this going to be audited?

He goes on:

“We wish to ensure that those developers who are committed to making a full contribution do so... We envisage that those who meet these commitments will be recognised as the responsible actors in this market.”

Fine words, but unless you get everyone involved, then not many will volunteer to pay ‘a fine’ determined by civil servants for something that they consider was not illegal.

If this is not a can of worms, I don’t know what is and as you might expect, several prominent developers have already stated that they had done nothing wrong because they installed products in good faith believing they met the regulations as described in Approved Document B to the Building Regulations (AD-B). I see court cases looming. Redrow chief executive Matthew Pratt became the first to comment, branding Gove’s threats “unrealistic” and “inequitable”. Pratt said: “I don’t think anyone can sign a deal that says ‘you will give me anything I want’. Which basically [is saying that at] the end of the year ‘we’ll tell you how much it [the cost] is and you’ll sign up to say you’ll give us it.’ Nobody can sign up to that, it’s unrealistic.”

In a similar move, a letter from the chief executive of housebuilder Persimmon to the DLUHC called the sanctions “unlawful”.

So was this stalemate 1?

Letter from the Secretary of State - 2

In order to cover all the bases, Gove also criticised the construction products industry with a letter to them, stating:

“There are a number of cladding and insulation companies whose products or services have contributed to the need for remediation of 11m+ buildings on fire safety grounds. I am offering a window of opportunity, between now and March, for the sector to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and secure an appropriate contribution from the sector.”

This approach was similar to that used for the developers, and a lot of the same arguments apply.

Who will pay, and how much for each manufacturer? Will Kingspan only pay 15% and Celotex pay 85% on the basis of the respective uses of their products on Grenfell? How much will Arconic pay for the cladding? What about other buildings and other fires? What time period are we talking about? Why should manufacturers pay out and not contractors? Or the architects who designed it? Or building control who approved it? It looks like an unworkable mess of claim and counter claim and blame/liability deflection.

CPA discussions

So far, the Construction Products Association (CPA) has responded positively and weekly meetings have been undertaken with Gove’s team at DLUCH. DLUCH originally had a hit list of around 70 organisations – mostly those who were associated with Grenfell, including architects and engineers, as well a product manufacturers and developers. But as indicated above, while there is a desire to get those involved to pay, and to be fair, some goodwill from some of those parties to contribute, it would be hard to charge a relatively tiny portion of the construction industry for faults at Grenfell, when there have been fairly widespread failings across the industry.

Whatever, the Government has the wind at its back and as one CPA representative said to me, “Gove has the leverage to whack us!” There is also a strong sentiment in Westminster that ‘Construction must pay’.

So is this stalemate 2?

Question: If he gets the money from the developers will the manufacturers get off scot-free? Or vice versa? How will the balance be struck?

Gove’s February announcement

Move forward to 14th February 2022 and DLUCH announces 38 pages of amendments to the Building Safety Bill currently going through Parliament. These will provide legal powers to force developers and construction product manufacturers to pay for remediation. One wonders if the ask nicely approach didn’t work then? I can’t help feeling that having the two stage approach is confusing. What about those already engaged?

Whatever, it does give more concrete and legal backing to the ‘who pays?’ question in the cladding crisis that has been lingering for years and to that extent is welcomed, but the devil will be in the detail.

The Government’s objective is to create a pecking order as follows:

1. Developers and cladding manufacturers are first in line to pay. 2. Second are freeholders subject to an affordability test (still to be determined). 3. Leaseholders are only expected to pay a capped amount towards non-cladding costs only. This contribution can only be collected where the landlord is not – and has never been – a company associated with the original developer.

Each player will have to put in place its funding before the next player has to pay, the aim being for the leaseholder to be the payer of last resort – and preferably not at all. Who manages all this?

This process also addresses the issue in the leasehold system whereby landlords (or their agents or the company managing the property) can spend leaseholders’ money without any effective control. As a former leaseholder, I’m very familiar with this. The fact that freeholders are before leaseholders might concentrate their minds on the need for works in all cases and the need for value for money.

The proposals mean that no-one living in a building:

• more than 11m tall (or 5 storeys) will have to pay anything for remediating flammable cladding or will have to pay more than £10,000 (£15,000 in London) to remediate non-cladding defects • where the freeholder or head lessor is an associated company of the developer will have to pay anything, for either kind of remediation.

There are higher limits for properties worth £1-2m and over £2m. The caps set out above can be spread over five years, in equal instalments. For someone living outside of London in a property valued at less than £1m, that would mean contributions of £2,000 a year for 5 years.

The caps set out above are one-off and one-time only contributions. Once they are exhausted, the landlord cannot come back for further contributions.

New powers

The amendments also create a series of new statutory powers to enable action to be taken against developers, cladding manufacturers and companies associated with them to force them to pay toward non-cladding costs. The Government is linking future building control and planning consent to past behaviour. Companies that do not agree to remediate their buildings cannot become members of a new Building Industry Scheme (no details yet). Companies that are not members of the scheme will not be able to obtain planning or building control permission. Quite how this will work in practice remains to be seen and I can see numerous legal challenges against it, since surely this a restriction of trade.

Other big concerns are that the Building Safety Bill amendments go much further than the request for money letters and that the extension to 30 years of coverage under the Defective Premises Act will cripple the industry with almost unending claims. The amendments also significantly increase an existing problem of lack of available professional indemnity (PI) insurance. Imagine the PI cover needed to protect the last 30 years of work.

Further activity in Parliament

There has since been a meeting of the Levelling Up, Housing and Communities Committee on the subject of Building Safety: Remediation and Funding. The report of the 7th session published 11th March makes interesting reading; the overall thrust being that leaseholders should not have to pay (no surprises there) but that the Government’s proposals still have gaps whereby leaseholders can still be left to pick up the bill. Amongst the recommendations are:

• Scrap the proposed cap on non-cladding costs for leaseholders • Implement a comprehensive Building Safety Fund to cover the costs of remediating all building safety defects on any buildings of any height where the original “polluter” cannot be traced • Compensate leaseholders for costs already paid out, including for interim measures and for rises in insurance premiums • Require all relevant parties who played a role in the building safety crisis to contribute to funds for remediation

The committee chair Clive Betts said: “The Government should be looking beyond developers and manufacturers to contribute to the costs of fixing the building safety crisis. We recommend the Government identify all relevant parties who played a role in this crisis, such as product suppliers, installers, contractors and subcontractors, and legally require them to pay towards fixing individual faults and ensure that they also contribute to collective funding for building safety remediation. Insurers should also be required to contribute to funds for remediation.”

What happened next?

The Government negotiations with developers and separately the construction product manufacturers outlined earlier continued. The Government reached an agreement with the developers on 13th April when 36 of them signed a pledge committing to remediate life critical fire safety works in buildings over 11m that they have played a role in developing or refurbishing over the last 30 years in England. They also agreed to reimburse any funding received from Government remediation programmes in relation to buildings they had a role in developing or refurbishing.

Details can be found here www.gov.uk/guidance/list-of-developers-who-have-signed-buildingsafety-repairs-pledge

RESOLVING THE BUILDING SAFETY AND CLADDING CRISIS CONTINUED...

Negotiations with the product sector have not been as successful. Regular meetings between the Construction Products Association and the DLUCH remediation funding team failed to agree a scope of work or the contribution from sector, with the industry unhappy with the ‘blank cheque’ approach from DLUCH, and of course many in the product sector are blameless. The end of March deadline laid down by Michael Gove passed and despite further meetings, no agreement was reached before Parliament rose for Easter.

On 13th April, Michael Gove wrote to the CPA stating that as there was no clear acknowledgement that actions taken by cladding and insulation manufacturers have contributed to the problem. He declared that manufacturers have individually and collectively failed to come forward with a proposal for playing their part in addressing it and that negotiations were now concluded. He continued: “I have instructed my officials to do whatever it takes to make sure that construction product manufacturers are held to account through the powers that I am establishing in the Building Safety Bill. My new recovery unit will pursue firms that have failed to do the right thing, including through the courts.” The letter can be viewed here https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/1068866/13.04.2022_Letter_to_ Construction_Products_Association.pdf

Strong stuff. In hindsight, I can’t help thinking that the CPA and the DLUCH team have been talking across each other, with neither side being able to address the other side’s concerns in a concrete way.

We will have to wait and see what transpires in the product area. One solution that has been aired, which I think might be the quickest and easiest overall, is to impose a levy on the whole of the sector, which, while unfair for the ‘good guys’ might be easier, less painful and also get the ‘win’ that Gove needs. It’s also possible that the ‘bad guys’ will cough up more than their pound of flesh.

ASFP as members of the Construction Products Association, Build UK and the Construction Industry Council will be closely monitoring developments and reporting back to members and lobbying as appropriate.

The elephant in the room

A lot is riding on the outcome of the Grenfell Public Inquiry chaired by Sir Martin Moore Bick. Since the fire, the Government line has consistently been that cladding had to be of limited combustible (or better) performance by virtue of the meaning of the word ‘filler’ in Approved Document B – specifically clause 12.7. They claim that filler includes the core of any aluminium composite material cladding such as that used on Grenfell. Many others beg to differ and it is widely considered that 12.7 is poorly drafted with the word ‘filler’ used as a catch-all.

It might have been the intention, but it certainly was not the effect. Shortly after the fire, the Building Research Establishment was requested to do screening tests on approximately 750 samples of cladding from high-rise buildings sent in by owners/landlords etc. The screening tests indicated that almost all of them ‘failed’, that is, they would not have been classified as of limited combustibility if the full test requirements were undertaken.

If, as is the DLUHC line, the guidance and meaning of 12.7 was clear, then surely all, or nearly all, or even a large majority would have passed the screening test? Surely, it is inconceivable that all the architects/designers/façade engineers/cladding installers deliberately misread or misinterpreted this leading all the tests to fail?

Why is this important?

It’s important because after the Lakanal House Fire in 2009 which killed six people the Coroner, Frances Kirkham’s Rule 43 letters instructed DLUCH to reconsider the AD-B guidance with respect to cladding and external walls, because it was “a most difficult document to use”. DLUCH did not revise AD-B despite pressure from the fire safety industry and the All Party Parliamentary Fire Safety Group.

Responding to the Coroner’s call to make AD-B an easier read, Secretary of State Eric Pickles said that he had “noted concerns about the difficulties that some of those involved in the Inquests had with the interpretation of Approved Document B”. But he said, while his department was committed to a programme of simplification, “the design of fire protection in buildings is a complex subject and should remain, to some extent, in the realm of professionals.” Perhaps he didn’t mean to be rude, but this bit didn’t come across well.

If Martin Moore Bick finds that the AD-B was indeed not clear and that combustible products used in external walls were used legally, then the blame/liability for remediation falls back on DLUCH, not the industry. This is probably why DLUCH is funding remediation above 18m, but doesn’t assist with the much larger number of buildings between 11m and 18m.

TAKING THE INITIATIVE

ASFP Technical Officer Dr Andrew Taylor highlights how the ASFP aims to influence culture change in the construction industry. In April, I gave a presentation at the Fire Safety Event at the NEC, and again on a webinar, covering the need for, and progress with, culture change in the construction industry post-Grenfell.

Dame Judith Hackitt’s Building a Safer Future report, published in May 2018 identified that the current system of building regulations and fire safety is not fit for purpose and that a culture change was required to support the delivery of buildings that are safe, now and in the future. The report mentioned the need for a culture change on over 30 different occasions.

Sadly, these requirements are nothing new for the ASFP. In 2003, a group of ASFP members, led by the then CEO David Sugden, produced a report entitled Ensuring Best Practice for Passive Fire Protection in Buildings. The report was funded by the Department of Trade and Industry in the UK. The report recommended that improvements were needed in the design, installation, building control, record-keeping, and maintenance of passive fire protection (PFP) systems. These improvements need to be underpinned by regulatory change.

One of the conclusions of the report was that: “Public safety is being impinged by incorrect PFP measures and we feel that a disaster caused by accelerated or unexpected fire spread could follow if no action is taken to improve initial standards and to define the responsibility of building occupiers to undertake correct maintenance.”

Sadly, we know that no regulatory changes were made, even after the Coroner at the Lakanal House Inquiry made this recommendation.

The legal text on materials and workmanship in the building regulations requires that: “Building work shall be carried out with adequate and proper materials […] and in a workmanlike manner”.

This is hardly the most rigorous of statements.

A cornerstone of ASFP’s policies down the years has been third party certification of products and installation activities. All ASFP members are signed up to a code of practice including third-party certification of product manufacture and installation as appropriate.

New legislation

We are now waiting for the Building Safety Bill to come into force, as many of our product families will be contained in the “Safety Critical” list, and therefore will be covered by a mandatory scheme that is underpinned by a new series of product standards. That will bring about an improvement in the mandatory testing, attestation, and verification of conformity for these products. It is close to making our third-party product certification policy a regulatory requirement. For some of our member organisations, this will be the realisation of something we have long lobbied for.

The secondary legislation for the Building Safety Bill also includes recommendations for changes needed in determining the competence of those working on all buildings.

We are continuing to see lots of conversations about competence, and ASFP Is looking at setting up a competence frameworks scheme for our members.

One of the biggest challenges with the Building Safety Bill is the slow progress of the draft text through Parliament. As I write this, we approach the five-year anniversary of the Grenfell Tower Tragedy. The draft text that contains many improvements for the future has been held up during conversations about who pays to repair defective buildings. These repairs may not be limited to external cladding. It is right that leaseholders should not be expected to pick up the bill for repairs, but there are many more steps on the road to resolving where the eventual bill will end up, as Niall Rowan writes on pages 24-26.

Taking action

Given that the timescale to fully implement the Building

Safety Bill, to draft and transition to new product standards will be measurable in years, we must not wait for this to come into being before we act.

In presenting her report in 2018, Dame Judith

Hackitt invited the industry to do the right thing in advance of regulation. She also pointed out that we needed “to maintain the spirit of collaboration and partnership which has been a feature of the review process to date”. I would like to think that ASFP has long lobbied for collaboration to be the way ahead. We have been involved in a number of initiatives aimed at improving the quality of installed passive fire protection measures. From 2018 to 2020, ASFP worked with several trade associations to produce the guide, Firestopping of Service Penetrations. Best Practice in Design and Installation.

We are now working jointly with the Finishes and Interiors Sector (FIS) and Gypsum Products Development Association (GPDA) to produce a labelling system explaining that a fire-resisting partition wall is an important fire safety measure. Each label is linked by a QR code back to a website with appropriate advice.

The website encourages builders to Stop, Think, Plan, Check and Record the work that they undertake in passing services through the wall.

ASFP has also encouraged our members to engage with other industry initiatives, such as the Code for Construction Product Information, a forthcoming code of conduct, proposed by the same, not for profit organisation, that runs the Considerate Constructor Scheme.

We will continue to look at these industry initiatives, and engage with them as appropriate in our quest to improve the quality of installed passive fire protection.