By Tom Bergin
LONDON (Reuters) – When the deadly fire at Grenfell Tower in 2017 led to the discovery that high-rise public housing buildings across Britain were wrapped in flammable cladding, the government vowed to make the contractors responsible pay for their negligence.
Seven years later, contractors who installed clapboards that did not meet fire safety standards in place when they were installed have largely avoided financial liability, according to a Reuters review of more than 100 buildings.
Cladding is a layer of insulating materials that is applied to the walls of a new or existing building to improve its thermal efficiency. The Grenfell Tower fire, which killed 72 people, raised public awareness that thousands of buildings in the UK are lined with flammable materials.
To tackle the problem quickly, the British government put a lot of money into enabling the replacement of flammable cladding on subsidized public housing. Then, to recoup taxpayers’ money, the housing ministry said it would work with building owners to pursue legal claims against contractors who installed faulty cladding.
Under UK law, the owner of a property that has been renovated in a way that does not comply with the building regulations in force at the time can sue the responsible contractors and designers, and in some cases the manufacturer of the materials used, for the costs of the renovation.
A Reuters review identified 103 public housing buildings, owned by 26 local councils and not-for-profit housing associations, which had the type of cladding deemed non-compliant by the government, the courts or the public inquiry into the Grenfell fire.
Only five of the 26 owners – responsible for 25 of the 103 buildings – said they had sought any compensation from the companies that installed their combustible cladding. Three managed to recover some money, while two are still in the mediation process with contractors in cases that did not reach the court. The total recovered was just 13% of the more than 260 million pounds ($325 million) it cost to reclad the 103 buildings, Reuters found.
Four lawyers who represented both building owners and contractors in post-Grenfell cladding cases told Reuters that the rules of funds created by the government to pay out remediation money had inadvertently discouraged wrongdoing builders from being sued. If public housing authorities win a lawsuit against the contractor, the proceeds must be given to the government, according to the rules, while the legal costs of the lost battle must be borne by themselves.
The National Housing Federation, which represents social housing authorities across Britain, said the government could have increased the number of claims by covering litigation costs and providing legal guidance.
Reuters found no evidence of a deliberate government plan to discourage claims for compensation.
However, the Department for Housing, Communities and Local Government said its national cladding scheme prioritized the rapid removal of dangerous cladding over recovering costs from contractors. He declined to comment on criticism that his rules discourage lawsuits against those responsible or to answer questions about the level of claims against construction companies. It also did not comment on whether it would change the rules of its cladding schemes to allow more claims to recover taxpayers’ money.
The Reuters analysis is the first comprehensive look at the extent to which contractors have contributed to the re-cladding of public housing buildings to which they attached non-compliant cladding, and reveals how few cases have been brought against the contractors.
Giles Grover, one of the leaders of the End Our Cladding Scandal campaign, which is made up of groups representing tenants affected by the national crisis, said the low number of compensation claims identified by Reuters was disappointing.
“It is frustrating that the contractors have not paid to repair these blocks, despite all the government’s promises to make them pay,” he added.
NATIONAL SCANDAL
The Grenfell disaster in Kensington killed dozens of residents when the building’s plastic-filled exterior panels turned a small fire in one flat into an inferno that engulfed the 24-storey skyscraper in west London.
The government said in 2017 that the panels used did not comply with current regulations when they were installed. The official inquiry, which published its final report in September, agreed and noted that none of the companies responsible had even claimed that the liner met regulatory requirements.
After the fire, inspections by local councils and housing associations, which provide subsidized housing for lower-income families, found that similar panels and other forms of cladding that did not meet fire regulations had been installed on buildings across the country.
More than 700 public housing buildings have had their cladding replaced after the Grenfell disaster, while around 1,800 still need to be made safe, the government’s spending watchdog said in November. The total cost of the remediation will exceed £4 billion, according to government figures.
The watchdog noted that because public housing owners don’t have cash available, the government can be on the hook for the bill.
An alternative to public money being used to pay for remediation is for owners to sue the builders, designers or manufacturers responsible for the original cladding, said Chris Leadbetter, a lawyer at Clyde & Co. who defended construction entrepreneurs in dozens of cases. cladding casings.
Reuters identified buildings in need of recladding using council statements, media reports, social media posts and other sources. Reuters then determined whether the original cladding complied when it was installed using statutory finance accounts, satellite imagery, planning documents, access to information requests, local council meeting minutes and discussions with dozens of lawyers, housing groups and local councils.
Suzannah Nichol, chief executive of Build UK, which represents construction companies, said the industry accepted that non-compliant cladding should not have been installed, but said contractors did not have the financial strength to cover all the remediation costs themselves. She said others, including product designers and manufacturers, were partly to blame and should share the financial burden.
“I don’t think any company is going to step in and pay for something if they’re not convinced they’re responsible,” she added.
Construction firms responsible for non-compliant cladding identified by Reuters, in 103 public housing buildings inspected, include UK-based Willmott Dixon and Paris-listed Alumet Bouygues (EPA:) SA and United Living, which is owned by American private equity group Apollo. Willmott Dixon, Bouygues and Apollo declined to comment on the cladding contracts until Alumet responded to inquiries.
‘BIG TENTH’ FOR THE LAW
Most public housing providers declined to give their reasons for initiating or not initiating cases.
But the cladding recovery fund rules put in place by the government after the Grenfell disaster offer an answer, according to the National Housing Federation and lawyers interviewed.
In 2018, the government set up the first of its funds to ensure that cash-strapped public housing owners can make their buildings safe as soon as possible. The government said it expects the recipients of the funds to file reasonable cases against the contractors and return any compensation received to the government.
The oldest fund, created in 2018, has so far handed out £300m of taxpayers’ money to councils and housing associations, official figures show. This fund has received less than £1 million back as a result of compensation claims, according to a Freedom of Information request.
In one case, Sheffield Council decided not to prosecute London-listed firm Morgan Sindall, which the council said installed non-compliant polyethylene core panels – like those used at Grenfell – on its Hanover Tower building.
The council said in a 2020 report that there might be a “public interest” in finding the facts in court, but because the government had already covered the costs of the recast, spending money on what would likely be expensive litigation was not in council taxpayers’ interests .
Eric Johnstone, legal director of Brodies solicitors in Edinburgh, said the fact that the government did not fund litigation but wanted to collect revenue from any litigation created a “huge disincentive” for social housing providers to sue.
Morgan Sindall told Reuters he did not believe he had any liability in connection with Hanover Tower, without elaborating. Sheffield declined to comment on the case.
Only three of the 26 building owners surveyed by Reuters said they had actually received compensation from the contractor in relation to the cladding claims. The first, Newport City Homes Housing Association in south Wales, launched its claim before the government set up its first cladding fund. Newport City Homes claimed the cost of protecting the three buildings from building contractor Wates Group, which installed polyethylene sheeting as part of a 2013 renovation. The housing association won a £4m settlement from Wates without even going to court, its accounts show.
Wates said he did not knowingly install non-compliant products. He declined to answer questions about the Newport or any of the 23 other high-rises where Reuters found the company had installed polyethylene-core cladding panels.
John Cawthorne, a former firefighter who lived in Sheffield’s Hanover Tower for 33 years, told Reuters he was furious that builders putting non-compliant cladding on blocks like his across the country were not being held to account. Cawthorne said the tenants were haunted by the fact that they could have died just as easily as the Grenfell victims.
“I live on the 15th floor of this building. I’m right at the top,” said the 68-year-old. “The same thing could have happened here. There’s no doubt about it. We could all have died.”
