Ten top executives and shareholders at Britain’s biggest housebuilders have personally pocketed more money since Grenfell than their firms have set aside to fix the cladding crisis. The bosses and owners have made a total of £708 million in dividends, share sales and pay over three years, £65 million more than their companies have allocated to fix dangerous homes they have built.
Martina Lees http://www.thetimes.co.uk
Barratt, Persimmon, Taylor Wimpey, Berkeley, Bellway, Redrow and Vistry have set aside £643 million for fire safety over the past three years. The figure is about 4 per cent of their profits over that period and a fraction of the estimated £15 billion — and counting — that it will cost to make all flats in the UK safe. The seven construction giants have posted £15.1 billion in profits since 2017, when the Grenfell fire in west London fire killed 72 people and exposed a nationwide building safety scandal.
The findings will add pressure on the government — and the newly appointed housing secretary Michael Gove — to increase industry levies and make companies pay for repairs where homes breached safety rules at the time.
“The numbers speak for themselves,” said Stephen McPartland, a Conservative MP leading a backbench rebellion to protect flat owners from fire-safety costs. “It shows the big developers are not taking the issue seriously. It’s imperative that those responsible actually pay to resolve this. Leaseholders don’t have the funds and never will have the funds to make their buildings safe.”
Clive Betts, chairman of the housing, communities and local government select committee, said he was “shocked” at the figures. “This makes the case absolutely for a significant tax and/or levy on companies who ought to be collectively made to pay for the failings of the industry over the years. If they have built flawed, dangerous buildings, they should simply put them right.”
To those who have been living with flammable cladding on their building for the past three years, who are struggling with the soaring costs of waking watches, insurance and life-changing bills for repair works, the figures are incendiary.
This month about a thousand leaseholders, who are among an estimated 700,000 people who are still trapped in unsafe flats and up to three million people who are struggling to sell, marched on parliament to protest about the quality of their homes and the bills they have received to fix defects. The sun was shining, but the mood was bleak.
“Michael Gove, we want justice,” they chanted. “The system isn’t broken, it was built this way,” said Karim Mussilhy, who lost his uncle in the Grenfell Tower fire, and criticised the “cosy relationships [of] our leaders . . . with those responsible for killing our families.”
Hayley Tillotson, the first-known leaseholder to go bankrupt because of the crisis, waved the placard “Bankrupt and broke, leasehold is a joke”. Other signs said “Paid for a home, got a nightmare Taylor Wimpey”; “How many Grenfells will it take?”; “Lives before profits”; and “Make those responsible pay, not the victims”.
One of those victims, Ritu Saha, who co-founded the UK Cladding Action Group after flammable cladding was found on her Taylor Wimpey flat, said: “To now find that they value the lives of thousands of the innocent victims far less than the bank balances of their CEOs and shareholders makes us feel incredibly angry, and even more determined than ever to make sure they are held to account.”
The construction industry is paying for a fraction of repairs, leaving owners and taxpayers to foot the bill. In February the government announced two levies for fire safety. A blanket levy on housebuilders with profits of over £25 million is expected to raise up to £200 million a year over the next decade, while a gateway levy will tax developers that apply for building regulations approval on some new high-rise schemes. Ministers have allocated £5.1 billion in taxpayers’ grants to reclad unsafe tall blocks.
It is not enough, according to Sir Peter Bottomley, the longest-serving MP. “There is thought to be an estimated gap of £10 billion where leaseholders would in theory have to pay. They haven’t got the money. Some will lose their homes and they will look to those who have made money from housebuilding with anger,” he said.
A landmark House of Lords report in 2016 described the housebuilding industry as having “all the characteristics of an oligopoly”. Since then housebuilder profits have been boosted by the taxpayer-funded Help to Buy scheme, which accounted for a third of total sales at the seven housebuilders since 2017. And over the past year a strong stock market rally — fuelled by the pandemic stamp duty holiday — dramatically inflated the value of bosses’ shares. At Taylor Wimpey and Bellway share prices are up about 70 per cent since last September. Redrow’s stock price is up more than 90 per cent — increasing the value of founder Steve Morgan’s stake by nearly £200 million in a year.
Their second windfall was an explosion in dividends. Ten years ago the seven giants paid £38.1 million in dividends. Their latest results show dividends of £846 million — and over the past three years they made total payouts of more than £5.3 billion.
Earlier this year Sajid Javid, the health secretary and former chancellor, called on the Competition and Markets Authority to investigate an industry “dominated by just a few large operators” with a “stranglehold on supply”. The seven companies we analysed built 257,636 homes since 2017 — 41 per cent per cent of the total supply since 2017.
The housing ministry said: “We are making sure industry is held to account for the wrongs of the past by contributing to the cost of safety works — so far half the private sector high-rise buildings with unsafe [Grenfell-type] ACM cladding have been remediated without passing costs on to leaseholders or taxpayers. The Building Safety Bill will legally require building owners to prove they have tried all routes to cover the cost of essential safety works, while our new levy and tax will apply to developers.”
Lucy Powell, Labour’s shadow housing secretary, wants to go further and has called for a “proper levy”. “Developers racking up huge profits, for their companies and themselves, while innocent leaseholders are trapped in unsafe, unsellable homes should be ashamed,” she said.
Steve Day, 40, who faces a £40,000 bill for fire risks at his Barratt flat in east London, was “disgusted” by the figures. Day has drawn up a law with experts that would make companies pay for building homes that breached regulations at the time, a proposal that the government is now seriously considering.