The government has been criticised for deciding to pay for the removal and replacement of unsafe cladding on social housing tower blocks by dipping into the budget for new social house building.
We have previously praised the government for stepping forward to fund this vital work to remove unsafe cladding. Alongside indications it will ban combustible cladding entirely, this will go a long way to tackling some of the construction failings that have been blamed for the tragedy at Grenfell.
But we are nevertheless disappointed – the decision to take the money from the Affordable Homes Programme is like robbing Peter to pay Paul. And we don’t have confidence the argument that the money will be put back into the budget in three years’ time stacks up.
What’s the issue?
Last week (16/05/2018), the government said it would ‘fully fund’ the removal and replacement of Grenfell-style cladding systems from more than 150 social housing tower blocks across the country.
Explaining the decision, the chancellor said that that the government does ‘not want vital safety work to put at risk our high priority house-building programmes.’
However, in parliament this week, the housing minister revealed that the money for replacing cladding will be taken from the government’s budget for new affordable house building, the Affordable Homes Programme. He explained this means that ‘fewer homes will be delivered in the short term’.
So instead of getting rid of the trade-off between new house building and removing unsafe cladding, it appears the government has just moved it, from individual landlords to the national affordable homes budget.
A trade-off between safety and new homes
It may be argued that compared to the size of the whole £9 billion budget, the £400 million estimated for replacing cladding is small beer and nothing to sweat about. It represents around 4.4% of the total budget.
Given our woeful shortage of affordable homes, though, in practice £400 million can deliver quite a lot of new supply and is not to be sniffed at. Even at the generous £100,000 grant rates that City Hall is proposing for new council housing in London, it would be enough money to deliver 4000 new social rented homes.
That’s almost equivalent to all of the new social rented homes built in England in 2016/17.
But there is also a broader risk of creating a direct trade-off between new builds and cladding remediation. What if the figure escalates?
As we said in an earlier post, the £400 million is just an estimate and there is a risk that costs could go up. One social landlord that we have spoken to initially estimated that replacing the cladding on their blocks would cost £2 million. The final cost has come to £18 million.
Obviously, that’s an extreme example. But if the government’s initial estimate (less than £3 million per block) is too little, will more be taken from the Affordable Home Programme or will social landlords be left with a gap to plug?
The dubious promise that money will be returned later
The government has claimed that there is no trade-off because it will put the money back into the affordable housing budget when the next programme starts in 2021.
But there are two problems with this promise:
- delaying housebuilding has consequences. Moving the delivery of 4000 new social homes back by three years means 4000 households will be forced to wait an extra three years for somewhere decent to live
- there is no way anyone will know whether government has kept its promise. The affordable housebuilding budget for 2021 hasn’t been announced, so there is no way of knowing when it is whether the £400 million has not gone back in or not
The government was rightly praised last week for stepping forward with more money and responding quickly to calls to ban combustible cladding. But this new revelation makes the result look more like a fudge than a solution. The result could be that fewer homes will be delivered over the coming years or that the government will find itself under increasing pressure to reconsider.