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Government ‘should drop last year of rent cut’ to fund fire safety work
Housing leaders have told government it could help fund essential fire safety work in tower blocks by dropping the 1% rent cut or choosing not to charge VAT.
At the National Housing Federation finance conference in Liverpool Waqar Ahmed, group director of finance at L&Q, said the government could “by a switch of their pen” scrap the 1% rent cut in 2019/20 and this would generate £2bn for the sector to help pay for fire safety work.
David Orr, chief executive of the National Housing Federation, said the sector had “heard a lot of noise” from government but seen “very, very little concrete action”. He added: “It’s very difficult to point to something and say as a result of Grenfell the government has done this.”
The government could decide not to charge VAT on fire safety work carried out by landlords, Mr Orr said. “That would be a very significant saving and I think they should do that,” he added.
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L&Q has 40 tower blocks over 10 storeys and 12 of its towers have cladding that has failed the government’s fire safety tests. It has set aside £50m to carry out the fire safety work needed on these towers.
Mr Ahmed said this £50m would likely have been spent on building new homes if Grenfell had not happened.
He added: “We’re fortunate we’ve got a big balance sheet, we can fund the impact of Grenfell. There is a conversation that we are having with government about how we can contribute to the supply of more homes.
"My view would be rather than get into a debate about who pays for it and who doesn’t something the government could very easily consider is in 2019/20 – the final year of the 1% rent cut – just don’t do a 1% rent cut. They can make that change overnight by a switch of their pen and essentially that would generate about £2bn capacity that could be immediately allocated to the sector.”
Only seven tower blocks out of 158 with unsafe cladding have had it removed and fully replaced. Mr Orr said the process has been delayed in some instances because there is still a “long queue” to get cladding tested by the Building Research Establishment.
Mr Ahmed said in London it is “very hard” to get cladding contractors because there is “such a shortage now”.
L&Q is not charging any of its leaseholders for the fire safety work. This contrasts with the owners of some private blocks where leaseholders face bills in the millions.
The government has faced numerous calls to fund fire safety work in the wake of Grenfell, both from social landlords and private block owners. However, despite conversations taking place between councils and government no funding has been forthcoming so far.
Some housing associations are “very anxious” about how they will afford the fire safety work and will find it “very difficult” unless they can get insurance companies to pay out, Mr Orr said.
Never Again campaign
Inside Housing has launched a campaign to improve fire safety following the Grenfell Tower fire
Never Again: campaign asks
Inside Housing is calling for immediate action to implement the learning from the Lakanal House fire, and a commitment to act – without delay – on learning from the Grenfell Tower tragedy as it becomes available.
LANDLORDS
- Take immediate action to check cladding and external panels on tower blocks and take prompt, appropriate action to remedy any problems
- Update risk assessments using an appropriate, qualified expert.
- Commit to renewing assessments annually and after major repair or cladding work is carried out
- Review and update evacuation policies and ‘stay put’ advice in light of risk assessments, and communicate clearly to residents
GOVERNMENT
- Provide urgent advice on the installation and upkeep of external insulation
- Update and clarify building regulations immediately – with a commitment to update if additional learning emerges at a later date from the Grenfell inquiry
- Fund the retrofitting of sprinkler systems in all tower blocks across the UK (except where there are specific structural reasons not to do so)
We will submit evidence from our research to the Grenfell public inquiry.
The inquiry should look at why opportunities to implement learning that could have prevented the fire were missed, in order to ensure similar opportunities are acted on in the future.
