After Grenfell: Big Profiteers and the Cladding Crisis

When firefighters arrived at Grenfell Tower at 1 am on June 14 2017, they found a fire that blazed for days and claimed the lives of 72 people. The embers in the tower eventually cooled. However, the socio-economic impact from the fire roars on for hundreds of thousands of UK residents to this day.

 

Grenfell triggered an intense phase of national fire-safety testing, in which 300,000 high-rise residents learned that their homes are unsafe. They now face life-changing charges and financial upheaval, while construction firms pocket the profits.

 

In Britain, cladding and cladded residences have been a hugely lucrative market over the last decade. Construction jobs have earned the industry billions and got hundreds of thousands of Brits on the property ladder. Now, in the face of post-Grenfell fire safety checks, many homes are unliveable, or require remediation work to the tune of seven-figure sums for each resident. Where international companies profited, innocent and vulnerable homeowners are facing the bills.

 

Around 300,000 residents of tall buildings in the UK require major remediation charges for their cladded flat. Jake Ellis, a founding member of End Our Cladding Scandal, also owns a dangerously-cladded flat. In his view, “those who have made such vast profits from selling them walk away without paying a penny to make them safe.”

 

To gather the full scope of the situation, it’s worth assessing the recent cladding market in the UK, and how leading companies profited before and after the fire. In the context of the debt, bankruptcies, homelessnesses, and deaths inflicted on innocent residents, the reality is astounding.

 

Listed builders in the UK made £30 billion profit in the last ten years. Much of the most profitable work for building firms came from the most vulnerable and well-intended sources, like social housing, green grants, and Help to Buy Schemes. Celotex, the firms responsible for 95% of the RS5000 insulation on Grenfell Tower, actively pursued the social housing market to get a slice of a profitable industry, according to the Grenfell Inquiry.

 

As cladding and insulation lower heating requirements, it lowers gas and electricity uses for residents. Firms therefore package the products as eco-friendly, planet-saving, and future-proofing technology. This allows them access to huge financial incentives, like the £2 billion government green grant. Firms like Cellotex and Kingspan, the two insulators of Grenfell Tower, used environmental finances to profit from green-washing. The cruel irony occurs when insulation products, designed to keep the heat in and save fossil-fuel combustions, catch fire or fail fire-safety tests.

 

The dangerous and profitable targeting of tax-payer funds proves a source of immense anger for cladding scandal activists. Along with the individual lease-holders losing out, this also represents the wasting of funds on a nationwide scale. Firms who made millions from now-unsafe cladding also benefited from the government’s Help to Buy Scheme. This grant provides Brits with an opportunity to get on the housing ladder. In the wake of Grenfell, thousands of heavily-invested new homeowners saw that opportunity go up in smoke.

 

Three leading developers made a total of £5.2 billion in profit-building flats up and down the country. These companies, Bellway, Taylor and Wimpey, and Barratt make around a third of their income from Help to Buy Scheme purchases. Following fire safety inspections in the wake of Grenfell, many of their tenants face life-changing remediation bills to make their homes safe.

 

The sheer scale of these cases raises fundamental questions about the state of building inspection policy in the UK. Under Margaret Thatcher’s government, with her ex-housing-developer cabinet member Michael Heseltine, the Conservative party introduced private housing inspectors with the Building Act of 1984. Many experts point to the private sector pressure on profit-driven inspectors on the inconsistent quality of housing regulations across Britain. Following a Freedom of Information Request, Inside Housing found that among housing authorities with Grenfell-style cladded high rises, two-thirds of buildings used private inspectors.

 

Another problem factor in the British housing market is the convoluted structure of contracting and sub-contracting construction work. When Rydon won the multi-million-pound contract to clad Grenfell a year before the fire, they hired eight contractors and sub-contractors. In the aftermath of the tragedy, this sprawling network serves to spread out responsibility and accountability among a diverse international cast of builders and manufacturers. It also creates a culture with the possibility of regulatory misunderstanding and dangerous confusion. In this situation, the residents paid the highest price. Meanwhile, Rydon made over £14 million profit in 2016, and over £270 million turnover.

 

Each aspect of Britain’s cladding crisis, from scale, to cost, to profit, is more shocking than the last. Many victims are bankrupt, with insecure housing, with lives and livelihoods under threat. It’s hard to imagine a solution to such a vast and complex issue, but advocacy groups like End Our Cladding Scandal offer some ideas, as does Sadiq Khan. EOCS’s message, and the London Mayor’s plan, would have rich construction companies pay for remediation, not bereft residents. According to City Hall analysts, a suggested levy to pay for fire-safety costs would cut developing firms’ margins from 20% to 18.7% per residence. With a slight profit reduction on one side of the scale and thousands of lives on the other, the answer, for many, is clear.