Gove: ‘Practical difficulties’ in pursuing foreign product manufacturers over defects

The government faces “practical difficulties” in pursuing overseas-based construction product manufacturers and developers when it comes to getting them to contribute to the cost of remediating defective buildings, housing secretary Michael Gove has admitted.

Gove, who is secretary of state at the Department for Levelling Up, Housing and Communities, made the comments as he appeared before the Levelling Up, Housing and Communities Committee yesterday (21 February).

His appearance to give evidence to the Committee’s inquiry on building safety: remediation and funding, followed an announcement last month of government plans to protect leaseholders by encouraging developers and product manufacturers to volunteer funding for remediation of unsafe properties. Gove’s department has warned that firms that fail to comply may face barriers when applying for planning permission or have funding from Homes England withheld from them.

Gove told the Committee that while housebuilders and developers were “not necessarily enthusiastic” about contributing towards the remediation of buildings with dangerous cladding, they had “engaged positively” with the government in the negotiating process and accepted that leaseholders should not pay.

He said that developers and housebuilders recognised that they should remediate buildings that they own and that there was a broader recognition that leaseholders should be protected. But he acknowledged that some have expressed concern that the £4bn remediation fund could be used “to improve buildings beyond that which is required purely by safety”.

Gove argued that it was right that developers should take ultimate responsibility rather than contractors or subcontractors because they “sit at the apex of the system”. But he said “it is certainly not the case that we are saying that only developers should bear responsibility”.

When asked if the government would be able to get foreign-owned companies or those registered in offshore domains to pay their fair share, Gove said: “There are a range of levers that we have and the levers that we have that can help to persuade developers to do the right thing obviously bear with more force on them than on some of those who are operating at one, two or three removes.

“But it is the case that we have other levers that we can use in order to try to pierce the corporate veil, in order to identify who ultimately the responsible owner of a building is and to make it clear that they have a responsibility to pay the costs.”

When asked what the government would do if foreign-owned developers simply refused to contribute to remediation, Gove said he “didn’t want to show too much of our hand” but insisted the government had means it its disposal.

Meanwhile, he admitted that it could be tricky to persuade some overseas-owned product manufacturers to cooperate. He said: “Some of the most egregious transgressors are companies that are based outside the UK and there are practical difficulties in pursuing them in the way that we would want to.”

But he added: “It was clear that there was a collective failure to ensure that appropriate safety rules were followed and that information was shared in an appropriate way. I wouldn’t want anyone to feel that there was anything other than a shared responsibility to deal with this situation and that government shares some of that responsibility as well.”