Taxpayer ‘faces multimillion-pound Help to Buy losses’ on cladded towers

westernpromise

I think the private contractor has a complete defence in that he met the standard (if he did). It's not his fault if the standard was inadequate - how would he know that? He would just in good faith buy and fit stuff that meets the deficient spec.

Analogously, White Star Line wasn't negligent in equipping Titanic with only enough lifeboats for 1,200 people of its complement of 3,300, because there was no standard in place requiring that there be enough for 3,300.

The shortcoming in either case is with whoever licenses people or companies to operate in the way that they do.

This is, I am afraid, an epic public sector failure. It's a public sector task to determine these standards, and it seems clear that however it's being done, it's not good enough because fire accelerant cladding can and has been quite legally fitted to towers.

It's a further public sector failure that the fire brigade clearly failed to respond correctly, actually leaving the scene after extinguishing the starting fire without noticing that it had spread outside. The result was that they had to return, the fire spreading meanwhile. They then caused many of the deaths by giving incompetent advice to the occupants to stay put.

The other public sector failure was that councils and fire brigades learnt nothing from a similar fire in Southwark in 2009 , and in fact Southwark Council was fined for lethal breaches of fire safety rules. If you simply fine a council for letting people die - the fine of course being paid for by council taxpayers - you send the message that in the public sector you can kill people with impunity.

Whether it's homicidal police, negligent social workers or inept emergency services, the fact is that public sector "workers" can kill or allow to die any number of people, and there are either no consequences or they get rich from being sacked (see Victoria Climbie). Criminal charges or loss of pension entitlement - not a chance.

Graham_Devon

westernpromise wrote: »

This is, I am afraid, an epic public sector failure. It's a public sector task to determine these standards, and it seems clear that however it's being done, it's not good enough because fire accelerant cladding can and has been quite legally fitted to towers.

In the case of the Grenfell cladding, at least.... the public sector signed it off, but the whole business is outsourced to private surveyor companies to provide advice, direction and oversight of the systems in place. These private surveyor companies were "urged" shall we say to look passed the obvious holes in legislation. This was reported on not too long back as part of the enquiry. While no one has broken a law, the people advising on the law weren't advising that the law should be tightened up either....not in their interests. No one has done anything wrong per-se, simply skirted around inconveniences.

The public sector simply don't have highly skilled professionals in every sector, in every council. Neither do the government, hence having big business bod's on government panels to advise. Would seem unfair to cut public sector bodies, but then also expect them to have experts in every industry and law. Let's face it, if council tax went up as much as it would need to to employ such people, there would be riots.

Unfortunately you do end up in a situation which we've seen many times - poor outcomes.

PasturesNew

If H2B was for new builds.... where's your NHBC when you need it?

chucknorris

lisyloo wrote: »

Part of the point of insurance is to cover negligence.


I have it as a housholder.
We are forced to have it if we want to drive a car.

My partner has it as a business providing services (the comapnies that contract his services insist on it).


So why wouldn't negligence be insured in this case?

I think you missed my point, which was, who is responsible architect or contractor. It would be the architect who was negligent (not the contractor) for specifying an unsuitable cladding, unless of course:

a) it was down to the installation/workmanship rather than the suitability of the material(s).

b) it was a design and build contract, so the contractor was responsible for the design.

c) the contract contained elements of contractor design, for example working to a performance specification, and that specification was not met.

The architect would have professional indemnity insurance (as I originally mentioned).

lisyloo

[QUTOE]The architect would have professional indemnity insurance (as I originally mentioned).[/QUOTE]


Apologies if I'm being think here, but if the architect is not a public sector worker and has insurance then why does the burden fall on the tax payer?
In private new builds I presume they would contract an architect who wasn't public sector.

PasturesNew

lisyloo wrote: »

... why does the burden fall on the tax payer?...

It's probably several layers of confusion thick.

The money the tax payer stands to lose is:

House costs £200k, buyer mortgages at £160k and borrows £40k from the Govt under the scheme. Owner holds 80%, Govt holds 20%

Big fire.

House now worth only £40k ... so the owner's share is worth £32k - and the Govt loan for £40k is now against an £8k share of an unsellable property. So the loss is that the Govt will say "it's OK, we'll just want our £8k back if you sell it", thereby losing £32k of tax payers' money lent from the loan pot.

But then .... if your piece is £160k, would you be able to sell it and pay £32k to the mortgage as you've still a shortfall there too ... which the Govt are probably covering in some way.

It's then a question of whether the Govt (on behalf of the tax payers' pot) can say to the contractor/architect "Oi - whip your insurance out ... we're coming for our losses due to your stupidity"

chucknorris

lisyloo wrote: »

[QUTOE]

Apologies if I'm being think here, but if the architect is not a public sector worker and has insurance then why does the burden fall on the tax payer?
In private new builds I presume they would contract an architect who wasn't public sector.

Most private sector company consultancies would have PI insurance, architects certainly would. I think the problem areas are identifying who is responsible, and also the motivation to do it. Things might eventually swing that way, events probably haven't run their full course yet.

Graham_Devon

One couple now threaten to Sue the HTB agency over the cladding used.

The flat which they bought for £600,000 is now worth just £90,000.

This time though, the HTB agency agreed to write down the loan, the family sent the money, but it was rejected, as the HTB agency had "changed its mind".

In their report for Ahmed, Taylor Chartered Surveyors said the collapse in value of her flat was because the cost of replacing the cladding was unknown and that it was unclear when the cladding would be replaced due to ongoing legal discussions between developer Galliard and the insurer of the building.

The company said some flats had been valued at £0. They were unsellable, unrentable and unmortgageable.

Long article bringing to light a number of issues for these families.

One of those issues is new. It appears the HTB agency now reserves the right to use it's own valuer to value any property before redeeming the loan. So if the HTB valuer disagrees with the rest - tough for the buyer.

Taregt said: !!!8220;If a borrower!!!8217;s property is affected by novel issues in relation to its valuation, eg its external cladding, Homes England reserves the right, in accordance with the terms of the equity mortgage, to agree the valuer used. This ensures the appropriate due diligence is carried out in the interests of borrowers and the taxpayer investment in these homes.!!!8221;

Stitched and up springs to mind.

https://www.theguardian.com/society/2018/jun/18/grenfell-style-cladding-drops-flat-value-nerisa-ahmed

LydiaJ

chucknorris wrote: »

Most private sector company consultancies would have PI insurance, architects certainly would. I think the problem areas are identifying who is responsible, and also the motivation to do it. Things might eventually swing that way, events probably haven't run their full course yet.

Yes, determining liability is the crucial part. The architect's PI insurer will say that if the cladding met the building control standard in operation at the time, then the architect was not negligent, and they will refuse to cough up.

Eventually they will agree who was liable for what percentage of what happened, and the PI insurers will have to pay the appropriate percentages of the costs of replacing the cladding. The big problem is that negotiations about liability can take years, and in the meantime the homes are blighted by the uncertainty. That's what makes them worth only 10% of their previous value.

The accident that affected my family was a much smaller thing - only 3 deaths, and only 5 insurers - one for a driver, and the public liability insurers for a county council, a utilities company and two engineering contractors. It still took them more than 5 years to settle who was liable for how much, though.

The most effective way for the public sector to fix this would be to set up some arrangement to pay for these towers to have their cladding changed immediately, with whoever's eventually found liable for the problem to end up being liable for paying back whatever it cost. I have no idea legally whether that's remotely possible, though, I'm afraid.

westernpromise

If the state-determined standard has been observed but is itself defective, the fault lies with the state.

I come back to my Titanic analogy. People who operate ocean liners do so in line with applicable standards. If the standard is one lifeboat place per three billy bunters, that's what they'll equip the ship with. To do more has an economic cost that puts them at a commercial disadvantage versus competitors who observe only the legal requirement. If the ship then sinks, it's not the fault of the vessel operator that there is no lifeboat place for 2/3rds of the people.

Companies that fitted fire-retardant cladding would find they never won tenders to fit the stuff, because they'd be more expensive than others who used stuff that met the legal minimum. They would be unable to justify their higher cost on grounds of safety because they'd then have to prove the legal standard was itself unsafe.

In either case, the company that exceeds the required standard has a good chance of going bust.