The Sunday Times today reports Housing Secretary Michael Gove backing cladding leaseholders putting pressure on investor Norges Bank Investment Management (NBIM) to make UK housebuilders pay up to remedy their own building safety defects.
Norges Bank Investment Management is Norway’s £1 trillion state-owned pension fund which prides itself on ethical investment – no arms, tobacco, offshore fiddling etc
The initiative came from Docklands leaseholder Lucy Brown-Cortes, who also co-authored LKP’s December 2020 proposal to dump forced loans on leaseholders and replace it with sector-wide levy from housebuilders.
This was essentially achieved with Michael Gove’s dictat that housebuilders and cladding manufacturers would be made to pick up the building safety bills last Monday.
The appeal to Norges Bank Investment Management was supported by Grenfell United, Sir Peter Bottomley, LKP and the End Our Cladding Scandal Groups.
The Norges Bank Investment Management holds the following investments according to the Sunday Times’s Martina Lees:
Kingspan £308 million holding
Arconic £121 million
Saint-Gobain £829 million, which made cladding and insulation that spread the Grenfell Tower fire, killing 72 people in 2017
Barratt £1.7 billion holding
Taylor Wimpey £1.4 billion
Lendlease £488 million
Crest Nicholson £345 million
Persimmon £200 million
Berkeley £108 million
Bellway £93 million
Vistry £71 million (Bovis Homes etc)
The Sunday Times reports:
“In the past decade, Norges Bank Investment Management has offloaded stocks from almost 370 companies over social and environmental issues. It has exited Boeing and BAE Systems over producing nuclear weapons, British American Tobacco because of tobacco and Glencore for coal-based energy.
“As a long-term investor in around 9,000 companies in 74 countries, we have an interest in investors’ demands for profitability being aligned with society’s broader expectations of companies,” NBIM says on its website.
Norway’s wealth fund urged to pull £5.7bn from 11 cladding firms and housebuilders if they don’t pay to fix their defects in unsafe homes. Gove backs @GrenfellUnited @EOCS_Official push to make companies pay via investor pressurehttps://t.co/zfORKoH7fn— Martina Lees (@Lees_Martina) January 16, 2022
Mr Gove is quoted:
“We back Grenfell United and the cladding campaign groups in their call to action. Developers and cladding companies who caused these problems must pay to fix them. If industry does not cooperate, we are prepared to impose a solution in law.”
The full letter from the cladding leaseholders to Norges Bank Investment Management can be read here:
Of course, all parties responsible,whether by intent of default, should be responsbible for paying for any defects. They should also be thankful that times have changed.
I made notes from a paper I cannot now remember – but it referred to liability for defects under the Contract It explained that Contracts have been around for a long time and that one of the first could be said to be the code of Hammurabi, that dealt with payment: Seemingly, if a builder built a house for someone and completed it, `he shall give him a fee of two shekels in money for each sar of surface`. The code also dealt with responsibility for any defects. and although clear but somewhat harsh – it said that if a builder builds a house for a man and does not make its construction meet the requirements and a wall falls in, that builder shall strengthen the wall at his own expense. King Hammurabi ruled the kingdom of Babylon from 1792 to 1750 BC and also in who pays and how much, deciding that if a builder builds a house for a man and does not make its construction firm and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death. Furthermore, that if the son of the owner dies, the son of the builder shall suffer the same fate.
If the same rules applied today, It is doubtful that any builder would be reluctant to cough up and although we should all learn from history – I suspect that in 2022, this might be seen as going a little too far.