Transparency data

Building remediation: accounting officer assessment (November 2024)

Published 13 November 2024

Applies to England

Background, context and objectives

Ministry of Housing, Communities and Local Government (MHCLG) have established a portfolio to oversee the remediation of unsafe buildings in England, delivered by 5 separate remediation programmes. These 5 programmes, are made up of:

1. Aluminium Composite Material (ACM) remediation programme (18 metres+)

2. Building Safety Fund (BSF) (non-ACM) remediation programme (18 metres+)

3. Cladding Safety Scheme (CSS) (11 to 18 metres)

4. Responsible Actors Scheme (RAS) (11 metres+)

5. Social Housing Remediation (11 metres+)

In response to the Grenfell Tower fire in 2017, the government announced that it would cover the costs of replacing unsafe Aluminium Composite Material (ACM) cladding systems on high-rise residential buildings in England where there is no alternative funding solution. This was covered by 2 government funds – the Social Sector ACM Cladding Remediation Fund (SSCRF), and the Private Sector ACM Cladding Remediation Fund (PSCRF). The SSCRF launched in 2018 with a budget of £400 million. The PSCRF launched in 2019 with a budget of £200 million.

In March 2020, the government announced the Building Safety Fund (BSF), with an initial budget of £1 billion to fund the remediation of unsafe non-ACM cladding on high-rise residential buildings. The fund was expanded to £4.5 billion in total in February 2021 to cover private and social sector residential buildings.

In January 2022 the government announced 3 key principles on the approach for remediation: taking a proportionate approach to making buildings safe, protecting leaseholders in buildings over 11 metres from the costs of cladding remediation, and holding industry to account.

On 23 September 2022, Accounting Officer Assessments (AOA) were published, to bring the format of the published assessment into line with other Government Major Projects Portfolio (GMPP) programmes, for the ACM (Aluminium Composite Material) High Rise Residential Building Remediation Programme and for the Non-ACM High Rise Residential Building Remediation Programme. This new AOA is being published to reflect the current portfolio approach to remediation.

The ACM High Rise programme is now almost complete, and the Non-ACM High Rise is currently being implemented.

RAS and CSS are new programmes within the portfolio and not covered by the previous two Accounting Officer Assessments.

The portfolio will be funded through a combination of government funding capped at the £5.1bn and the remaining funding will come through industry, either directly through self-remediation (Developers signing a government contract committing them to remediate unsafe buildings which they developed), or indirectly via developer refunds and the Building Safety Levy (The Levy will be paid by developers and charged on new residential buildings requiring building control approval in England).

This memorandum is being published as the portfolio will be a new GMPP programme and will supersede previous individual GMPP remediation programmes such as 18 metres+.

Assessment against the Accounting Officer standards

a. Regularity (has legal basis, Parliamentary authority, and Treasury authorisation; and is compatible with the agreed spending budgets)

The funds do not require any new legislation. Grant funding is provided under s.1(1) Infrastructure (Financial Assistance) Act 2012.

HMT has agreed the funding commitment of £5.1 billion, with any additional funding required coming from industry, through the Building Safety Levy which will be collected under the Building Safety Act 2022 and through recovering funds from developers where government has already stepped in to remediate buildings.

My assessment is that the regularity test is satisfied.

b. Propriety (meets the high standards of public conduct and relevant Parliamentary control procedures and expectations)

Funding decisions are made using transparent criteria and meet the standards governing the use of public funds.

Funding is allocated according to funding guidance which is published on GOV.UK.

The Department publishes regular statistics on the status of remediation and funding applications for buildings in scope of the funds.

My assessment is that the propriety test is satisfied.

c. Value for Money (in comparison to alternative proposals or doing nothing, the proposal delivers value for the Exchequer as a whole)

The Department previously assessed that there was insufficient evidence to conclude that the ACM and BSF funds would meet the normal tests for value for money, resulting in a direction from the Secretary of State to the Department in May 2020.

Remediation of private sector residential buildings with unsafe ACM cladding: ministerial direction

Remediation of buildings which have unsafe non-ACM cladding systems: ministerial direction

More information is now available and the Department has been able to conduct a more comprehensive assessment. The proposed interventions which are now part of the portfolio are now deemed to represent value for money. This is because we have now (1) been able to quantify and monetise more benefits of reduced fire risk associated with bringing forward remediation work, (2) assessed non-monetised benefits and their scale of impact to a much greater extent, and (3) evaluated those non-monetised benefits against a “switching value” to examine if it was plausible that the portfolio could represent a net benefit.

Updated economic analysis demonstrates that the fiscal savings or economic benefits generated are likely to more than offset the cost, making the investment in single remediation portfolio positive value for money.

My assessment is that the value for money test is satisfied.

d. Feasibility (can be implemented accurately, sustainably, and to the intended timetable)

The portfolio is monitored regularly through Programme and Delivery Boards and as a GMPP Programme is reported on a quarterly basis to receive independent scrutiny and assurance from the Infrastructure and Projects Authority (IPA).

The deliverability and feasibility of these funds is formally assessed, and delivery risks are being managed through internal measures.

My assessment is that the feasibility test is satisfied.

Conclusion

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Sarah Healey, Accounting Officer
Date: 7 November 2024