Shift in social housing spending after Grenfell tragedy

The terrible events of Grenfell Tower in London are likely to provide a short-term boost for construction spending, but may also delay some major new-build projects as the emphasis shifts to retro-fitting. In the immediate aftermath of the tragedy on June 15 that killed at least 79 people, 60 blocks failed safety tests on their cladding and another 540 need to be tested. Glenigan economics director Alan Wilen commented: “In the wake of this terrible tragedy, there will undoubtedly be a huge increase in work to safeguard many towers across the country. “We’ve already seen councils from Birmingham to Croydon quickly agree to retrofit towers with sprinklers but with many councils still struggling with austerity cuts, this cash will need to come from somewhere else unless central government agrees to foot the bill.” The cost of replacing this cladding and sprinklers has been estimated at £1 million according to experts quoted by the Daily Telegraph, which could produce a bill of £600 million. This outlay may delay the procurement of some social housing schemes. In the months before the fire, some big social housing for housing associations and councils began to move forward. In April, Galliford Try was awarded a £128 million contract by Notting Hill HA to build the second phase of the £200 million Stephenson Quarter project in Newcastle, while the London Borough of Hounslow agreed a £90 million deal with Willmott Dixon in February to deliver 1,500 social housing units. Although the underlying value of social housing schemes starting on site fell 8% in the quarter to May 2017 on the same period a year ago, the value of work securing detailed planning approval surged 44% according to Glenigan. Public housing output stayed fairly static in the first four months of this year according to the Office of National Statistics but there was a dramatic slump in public housing orders in the first quarter of this year with a 53% fall against Q1 2016. A rise in repair and maintenance work seems likely in the coming months at the expense of new-build work as planning approvals are not immediately implemented.