Transparency data

ACM High Rise Residential Building Remediation Programme: accounting officer assessment

Updated 30 October 2024

1. Background, context and objectives

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 from social and private sector high-rise residential buildings in England where there is no alternative funding solution. This is covered by two government funds – the Social Sector ACM Cladding Remediation Fund (SSCRF), and the Private Sector ACM Cladding Remediation Fund (PSCRF). This memorandum covers both funds.

The ACM remediation programme forms part of the Department for Levelling Up, Housing and Communities (DLUHC) Outcome Delivery Plan, setting out the department’s objective to deliver ‘More, better quality, safer, greener and more affordable homes,’ and more specifically to ‘Support building owners to take action to ensure safety of residents in existing high-rise residential buildings’.

The SSCRF launched in 2018 and covers the costs of removing and replacing unsafe ACM cladding on social sector residential buildings. The fund is available for social housing buildings 18 metres and over in height owned by housing associations and local authorities. The fund has an indicative budget of £400 million.

The PSCRF launched in 2019 and covers the costs of removing and replacing unsafe ACM cladding on private sector residential buildings. The fund is available for private residential buildings 18 metres and over in height with at least one residential leasehold unit. The fund has an indicative budget of £200 million. Funding is provided to the entities who are responsible for the safety of the building, but is for the benefit of leaseholders who own individual units within the building.

The Accounting Officer carried out an assessment of the programmes at the time of launch and concluded that the PSCRF programme did not meet the normal tests of Value for Money and a ministerial direction was required. This was received and published on gov.uk in May 2019.

This memorandum is being published now to bring the format of the published assessment into line with other GMPP programmes.

2. Assessment against the Accounting Officer standards

a. Regularity

The funds do not require any new legislation. Grant funding is provided under s.1(1) Infrastructure (Financial Assistance) Act 2012. As per the legislation, HMT consent is sought prior to making capital payments. The DLUHC awards are in line with the available budget and HMT approval was obtained prior to launching these schemes. The department has carefully considered fund design to ensure compliance with all relevant legislation, including subsidy control.

The department has received the authority to spend against the indicative budgets through HMT approved business cases. The amount of funding approved under the PSCRF is forecast to exceed the agreed budget of £200 million, and this is expected to be managed within the wider remediation portfolio budgets.

My assessment is that the regularity test is satisfied.

b. Propriety

Distribution of the funds meet the standards governing the use of public funds. Funding is allocated according to published funding guidance. 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

For the SSCRF, the department assessed that this fund met the Value for Money test because without government funding, the necessary remediation work would otherwise have crowded out housebuilding and/or other planned maintenance by social sector providers. The department is of the view that this assessment remains correct.

For the PSCRF, the department assessed that this fund did not meet the Value for Money test. This was because the fund involves a transfer of resources from the general taxpayer to private individuals and companies. The analysis the department has done, in line with the Green Book, shows that the public benefits of the scheme do not outweigh the costs of this transfer. Noting this, the then Secretary of State provided a direction to the department to launch the fund in May 2019 because of the importance of ensuring that these essential safety works happened at pace. The department is of the view that this assessment remains correct. The department has taken steps to ensure cost effectiveness in the development of the scheme, including most recently agreeing with leading housebuilders that they will meet the costs of all life-critical fire safety works on buildings they developed over 11 metres in height.

My assessment is that the value for money test is satisfied for the SSCRF. My assessment is that the value for money test is not satisfied for the PSCRF, but the department has taken appropriate action to maximise cost effectiveness following ministers’ direction to establish the fund.

d. Feasibility

The ACM High Rise Residential Building Remediation Programme sits on the government Major Projects Portfolio (GMPP) and operates as a major programme in line with best practice standards outlined by the Infrastructure Projects Authority (IPA) and their gateway processes. The deliverability and feasibility of these funds is formally assessed and delivery risks are being managed through internal measures. As of 31 July 2022, supported by grant funding and other work by the department, 95% of high-rise residential buildings with unsafe ACM cladding had either started or completed work to replace unsafe cladding.

My assessment is that the feasibility test is satisfied.

3. 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.

Jeremy Pocklington, Accounting officer

23 September 2022