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Michael Gove, the levelling up secretary, is closing in on a multibillion pound deal with Britain’s biggest housebuilders to help resolve the national cladding crisis exposed by the 2017 Grenfell Tower disaster.

Sky News has learnt that major companies including Barratt Developments and Persimmon are preparing for the imminent signing of a legally binding contract with the government that could ultimately cost the industry £5bn or more.

One executive said they expected the final contract to be signed and unveiled as soon as next week, although they cautioned that the timing remained fluid.

Last year, dozens of developers signed a pledge to fix buildings constructed since the early 1990s, with revisions to the deal with government in recent weeks having focused on the scope of companies’ exposure.

The City watchdog is thought to have been involved in discussions with the industry about whether signing the contract would require the approval of shareholders in listed companies such as Barratt, Persimmon and Taylor Wimpey.

Sources have estimated the cost of the new Residential Property Developers Tax at up to £3bn and the bill for self-remediation at around £2bn.

A further tax on the industry could raise £3bn, industry executives have concluded, leading some companies and investors to warn that the sector risks seeing a flight of capital.

More on Grenfell Tower

Earlier this month, the Department for Levelling Up, Housing and Communities said it was “finalising the legally binding contracts that developers will sign to fix their unsafe buildings, and expect them to do so very soon.

“We will not accept any backsliding on their commitments.

“It is building owners’ legal responsibility to make sure that all buildings are safe.”

Albert House, Woolwich, London, which has cladding that since the Grenfell disaster has been deemed un-safe
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Many buildings across the UK have been deemed to have unsafe cladding since the Grenfell Tower disaster in 2017

FTSE-100 housebuilders have already taken significant financial provisions in their accounts to prepare for the signing of the final government contract.

Some have flagged during recent earnings calls with analysts that they expected an imminent settlement.

“In signing the pledge, we’re saying that we essentially had a commitment that we wanted to sign up to the legal agreement,” David Thomas, Barratt’s chief executive, told analysts this month.

” There’s been a process of discussion regarding the legal agreement that has been ongoing since June last year, so we think we’re getting close to the government publishing the legal agreement, and we would expect in due course that we would sign up to that.”

Read more:
Grenfell inquiry finds shoddy workmanship and unsafe cladding

Homebuilders pledge to pay £5bn towards fire safety costs

Hanan says she still thinks of the tower as home
Image:
The cladding on Grenfell Tower was found to have caused the fire to spread so quickly

A spokesman for the Home Builders Federation (HBF) said: “The pledge [signed last year] demonstrated the industry’s commitment to play its part in ensuring leaseholders don’t pay for work needed to make buildings safe.

“We have been working constructively with government to ensure the detailed contract reflects the commitments of the pledge and we await a final version.

“UK housebuilders are taking responsibility and are well progressed with remediating their own buildings and are already paying another £3bn to fund work on buildings built by foreign companies and others.

“Government now needs to deliver on commitments to secure contributions from foreign builders and the material providers at the heart of this issue and avoid targeting UK housebuilders further for buildings built by others”.

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Shrinkflation: It’s not your imagination, these products are getting smaller

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Shrinkflation: It's not your imagination, these products are getting smaller

KitKats, Gaviscon, toothpaste, and even Freddo have all fallen victim to shrinkflation, consumer group Which? has found.

As families struggle with the cost of a trip to the supermarket, a survey of shoppers revealed how many products are getting smaller – while others are being downgraded with cheaper ingredients.

Among the examples are:

• Aquafresh complete care original toothpaste – from £1.30 for 100ml to £2 for 75ml at Tesco, Sainsbury’s and Ocado

• Gaviscon heartburn and indigestion liquid – from £14 for 600ml to £14 for 500ml at Sainsbury’s

• Sainsbury’s Scottish oats – from £1.25 for 1kg to £2.10 for 500g

• KitKat two-finger multipacks – from £3.60 for 21 bars to £5.50 for 18 bars at Ocado

• Quality Street tubs – from £6 for 600g to £7 for 550g at Morrisons

• Freddo multipacks – from £1.40 for five bars to £1.40 for four bars at Morrisons, Ocado and Tesco

Which? also received reports of popular treats missing key ingredients, as manufacturers seek to cut costs.

The amount of cocoa butter in white KitKats has fallen below 20%, meaning they can no longer actually be sold as white chocolate.

It comes after Penguin and Club bars lost their legal status as a chocolate biscuit, as they now contain more palm oil and shea oil than cocoa – as reported in the Sky News Money blog.

Which? retail editor Reena Sewraz called on supermarkets to be “more upfront” about price changes to help households “already under immense financial pressure” get better value.

While keeping track of the size and weight of products can be tricky, Which? has two top tips for detecting shrinkflation.

The first is to be wary of familiar products labelled as “new” – because the only thing that’s new may end up being the smaller size.

Meanwhile, the second is to pay attention to how much an item costs per 100g or 100ml, as this can be an easy way of finding out when prices change.

What have the companies said?

A spokeswoman for Mondelez International, which makes Cadbury products, said any change to product sizes are a “last resort”, but it’s facing “significantly higher input costs across our supply chain” – including for energy.

A Nestle spokesman said it was seeing “significant increases in the cost of coffee”, and some “adjustments” were occasionally needed “to maintain the same high quality and delicious taste that consumers know and love”.

“Retail pricing is always at the discretion of individual retailers,” they added.

A spokesman for the Food and Drink Federation also pointed to government policy, notably national insurance increases for employers and a new packaging tax.

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Is inflation reaching its peak?

Fresh food prices on the rise

The Which? report comes as latest figures showed fresh food costs 4.3% more than it did a year ago.

The increase in October, reported by the British Retail Consortium (BRC) and market researchers NIQ, was up on the 4.1% year-on-year rise in September.

Overall food inflation was down slightly, though, to 3.7% from last month’s 4.2%.

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There has also been a slowdown in overall shop price inflation, which the BRC said was down to “fierce competition among retailers” ahead of Black Friday sales.

The annual shopping extravaganza will this year arrive in the same week as the chancellor’s budget, which is set for Wednesday 26 November.

BRC chief executive Helen Dickinson called on Rachel Reeves to help “relieve some pressures” keeping prices high, with the national insurance rise in last year’s budget having “directly contributed to rising inflation”.

“Adding further taxes on retail businesses would inevitably keep inflation higher for longer,” Ms Dickinson warned.

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Petrofac administration not a great start to the week for Ed Miliband though relief could come

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Petrofac administration not a great start to the week for Ed Miliband though relief could come

It’s not the start to the week that Ed Miliband, the energy secretary, would have been hoping for: more than 2,000 private sector jobs in Scotland at risk from the collapse of Petrofac, the London-listed oilfield services group.

Its slide into insolvency was triggered by last week’s cancellation of a major contract by its biggest customer, but the failure of a company once valued at more than £6bn has been a long time coming.

Money blog: ‘We protect UK from attack, our salaries can be limitless’

Administrators at Teneo will now attempt to salvage what they can from Petrofac’s wreckage.

“The group’s operations will continue to trade, and options for alternative Restructuring and [sale] solutions are being actively explored with its key creditors,” Petrofac said on Monday morning.

“When appointed, administrators will work alongside Executive Management to preserve value, operational capability and ongoing delivery across the Group’s operating and trading entities.”

For thousands of employees, the future is now uncertain, although people close to the company say they are hopeful that a buyer can be found swiftly for its North Sea operations, with one suggesting that it could even happen in the coming days.

That would be a relief to Mr Miliband, whose energy policy has come under growing scrutiny in recent months amid dire warnings about the future of Britain’s offshore oil industry.

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More than 2,000 jobs at risk as oil and gas company enters administration

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More than 2,000 jobs at risk as oil and gas company enters administration

More than 2,000 Scotland-based jobs are at risk as oil and energy services group Petrofac has applied for administration.

The group’s operations will continue to trade, and options for restructuring of the company and a possible merger or acquisition are being actively explored with its key creditors, the company said on Monday.

People close to the company say they are hopeful a buyer can be found swiftly for its North Sea operations, with one suggesting that it could even happen in the coming days.

Money blog: ‘We protect the UK, our salaries can be limitless’

Administrators will work alongside company management to “preserve value, operational capability and ongoing delivery”, its announcement read.

News of a possible insolvency announcement was first reported by Sky News.

Energy Secretary Ed Miliband and other ministers have been briefed on the situation.

More on Fossil Fuels

Not a great start to the week for Ed Miliband, though relief could come

It’s not the start to the week that Ed Miliband, the energy secretary, would have been hoping for: more than 2,000 private sector jobs in Scotland at risk from the collapse of Petrofac, the London-listed oilfield services group.

Its slide into insolvency was triggered by last week’s cancellation of a major contract by its biggest customer, but the failure of a company once valued at more than £6bn has been a long time coming.

Administrators at Teneo will now attempt to salvage what they can from Petrofac’s wreckage.

For thousands of employees, the future is now uncertain, although people close to the company say they are hopeful that a buyer can be found swiftly for its North Sea operations, with one suggesting that it could even happen in the coming days.

That would be a relief to Mr Miliband, whose energy policy has come under growing scrutiny in recent months amid dire warnings about the future of Britain’s offshore oil industry.

An advisory firm, Kroll, had been engaged by the Department for Energy Security and Net Zero to work with ministers and officials on the unfolding crisis for the company.

What is Petrofac?

Petrofac employs about 7,300 people globally, according to a recent stock exchange filing.

It designs, constructs and operates offshore equipment for energy companies.

The company has been valued at more than £6bn but has been struggling with debt.

It also faced a Serious Fraud Office investigation, which resulted in a 2021 conviction for failing to prevent bribery, and the payment of millions of pounds in penalties.

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Ed Miliband ‘welcomes’ challenge from Jeremy Clarkson for seat in parliament

Founded in 1981 in Texas, the business has been in talks about a far-reaching financial restructuring for more than a year.

A formal restructuring plan was sanctioned by the High Court in May this year with the aim of writing off much of its debt and injecting new cash into the business.

This was subsequently overturned, prompting talks with creditors about a revised agreement.

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