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Mon April 12 2021

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Bellway says skills shortage is slowing cladding replacement

24 Mar National house-builder Bellway has increased the money set aside to fix post-Grenfell cladding and fire safety issues, but is struggling to get it spent.

Among the obstacles it is encountering are shortages of suitable skills and materials – described as “an enduring challenge”. 

Bellway has allocated an additional £20.3m in its latest half-year accounts to fixing legacy building safety issues, bringing the total amount provided since the Grenfell Tower fire in 2017 to £131.6m.

Some £91.6 million of this provision, relating to 24 developments, most of which are over 18 metres in height, remains unused at 31st January.

Chief executive Jason Honeyman explained why it was taking his company – and, by extension, others – so long to rectify problems – a combination of the regulatory background and supply chain issues.

“Initially, our review efforts were directed towards those buildings over 18 metres in height, where aluminium composite material had been used in the construction of the external wall envelope.  The scope of our review has since widened, following the Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings, issued by the Ministry of Housing, Communities & Local Government in January 2020,” he said.

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“We therefore now approach this issue, with the benefit of sector-wide hindsight and, by applying revised guidance which clarifies the government's interpretation of the extant building regulations that were in place at the time of construction.  Our reviews, which often include the results of investigative surveys, consider whole external wall systems to determine whether the combination of materials used adequately prevent external fire spread, thereby rendering the building safe.

“Differing regulatory frameworks result in ongoing changes with regards to the scope of potential remediation works.  In addition, obtaining a supply of suitable replacement materials, and appropriately skilled remediation experts, proves to be an enduring challenge.  As a result, while a prudent approach has been taken, there continues to be inevitable labour constraints and upward pressure on costs as we work with third parties to establish fully costed remediation solutions on the 24 developments.  We believe we have captured the vast majority of issues and all known liabilities are properly provided for.  The extent of the provision could increase, however, in line with normal accounting practice if new issues are identified, as building owners continue to undertake their own investigative works on other schemes within our legacy portfolio.  Bellway is actively pursuing recoveries from previous suppliers, subcontractors and professional advisors where they have fallen short of the standards required.”

Bellway reported 12% growth in revenues in its latest half-year revenues, with more promised.

For the six months to 31st January 2021, Bellway generated revenue of £1,720.5m (2020: £1,541.4m), making it a new record first-half for the builder. Pre-tax profit was down 4% to £280.2m (2020: £291.8m).

Taking advantage of reduced competition, Bellway has been investing heavily in land, with a record 8,848 plots contracted (2020: 7,005 plots) at a value of £452.8m (2020: £408.2m), positioning the business for future volume growth.

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