The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Noted, thank you
Looks to me like they have held a similar sized short position for the whole period.
The one they have has since April 2021 you mean, the size of which has not changed since then?
I think it is the first article/news reporting anything positive for the HB’s. I think the timing of the Grenfell enquiry and its findings highlight that government was highly complicit in this whole mess and make it much harder to demand a £4bn settlement. That said who knows what will happen. But it feels like the sides are a lot closer than they were 6 weeks ago. Sounds like a settlement with all sides coughing up something, but hopefully a lot less than £4bn from the HB’s.
The recent counter offer to Mr Gove was fronted by outgoing Taylor Wimpey executive Pete Redfern, who, alongside Persimmon’s Finch, is seen as willing to engage in further discussion. Despite its rejection, the offer was welcomed as constructive by civil servants involved.
While relationships between both sides are beginning to normalise, and seem more likely to reach an agreement in the future, there remains frustration from housebuilders over a lack of Government attention on other industries involved.
In a recent report, Clive Betts, the chair of the Levelling Up Select Committee, said: “The Government should be looking beyond developers and manufacturers to contribute to the costs of fixing the building safety crisis.
“We recommend the Government identify all relevant parties who played a role in this crisis, such as product suppliers, installers, contractors and subcontractors, and legally require them to pay towards fixing individual faults and ensure that they also contribute to collective funding for building safety remediation.”
The report was viewed as somewhat of a blow to the efforts of the Government, with multiple points arguing in favour of the developers. It encouraged Whitehall to focus on foreign developers, exert further pressure on product manufacturers and to accept some financial responsibility, given regulatory failings which led to the Grenfell disaster. It echoed major points large housebuilders have made publicly and privately since the beginning of the crisis.
As Michael Gove’s deadline approaches, few believe the target will be met - that may pile even more pressure on the Government to back down.
Developers are keen to impress that while Mr Gove has rejected their latest offer - cover only their own costs on the condition of "no further call on our members in respect of these issues” - the tone has markedly improved.
Still, their accountants and lawyers represent an organised opposition against perceived strong-arm tactics.
Whitehall language in early January argued that “polluters must pay”, referencing how all developers who caused cladding issues must rectify them. This, however, was quickly replaced with “those with the broadest shoulders should carry the biggest load”, as it became clear how hard it would be to chase foreign builders without any remaining footprint in the UK.
Developers responded with fury with one executive in January describing his approach as “Marxist”.
He added: “He didn’t threaten to kill my children, but everything else was on the table. You wouldn’t expect Shell to pick up the costs of a BP oil spill.
"We don’t have any problem at all with cleaning up our own mess, and we’re paying the additional tax on top of that, but this is yet another ask."
Housebuilders’ stance has remained relatively united throughout, with Persimmon being one of the only examples of a slight outsider among them. Still rebuilding its reputation following the coverage of Jeff Fairburn’s controversial £75m bonus, the developer has taken a softer stance towards Whitehall to limit any further damage.
“They’re already coming off the back of Fairburn and the reputational issues there, and they don’t have as much cladding exposure given they rarely build above 11m,” said an executive at a rival developer. “It’s quite clear they are in a different set of circumstances than Berkeley.” Berkeley builds almost exclusively above 11m developments and have higher exposure to remediation.
As negotiations continue, insiders say talks have become bogged down in disputes over details and data.
Very interesting article in the telegraph yesterday.
The blaze ripping through a London tower block last week forced Britons to reacquaint themselves with what has become a more familiar sight in recent years.
Crawford Building in Whitechapel was evacuated and more than 100 firefighters called out to the scene. While no deaths were recorded and the incident was not related to cladding, it sparked memories of the 2017 Grenfell Tower disaster - and concern over the urgency of safety upgrades made in its wake.
Liam Spender, an activist for the End Our Cladding Scandal campaign group, hopes that images of smoke billowing out of another high-rise will speed up current talks between developers and the Government.
“The longer this goes on the more people suffer with waking watch, increased insurance and being unable to sell their homes,” he says. “This is an issue that worsens with every passing hour. We must conclude this soon, so that people can move on with their lives.”
As the deadline of the end of March fast approaches, pressure is on for a solution to be reached on cladding remediation between developers and the housing secretary, Michael Gove. Sources say it could come as soon as next week.
Despite a cooling in hostilities between both sides, sticking points remain in negotiations that have been underway since late January.
A key issue is the estimated costs of the Government remediation plans, disputed by housebuilders.
The House Builders Federation last month hired PwC to conduct their own audit of housing with cladding issues across Britain, in response to Government claims of costs in excess of £4bn to remediate cladding on medium-rise blocks.
Sources involved say PwC’s final costs projections are likely to be lower than £1bn, with a tenth as many houses needing remediation compared to official estimates.
Lawyers from Linklaters have also been brought in by the House Builders Federation, to fight back against what developers view as attempts by Mr Gove to strong arm the sector into covering all remediation costs.
Persimmon has also taken legal advice from Lord Pannick QC, according to reports, following threats by Mr Gove to stop UK housebuilders from trading and to block planning permissions for any that had not done enough remediation work.
Dean Finch, boss of Persimmon, wrote to the Levelling Up department last month to express these concerns, saying that, in Lord Pannick’s view, the threats were illegal.
One negotiator on the housebuilding side says: “The Government’s data is rubbish - which is a big cause of the delay. Both the number of buildings impacted and the overall cost of the remediation is well above the number we expect to see having spoken with people in the industry”.
“Gove’s still saying [he needs] solutions by the end of March, and given the lack of specifics which have been worked through that’s a huge ask.”
Developers are keen to impress that while Mr Gove has rejected th
I think a resolution to the cladding issue is getting closer. HBF tabled a proposal last Friday, which although not accepted, was not completely rejected. Rather HBF told to go away and better the proposal. Also as a collective the shares were looking very beaten up so combined with this weeks updates has got the bigger players having a nibble. Only my two pence worth and probably completely wrong!
Its so watered down by the regional caps it doesn't make up a huge number of sales. It now is c10% for most of the big boys, expect for Persimmon perhaps, down from 40-50%. Regarding cladding I would expect all the big boys will end up making a contribution of between £1-2bn over an extended period ( larger the contribution longer the time period for paying it0. The Government will end up covering the rest in some way shape or form ( the treasury release says there will be no fresh cash so it will have to come from existing dept budget ). All parties want this resolved quickly and I suspect for the Government/Gove its about the political upside of being seen to be tough with the industry rather the money. Ultimately if he pushes too hard and asks for too much the HB’S will push back and fight the process and it will be the leaseholders who suffer as the work will be pushed back for years whilst they it goes to court. The counter to that is, for the HB’s, there is an amount which is worth paying to make the whole thing go away.
As with all things in life it will be a negotiation and come March as long as Gove has a decent sized contribution from the industry he will be able to spin it as a win and move on. I do think the share price will be hampered until there is a resolution and I could well be wrong but its in no ones interest for a long drawn out process.