UK cements business flakiness with builder U-turn

2 minute read

A bricklayer working for Taylor Wimpey builds a wall on an estate in Aylesbury, Britain, February 7, 2017. REUTERS/Eddie Keogh

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LONDON, Jan 10 (Reuters Breakingviews) - Britain’s 4 billion pound cladding fix should raise alarm bells for other industries. On Monday, the government said it would get housebuilders like Persimmon (PSN.L), Taylor Wimpey (TW.L) and Barratt Developments (BDEV.L) to pay for a larger share of the estimated 15 billion pound cost of removing flammable cladding on apartment blocks. The move, designed to prevent the repeat of a catastrophic fire in 2017, sent builders’ shares down as much as 6%.

The new plan should go down well with voters. Boris Johnson’s government last October said it would hit housebuilders for 2 billion pounds. It had already committed 5 billion pounds of taxpayer money to remove cladding, and homeowners were on the hook to pay the rest. Given the squeeze on living standards and rising energy bills, it’s easy to see why the prime minister may have decided to tap housebuilders for more. The risk, however, is that hitting the sector will hurt housebuilding, exacerbating the UK’s housing shortage. The speed of the U-turn, meanwhile, highlights Johnson’s government’s mercurial attitude towards the private sector. (By Aimee Donnellan)

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Editing by Neil Unmack and Oliver Taslic

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