Gove attacks ‘cartel’ of big property developers

Michael Gove has opened up a new front in his war with Britain’s biggest housebuilders after describing them as a “cartel” in comments to Conservative activists.

The Housing Secretary told the Conservative Environment Network last week that he had become unpopular with developers because of his stance on building safety.

He said: “I’m not a poster boy [for developers]… I’m not particularly popular with developers at the moment because of some of the steps we’ve taken in respect of building safety and some of the other changes we want to make as well.

“There are 101 changes we want to make, that we’ve essentially got a cartel of volume housebuilders who operate in a particular way, and there are all sorts of unhappy consequences.

“As I mentioned, all of their incentives are essentially to swallow up virgin greenfields, rather than to think hard about regeneration. All of their incentives are to leave it to someone else to worry about environmental externalities of any kind, rather than to include them in the way in which they think about development. “

The comments are particularly inflammatory because they suggest Mr Gove believes the industry is engaging in uncompetitive practices.

Acting as a cartel – where companies collude to artificially maintain high prices for their customers – is illegal in Britain and punishable with a fine of up to 10pc of worldwide turnover. There is no evidence that house builders are engaging in cartel-like behavior.

The industry reacted with fury to the comments, with one chief executive describing Mr Gove’s words as “baffling”.

They said: “He seems to be suggesting some of Britain’s biggest companies are akin to a criminal organization.”

Tensions between developers and Mr Gove are already running high over his separate demand that they pay to remove flammable cladding from thousands of flats.

Officials in his department have told housebuilders that planning permission may be retrospectively removed from developers if an agreement is not signed by March.

Industry sources warned that the move could stall building sites and cause firms to collapse, describing it as an attempt to strong-arm developers into accepting Mr Gove’s terms.

Discussions have reached an impasse after a counter-offer by housebuilders to solve the crisis was rebuffed.

Developers had suggested they could cover cladding costs at their own sites with no additional targeted taxation measures other than the Residential Property Developer Tax, which is set to be active from April.

The Government and developers have extended the deadline for talks but disputes over data and culpability remain.

The House Builders Federation trade body 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 fix the problem in medium-rise blocks.

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