The powerful Public Accounts Committee sounded the alarm today in a critical report on the Government’s response to the Grenfell disaster.

The committee said present Government policies were creating a crisis that threatened a “chilling effect” on house building overall, with social housing providers forced to divert resources to remediation rather than badly needed new homes.

It also highlighted concern that eight years on from Grenfell, the Government still does not know how many buildings have dangerous cladding, how much it will cost to address, or how long it will take.

Watchdog MPs said there was mounting concern among house builders that the Building Safety Levy could hit build rates further with developers seeking to cut affordable home allocations or even halt more marginal schemes.

Housing, Communities and Local Government ministers have yet to set the saftey levy rate but rumours suggest it could be as high as £5,000 a unit, a developer told the Enquirer.

The report warns in London alone there was a 90% drop in social housing starts over the last year. The lack of funds for new build is also causing problems for developers who are struggling to find registered landlords to take up affordable housing provision in schemes.

The PAC report states: “In its written evidence to us, the Home Builders Federation said in the absence of detailed levy rates, which it did not expect to be published until later in 2025, it anticipated that there would be an impact on the supply of new homes, especially affordable housing and especially in the south east of England.

“The HBF also told us that it was concerned that many smaller developers will go out of business as a result of the financial burden being placed on the home building industry.

“Government is not taking seriously enough the risk that paying for remediation diverts social housing providers’ resources away from building new housing.”

The MHCLG had not published an impact assessment of Government policies on the viability of house building, claiming both that it expected the impact to be small and that was is likely to be affected by too many other factors.

The PAC has now called on Ministers to publish before the end of 2025 a formal assessment of the impact of its remediation policies – including the Building Safety Levy – on house building projections in both the social and private sectors and what action is needed to ensure the building of 1.5 million homes is not affected by these policies.