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Under a scheme expected to be announced by Housing Secretary Michael Gove this week, leaseholders in low-rise buildings will no longer have to take out loans to pay for remedial work. Instead developers are expected to come under pressure to cover costs of up to £4billion.

Mr Gove is expected to tell the Commons that if developers choose not to pay for cladding removal voluntarily then the Government will threaten them with legal compulsion.

The Government had committed up to £5billion for the removal of dangerous cladding on buildings taller than 60.5ft.

Under measures introduced in England following the Grenfell Tower fire, which killed 72 people in 2017, grants are currently only available to leaseholders in those buildings. Leaseholders living in blocks between 36 to 60.5ft have to pay for cladding removal themselves.

The apparent climbdown was revealed in a leaked Treasury letter sent to Mr Gove that said loans for smaller buildings would be replaced by a “limited grant scheme” and the taxpayer would not foot the bill.

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Cladding campaigners have long asked the Government to accept that buildings under 60.5ft ought to be covered and that leaseholders should not have to pay.

Senior Tory MP Sir Peter Bottomley, who co-chairs the All-Party Parliamentary Group on Leasehold and Commonhold Reform, yesterday said: “From what we’re hearing, progress is being made though it’s not enough.”

He added that “we need to get the money, spend it properly, and we need to overcome the hurdle” of indemnity funding so landlords can make claims from developers and manufacturers.

He said the Government must tell insurance companies to “come to the table with, say, £8billion and then innocent leaseholders will live in homes which are safe and saleable”.

Labour’s shadow housing minister Matthew Pennycook said: “Any new measures that help resolve the building safety crisis are welcome but, on the face of it, these appear far less significant than they sound.

“There’s nothing on non-cladding defects, no new developer levy and the position on leaseholder liability is unchanged.”

A spokesman for the End Our Cladding Scandal campaign was disappointed that the new measures do not “extend to non-cladding” costs.

He said: “It’s a welcome step in the right direction but there’s still a long road to travel.”

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