THE GRENFELL TOWER FIRE

Extract A:
The number of high-rise* buildings with
dangerous cladding which have not started,
started and completed repair work to resolve
potentially lethal cladding
A breakdown of the population of the Royal
Borough of Kensington and Chelsea,
compared with Grenfell Tower’s local
neighbourhood

Source: Building Safety Programme, 31 May 2019 Source: Supporting health & wellbeing for the
*High-rise is defined as being a block of flats in excess communities impacted by the Grenfell Tower fire
of 10 floors disaster, JSNA, July 2018

Extract B:      Grenfell Tower Fire: What, how and could it have been avoided?
 
On the night of the 14th June 2017, a fire erupted within the London Borough of Kensington and 1
Chelsea. The 24-storey Grenfell Tower block of flats had caught ablaze and 72 had died in the  
immediate fire, with two later dying in hospital. It marks the worst UK residential fire since World  
War II.  

The Grenfell Tower Inquiry began on 14th September 2017, which the government commissioned 5
to find the root cause of how the fire and other related and ancillary issues. The findings from the
first report in October 2019 addressed the events of the night. It was reported that it started due to
a malfunctioning fridge-freezer that was located on the fourth floor, which spread rapidly to engulf  
the entire building. The reason for the rapid spread was due to the building’s cladding (material  
placed over a building to ensure it retains heat, particularly in colder months) and external  10
insulation. Whilst cheap and effective, it could be argued by some that cladding is a demerit good.

This then poses the question, could it have been avoided? As of June 2020, the fire is still being
investigated. One of the parties that would not immediately spring to mind that could be
responsible are the management of the building – the Kensington and Chelsea London Borough
Council. They have long been criticised for not taking effective action prior to the fateful night 15
when the Grenfell Tower fire occurred, and there were multiple complaints before about the safety
of such cladding. Additionally, despite being one of the most affluent councils in England,
Grenfell’s residents were ranked among the top 10% most deprived areas in England in 2015.

Whatever the enquiry or long terms solution concludes, one thing is certain. The fire has not only
caused unavoidable deaths, but caused a rift between government, builders, homeowners, 20
leaseholders and the entire general UK population. Many argue there is an element of both
government and market failure. Are there any ‘fair’ answers to all this?

Source: news reports, 2017-2021

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 Extract C:      Cladding crisis: Homeowners, government or builders?
 
Homeowners trapped in flats in high-rise building covered in cladding could soon be spared from 1
huge bills by an impending Government “reset”. But campaigners have warned the plans will fail  
to protect leaseholders from heft costs. Up until 2021, very little had been done for those that  
dwelled in housing below 18m. However, Levelling Up Secretary, Michael Gove, is expected to  
announce that flat owners in buildings 11 metres or higher will now pay nothing towards the repair 5
of unsafe cladding. Instead, the housebuilders and cladding companies will have to foot the repair  
bill, as it is viewed that their decision to cut costs by some has led to the cladding crisis we now  
face.  
 
It marks the end of a controversial scheme under which the Government would have covered the
costs for buildings above 18 metres in height, but owners in smaller buildings would have needed 10
to take out punitive loans to pay for works. Those long-term loans would have been unattractive to
potential buyers and dragged down property prices, as they would have been tied to the flat, not
the owner.

The change will spare tens of thousands more flat owners from crippling costs. Some 38,000
apartment blocks are estimated to be 11 to 18 metres high, although campaigners put the figure 15
at closer to 90,000. Savings will be significant. Leaseholders have faced average costs of
£40,000 each to rectify unsafe cladding, but bills can spiral in excess of £100,000.

Source: news reports, 2021-2022

Q1.
 
Define the term ‘market failure’ from The Grenfell Tower Fire, Extract B (line 21).

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[3 marks]

Q2.
 
Using The Grenfell Tower Fire, Extract A and given the population of the Royal Borough
of Kensington and Chelsea was 156,197 in 2017, calculate, to the nearest person, the
number of people living in deprivation within the Kensington and Chelsea Borough.

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[4 marks]

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Q3.
 
Use The Grenfell Tower Fire, Extract A to identify two significant points of comparison
between the number of high-rise buildings with dangerous cladding which have not
started, started and completed remediation work to resolve potentially lethal cladding

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Comparison 2 ___________________________________________________________

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[4 marks]

Q4.
 
The UK Housing Market, Extract C (lines 17 to 19) states ‘those long-term loans would
have been unattractive to potential buyers and dragged down property prices, as they
would have been tied to the flat, not the owner.’

Draw a diagram to show the effects of implementing this suggestion on the market for
cladding affected flats.

[4 marks]

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Q5.
 
The Grenfell Tower Fire, Extract B (line 11) states ‘whilst cheap and effective, it could
be argued by some that cladding is a demerit good’

Explain why cladding could be viewed by some to be a demerit good.

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[10 marks]

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Q6.
 
The Grenfell Tower Fire, Extract B (lines 20 and 21) states that ‘many argue there is an
element of both government and market failure. Are there any ‘fair’ answers to all this?’

Use the extracts and your knowledge of economics to evaluate the view that the
government should pay for the cladding crisis in the wake of the Grenfell Tower Fire.

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[25 marks]

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Page 8 of 14
 Mark Scheme

Q1.
 
Level of Response Max
response 3 marks

3 •     A full and precise definition is given. 3 marks

2 •     The substantive content of the definition is correct, 2 marks

but there may be some imprecision or inaccuracy.

1 •     Some fragmented points are made. 1 mark

Examples of acceptable definitions

•        Occurs when the production and/or use of goods and services by the market is not
efficient.
•        Occurs when the production and/or use of goods and services by the market is not
equitable (socially desirable).
•        When a market results in a misallocation of resources.

Full marks can also be awarded for an accurately labelled marginal cost and benefit
diagram, provided the candidate includes a commentary that shows that she/he
understands why the diagram shows market failure occurring.

Examples of 2 mark responses:

•        Providing a definition of a particular form or cause of market failure, e.g public good.
•        Defining a market failure in terms of a market achieving an unsatisfactory outcome.
•        Relevant diagram, without an accompanying commentary, illustrating market failure.

Examples of 1 mark responses:

•        Stating a ‘stand-alone’ example, e.g demerit good.

[3]

Q2.
 
Response Marks

For a correct answer: 34,363 or 34,364 4 marks

For the raw value, including decimal places. 3 marks

e.g: 156,197 x 0.22 = 34,363.34

For identifying and attempting to use the correct multiplier whilst 2 marks
using the population figure, but getting the wrong answer
e.g: 156,197/0.22 = 709,986.36

For identifying 22% or 0.22 (can be seen anywhere) 1 mark

[4]

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 Q3.
 
Award up to 2 marks for each significant point of comparison made
 
Response Marks

•     Identifies a significant point of comparison 2 marks

•     Makes accurate use of the data to support the
comparison identified
•     Units of measurement given accurately.

•     Identifies a significant point of comparison but only 1 mark

one piece of data is given when two are needed
and/or no unit of measurement is given and/or the
unit of measurement is inaccurate and/or the wrong
date is given.
OR
•     Identifies a significant feature of one data series with
accurate use of the data (including the unit of
measurement) but no comparison is made.

Significant points include:

•        Private residential high-rise blocks had the most amount of dangerous cladding, with
160 of them possessing dangerous cladding, compared to only 15 high-rise blocks
that were classed as public buildings.
•        Social housing high-rise blocks had the greatest amount of completed work to rectify
cladding, with 60 completed, compared to only 1 for both hotels and public buildings.
•        Public buildings had the lowest amount of cladding started, with only 1 building
started to rectify the cladding, compared to social housing which had 80* buildings
started to rectify the cladding.
•        The percentage complete as a total of the amount with dangerous cladding was
approximately 80% for private residential high-rise blocks, whereas it was only 13%
for social housing high-rise blocks.

In general, allow a margin of error of + or – 5 tower blocks. However, in some cases

(marked *) allow greater margin for error (+ or – 10), as this spans multiple intervals.

In conjunction with this, allow some flexibility when the candidate uses words such as:
‘about’, ‘around’, ‘approximately’. Additionally, if it is clear the candidate understands that
it is referring to number of buildings (affected by cladding), allow them the marks for the
use of correct unit of measurements.

Note: This is not an exhaustive list of possible responses, but a range of responses you
may encounter. Reward any others that are similar and coherent.
[4]

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 Q4.
 
The correct diagram involves a demand and supply diagram, illustrating an initial
equilibrium point, with demand shifting to the left, as shown below:

 
 
Response Marks
Accurately drawn D/S diagram showing a leftwards shift in 4 marks
D, new equilibrium price and quantity, e.g. P2Q2, with both
axes and all curves and coordinates correctly labelled
(arrows not needed).
Accurately drawn D/S diagram showing a leftwards shift in 3 marks
D with one label missing/incorrect (axis or curve).

OR

Accurately drawn D/S diagram showing a leftwards shift in

D with one coordinate missing/incorrect (P or Q).

Accurately drawn D/S diagram showing an initial 2 marks

equilibrium point and a leftwards shift in D with two labels
missing/incorrect.

OR

Accurately drawn D/S diagram showing an initial

equilibrium point and a leftwards shift in D but also a
leftwards shift in supply.

Accurately drawn D/S diagram showing an initial 1 mark

equilibrium point with both axes, both original curves and
both coordinates correctly labelled, e.g: P1Q1.

OR

Accurately drawn D/S diagram showing an initial

equilibrium point and a leftwards shift in D but also a
leftwards shift in supply with one or two labels
missing/incorrect.

For axes labels; Horizontal: Quantity or Q (QD or QS or output are not acceptable)
Vertical: Price, P, £ or some monetary symbol. Price level is not acceptable.
[4]

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Q5.
 
Level of Response Marks
response 10 marks

3 •     Is well organised and develops one or more of the 8 – 10

key issues that are relevant to the question marks
•     Shows sound knowledge and understanding of
relevant economic terminology, concepts and
principles
•     Includes good application of relevant economic
principles and/or good use of data to support the
response
•     Includes well-focused analysis with a clear, logical
chain of reasoning
•     May include a relevant diagram to support their
explanation.
2 •     Includes one or more issues that are relevant to 4–7
the question marks
•     Shows reasonable knowledge and understanding
of economic terminology, concepts and principles
but some weaknesses may be present
•     Includes reasonable application of relevant
economic principles and/or data to the question
•     Includes some reasonable analysis but it might not
be adequately developed and may be confused in
places
•     May include a relevant diagram to support their
explanation.
1 •     Is very brief and/or lacks coherence 1–3
•     Shows some limited knowledge and understanding marks
of economic terminology, concepts and principles
but some errors are likely
•     Demonstrates very limited ability to apply relevant
economic principles and/or data to the question
•     May include some very limited analysis but the
analysis lacks focus and/or becomes confused
•     May include a diagram but the diagram is likely to
be inaccurate in some respects or is inappropriate.

Relevant issues include

•        The main characteristics of a demerit good.
•        Why cladding could be over-consumed (primarily, it is “cheap and effective”).
•        How the cost of cladding would not necessarily account for third parties.
•        How insurance premiums for high-rise blocks will increase as a result of the Grenfell
Tower Fire.
•        How it could lead to mental health issues with residents of high-rise blocks, and the
NHS pressures as a result (regardless of whether they believe they have cladding or
not).
•        Analysis of residents and the surrounding community being affected by cladding, or
the general image of the Royal Borough of Kensington and Chelsea as a result of
the Grenfell Tower Fire.
•        The difficulty to now get loans or mortgages for prospective buyers or residents of
high-rise blocks (regardless of whether they believe they have cladding or not).
•        Any other relevant issues not mentioned above that analyse as to why cladding
could be viewed as a demerit good.

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 [10]

Q6.
 
Areas for discussion include:
•        The importance of all stakeholders in their role within the Grenfell Tower Fire
•        Market failure in the context of cladding (the cost of cladding not considering the
effect on third parties)
•        Government failure in the context of cladding (failure to act)
•        Government taking responsibility, as there has been very little action since the fire in
2017 for those that were in residencies less than 18m tall, allowed the use of the
dangerous cladding through regulation and legislation
•        Residents taking responsibility, as they bought the flats, or were housed in them and
did not complain vocally enough about their dangers, bought inferior or faulty
electrical appliances that start fires
•        Manufacturers of electrical goods taking responsibility, as it was the catalyst for the
fire in the first place that has triggered the cladding crisis
•        The housebuilders/cladding installation company taking responsibility, as they were
the ones that installed and used the cladding across affected buildings and sort a
low cost solution to insulation of high-rise blocks.
•        The Royal Borough of Kensington and Chelsea taking responsibility, as they housed
their poorest residents in Grenfell Tower (note: somewhat limited argument, as the
question is referring to the entire cladding crisis, as opposed to just Grenfell)
•        Government intervention vs. free market solution.
•        More effective regulation to prevent a similar crisis from happening again.
•        Costs and benefits of different parties getting involved and weighing up their ability
for change to occur.
•        Short-run and long-run consequences of cladding being introduced or phased out
•        Equality arguments; some parties clearly more affected by this more than others
•        Imperfect knowledge of cladding in general (e.g: the beauty of hindsight)
•        The law of unintended consequences.
•        The significance of the data in the extracts.

The use of relevant diagrams to support the analysis should be considered when
assessing the quality of the candidate’s response to the question.
 
Level of Response Marks
response 25 marks

5 Sound, focused analysis and well-supported 21 – 25

evaluation that: marks
•     is well organised, showing sound knowledge and
understanding of economic terminology, concepts
and principles with few, if any, errors
•     includes good application of relevant economic
principles to the given context and, where
appropriate, good use of data to support the
response
•     includes well-focused analysis with clear, logical
chains of reasoning
•     includes supported evaluation throughout the
response and in a final conclusion.
4 Sound, focused analysis and some supported 16 – 20
evaluation that: marks
•     is well organised, showing sound knowledge and

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 understanding of economic terminology, concepts
and principles with few, if any, errors
•     includes some good application of relevant
economic principles to the given context and,
where appropriate, some good use of data to
support the response
•     includes some well-focused analysis with clear,
logical chains of reasoning
•     includes some reasonable, supported evaluation.
3 Some reasonable analysis but generally 11 – 15
unsupported evaluation that: marks
•     focuses on issues that are relevant to the question,
showing satisfactory knowledge and understanding
of economic terminology, concepts and principles
but some weaknesses may be present
•     includes reasonable application of relevant
economic principles to the given context and,
where appropriate, some use of data to support
the response
•     includes some reasonable analysis but which
might not be adequately developed or becomes
confused in places
•     includes fairly superficial evaluation; there is likely
to be some attempt to make relevant judgments
but these are not well-supported by arguments
and/or data.
2 A fairly weak response with some understanding 6 – 10
that: marks
•     includes some limited knowledge and
understanding of economic terminology, concepts
and principles but some errors are likely
•     includes some limited, application of relevant
economic principles to the given context and/or
data to the question
•     includes some limited analysis but it may lack
focus and/or become confused
•     includes attempted evaluation which is weak and
unsupported.
1 A very weak response that: 1–5
•     includes little relevant knowledge and marks
understanding of economic terminology, concepts
and principles
•     includes application to the given context which, at
best, is very weak
•     includes attempted analysis which is weak and
unsupported.
[25]

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