Government threatened ‘severe consequences’ if cladding deal is not reached

Three cladding companies, whose poor practices were uncovered by the Grenfell Tower incident, have been issued a severe warning by the Housing Secretary if they fail to provide a comprehensive financial package to fix unsafe buildings.

Michael Gove has written to investors in Ireland’s Kingspan, US-based Arconic, and France’s Sanit-Gobain and urged them to use their ‘position of influence’ to reach a ‘just resolution for all concerned’.

Investors who were sent letters include US funds Blackrock, Vanguard and Fidelity Management and Research, as well as Norges Bank, the central bank of Norway.

The government states the three construction firms were responsible for manufacturing the majority of cladding used in the Grenfell tragedy – a tragic event which killed 72 people in 2017 -but so far have not contributed to fixing other unsafe UK buildings their products are used in.

In 2017, a high-rise fire broke out in the 24-storey Grenfell Tower block of flats in West London. The fire was started by an electrical fault discovered in a refrigerator on the fourth floor, but due to the materials the building was constructed with, it didn’t take long for the fire to spread, destroying the entire establishment.

Following this, Michael Gove has warned if the construction firms fail to produce a settlement, the government’s focus ‘will be trained upon them’ and ‘the consequences for that firm are likely to be severe.’

Mr Gove also added that there are likely to be consequences for shareholders’ reputations, and their financial stakes, if he is forced to use ‘the legal and commercial tools available’ to ensure the position of the cladding companies ‘becomes extremely uncomfortable.’

In a statement issued last week, Mr Gove said: ‘I have always been clear that those responsible for the building safety crisis must pay.

‘But despite the fact that their products continue to put lives at risk, some cladding firms have no intention of doing what’s right and addressing their moral and financial obligations to innocent residents.

‘Today we ask responsible investors to use their influence to encourage these companies to come forward immediately with a comprehensive financial package for remediation work.

‘To those cladding companies who fail to do the right thing: you will face severe consequences and I will use all commercial and legal tools available to me to ensure you take responsibility.’

Against this backdrop, Kingspan had publicly said they would be willing to pay for remediation costs where its products had been use inappropriately, but has not yet agreed to a financial package.

Additionally, 46 firms have agreed to the government’s Developer Remediation Contract, which sets up a £2bn fund to fix fire-safety defects in English buildings over 11 metres they had a role in developing or refurbishing.

The Department for Levelling Up, Housing and Communities has also published an independent review which examines the current testing regime for construction products, which has prompted them to ‘carefully consider’ findings and set out proposals for reforms in due course.

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