Michael Gove urges investors to pressure cladding companies over housing repair costs

Michael Gove, UK housing secretary, has urged big investors including BlackRock and Vanguard to pressure cladding makers to cover the costs of fixing unsafe buildings in the wake of the Grenfell Tower fire.

Shareholders in cladding companies Kingspan, Arconic and Saint-Gobain should use their “position of influence” to press the groups to “engage constructively in helping us reach a just resolution”, Gove wrote in letters to investors in the three groups.

The move is part of a wider push by the government to pressure the private sector to pay the billions of pounds needed to fix building safety issues identified after the 2017 Grenfell fire, which killed 72 people.

“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,” said the housing secretary.

Kingspan said it had already offered to “contribute to an appropriate joint government and industry-wide scheme” and to pay for its share of fixing issues with unsafe cladding “where we are responsible”.

Arconic and Saint-Gobain did not immediately respond to requests for comment.

The government has already secured more than £2bn of commitments from 46 developers and housebuilders to resolve “life-critical fire-safety defects” on tall buildings the companies had a role in developing or refurbishing.

Developers of new buildings will also be asked to contribute £3bn over 10 years to fund works through the building safety levy.

Some UK housebuilders have complained that ministers have unfairly targeted them while neglecting overseas developers and cladding firms.

The Department for Levelling Up, Housing and Communities said the three cladding companies, which it said in total had manufactured most of the cladding on Grenfell Tower, “have not contributed a penny to the cost of fixing buildings in the UK that their products have made unsafe”. 

The department said the evidence presented to the official inquiry into Grenfell revealed “shocking behaviour” by the three companies.

The evidence included “apparent mis-selling of construction products” and “misappropriating safety test results thereby perpetuating the sale of high-risk products on the market”. The inquiry is expected to present a final report later this year.

Asset managers Fidelity Management and Research and Norway’s $1.3tn oil fund are among the investors in the cladding companies who received letters, the department said.

BlackRock and Vanguard are among the top 10 shareholders in the three cladding companies, according to Bloomberg data. The US asset managers have large stakes in many public companies because they run large investment businesses that passively track.

Gove warned the shareholders of damage to their reputation and value of their investments should he have to use “legal and commercial tools” to force the cladding companies’ hand.

BlackRock, Vanguard and Norges Bank did not immediately respond to requests for comment. Fidelity declined to comment.