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Gove warns cladding investors of ‘severe consequences’ if remediation deal not reached

  • 21/04/2023
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Gove warns cladding investors of ‘severe consequences’ if remediation deal not reached
Secretary of State for the Department for Levelling Up (DLUHC) Michael Gove (pictured) has written to investors Kingspan, Arconic, and Saint-Gobain to urge them to use their influence to encourage the firms to “engage constructively” so that a resolution could collaboratively be reached.

Shareholders who received letters include Blackrock, Vanguard, and Fidelity Management and Research, as well as investors like Norges Bank.

The letter warned that if the manufacturers do not come forward with a “comprehensive financial package” then the focus of the DLUHC would be placed upon them and the consequences would be severe.

This would include ramifications on shareholders’ reputations and their financial stake if the DLUHC is forced to use “legal and commercial tools available” to ensure cladding companies become “extremely uncomfortable”.

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. It cannot be right that cladding companies continue to profit whilst so many innocent, hardworking people face financial hardship and misery.”

He added: “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.”


No financial contributions from manufacturers

The DLUHC said that to date the three construction product manufacturers had not made any financial contributions to fixing buildings and evidence showed that they had sold flammable products that were inappropriate for end use, mis-selling of construction products though inaccurate manufacturing information and misappropriating safety test results so high-risk products continued to be sold.

Gove has also written to the bosses of the three companies last month calling for action, with Kingspan saying that it would be willing to pay remediation costs but not committing to any new remediation funding.

The DLUHC reiterated that there 46 signatories on the landmark developer remediation contracts, which mandates that buildings over 11 metres need to be remediated if they had a role in developing or refurbishing them.

The department’s recovery strategy unit has also ramped up litigation against irresponsible freeholders who do not remediate building they are responsible for.

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