Michael Gove has threatened a UK trading ban on manufacturers of combustible cladding and insulation unless they pay to fix dangerous housing. Opening a new front in the government’s attempt to force the construction industry to fix billions of pounds’ worth of fire safety defects, the secretary of state for levelling up, housing and communities has given the companies a March deadline to agree a settlement. In a letter to the industry, Gove highlighted more than £700m in profits made over the last four years by the three firms most closely associated with the Grenfell disaster – likely to mean Arconic, Celotex and Kingspan, which made the combustible cladding panels and insulation foam on Grenfell Tower, where a fire in June 2017 killed 72 people. He described as “extremely alarming” evidence revealed by the Grenfell Tower public inquiry about how firms manufactured, tested and marketed their combustible materials. Gove told the Construction Products Association in a letter: “The total contribution from the cladding and insulation sector must represent a significant portion of the total remediation costs, caused by the dangerous products sold by some of your members. “I am offering a window of opportunity, between now and March, for the sector to work with my department through open and transparent negotiations to agree a settlement that will restore confidence and secure an appropriate contribution from the sector.” If they failed to pay up, he said, he would consider “using our regulatory framework to limit any culpable company from operating and selling products in this country in the future”. He added: “I will pursue those individuals and firms liable for building defects who are unwilling to do the right thing now. There is no future for those companies and directors who are not fully committed to upholding the safety of residents and fixing past wrongs.” The inquiry has heard that a senior executive at Arconic, which made Grenfell’s combustible polyethylene-filled (PE) cladding panels, warned colleagues in 2016: “We really need to stop proposing PE in architecture! We are in the ‘know’.” When Kingspan, which made some of the combustible insulation, tested its foam insulation in 2007, the rig became “a raging inferno”. Celotex, which made most of the insulation, knew in 2013 that “in the event of a fire [its insulation] would burn”, the inquiry heard. The government has said removing dangerous cladding could cost more than £9bn. This month Gove promised in parliament that the government would give leaseholders statutory protection that extends to all works required to make buildings safe. Gove’s move came after he met housebuilders last week to demand they also pay up. He was met with a counter-demand that the government also target materials companies. Leaseholders affected by the cladding crisis welcomed the latest steps. UK Cladding Action Group, which represents thousands of people whose homes have been rendered worthless and are facing bills as high as £200,000 a household, said: “These firms have deep pockets and will fight tooth and nail to remain unaccountable for their failings. We support the minister as he works to protect innocent leaseholders from the failings of others.” Arconic declined to comment. It has previously said the principal cause of the Grenfell tragedy was “failure by those responsible for the refurbishment of the tower”. Kingspan and Celotex have been contacted for comment. Kingspan has previously said it “welcomes the plans for industry dialogue and the helpful clarity that should bring for all stakeholders”. Celotex has previously admitted to “unacceptable conduct on the part of a number of former employees”.