Developers that are refusing to contribute to the fund set up to fix dangerous cladding will be warned this week they could be blocked from selling new homes. The levelling up secretary, Michael Gove, will explicitly threaten retaliation, citing powers in the building safety bill that would stop uncooperative developers getting planning permission. It is understood that Galliard Homes will be one of the major developers singled out as a potential target for the punitive measures, although other companies are also expected to be named by Gove. Earlier this month Gove, who was tasked by No 10 with addressing the cladding scandal – which has involved thousands of leaseholders facing crippling bills for the removal of dangerous cladding – signed an agreement with 35 developers, which collectively agreed to contribute £2bn towards fixing buildings they had a role in constructing. But some developers did not sign up to this supposedly voluntary agreement, and Gove will this week ratchet up the pressure by reminding them that if they continue to refuse, they risk harsh sanctions under legislation about to become law. The building safety bill was introduced to create a new regulatory framework for building safety after the Grenfell Tower fire. But as it was going through its final stages in the House of Lords Gove introduced amendments that would give him the power to stop firms that have failed to sign his cladding pledge from selling homes. Under the bill, which is back in the Commons this week and expected to become law very soon, these firms could be blocked from obtaining planning permission, or prevented from getting building control signoff. Ministers believe that even the threat of these sanctions could be enough to deter investors. According to an internal document about the strategy seen by the Sunday Times, officials are arguing that it would be “irresponsible” not to warn prospective consumers of the potential risks. Galliard is one of at least nine large developers that has yet to sign the Gove pledge. They are expected to be given just a few weeks more to comply. Galliard said at the weekend that it had acted quickly on cladding but that, before signing the pledge, it required “certainty” from the government and “a clear and succinct plan for developers, the government, the supply chain and insurers to all work together to find an equitable solution”. Under the Gove plan, in addition to the £2bn from developers to fix their own buildings, the industry will commit a further £3bn for the removal of unsafe cladding though an expansion of the building safety levy, a charge on new residential buildings. In a separate development, it has emerged that Gove is expected to include legislation in the Queen’s speech proposing to change the way developers are expected to fund affordable housing. Under the current system, local authorities can impose section 106 agreements (named after section 106 of the 1990 Planning Act) on developers telling them that, as a condition of getting permission, they must construct a certain number of affordable homes. Gove wants to abandon these arrangements and instead force developers to contribute to an infrastructure fund that could be used by councils. In a recent white paper, the Department for Levelling Up, Housing & Communities argued that a new approach was needed because the current system “enables some developers to benefit disproportionately and unfairly from the land they develop”.