The cladding used to insulate Grenfell Tower, widely blamed for spreading the devastating blaze, is banned in Britain, Philip Hammond has said.
The Chancellor said a criminal investigation would examine whether building regulations had been violated when the block underwent an extensive renovation that was concluded last year.
He insisted the Government had acted on safety recommendations after an earlier fire in London in 2009, but it would wait for the public inquiry’s findings before making any changes in regulation.
The Chancellor’s comments came as the political fallout from Britain’s most deadly peacetime disaster showed no sign of letting up.
John McDonnell, the shadow chancellor, criticised the Government’s response and a Labour MP, David Lammy, raised fears of a cover-up as he urged the Prime Minister and Metropolitan Police to immediately seize all relevant documents.
The building’s external cladding has come under intense scrutiny after the tragedy in which 58 people are presumed dead.
It gave Grenfell Tower, a 24-storey mid-1970s structure, a more modern look but many experts have said it played a tragic role in spreading the fire so quickly, allowing flames to race up the building and making it harder to contain them in the crucial first hour.
Mr Hammond, speaking on the BBC’s Andrew Marr Show, said: “My understanding is the cladding in question, this flammable cladding which is banned in Europe and the US, is also banned here.
“So there are two separate questions. One, are our regulations correct, do they permit the right kind of materials and ban the wrong kind of materials? The second question is, were they correctly complied with?
“That will be a subject that the inquiry will look at. It will also be a subject that the criminal investigation will be looking at.”
Mr Hammond also said the Government wants to see technical advice on whether tower blocks should be retrofitted with sprinklers before taking any action.
Criticism of the Government has focused on an apparent lack of coordination on the ground and its failure to immediately find accommodation for dozens of families who lost their homes in the fire.
Mr McDonnell said the Government had failed to immediately “recognise the scale of this disaster”. Speaking on Sky News’ Sophy Ridge on Sunday, he criticised what he called a “catastrophic failure” in its response.
Jeremy Corbyn renewed his controversial call for empty homes in the area to be taken over by the Government to house victims of the fire.
“Occupy it, compulsory purchase it, requisition it – there’s a lot of things you can do,” the Labour leader told ITV’s Peston on Sunday.
Meanwhile, Mr Lammy called for action to prevent the destruction of evidence that could show criminal wrongdoing.
“The Prime Minister needs to act immediately to ensure that all evidence is protected so that everyone culpable for what happened at Grenfell Tower is held to account and feels the full force of the law,” he said.
“When the truth comes out about this tragedy, we may find that there is blood on the hands of a number of organisations.”
Tory officials have come to the defence of Theresa May, widely criticised for a perceived lack of empathy in the immediate aftermath of the disaster.
Mrs May met a group of survivors at Downing Street on Saturday afternoon, saying afterwards that the response in the hours immediately following the tragedy was “not good enough”.
She has promised a £5m support fund and more staff deployed across the area to assist the bereaved families.
A clergyman who attended the meeting, the Rev Mark O’Donoghue, said the PM “welled up” upon hearing accounts of the tragedy from those affected.
And Greg Hands, minister for London, said she was “very personally affected by this disaster”.