UK: Construction News Round-Up: Our Regulations, Contracts And Industry

Government Construction Strategy 2016-20 published

The government published the Government Construction Strategy 2016-20 in March 2016 with a forecast of increased construction productivity over that period. The government aims to: encourage the use of collaborative procurement techniques, such as early contractor involvement; improve fair payment in public sector organisations and promote the use of project bank accounts (PBA) across all government departments; increase good practice in the use of building information modelling (BIM) level 2 across government departments (to a point that supports the later adoption of BIM level 3*); and deliver 20,000 apprenticeships through central government procurement over this Parliament.

A basic "action plan" is annexed to the strategy and sets out how its goals will be delivered.

* In the latest budget, the government committed to develop and roll out BIM level 3. Click here to view the Budget 2016 (see paragraph 2.322).

Significant infrastructure reports and consultations issued in the transport, energy and water sectors – and government responses

All those involved in the infrastructure process will want to familiarise themselves with the series of reports and government responses issued recently.

• Transport for a world city: A National Infrastructure Commission report (10 March 2016) and Review of the Case for Large Scale Transport Investment in London (March 2016), the National Infrastructure Commission (NIC).
  • See also the government response to the NIC's Transport for a world city report (April 2016).
• High Speed North: A National Infrastructure Commission (NIC) Report (published by the NIC on 15 March 2016). In essence: "The Commission's central finding is that the North needs immediate and very significant investment for action now and a plan for longer term transformation to reduce journey times, increase capacity and improve reliability." 
  • See also the government response to NIC's High Speed North (13 April 2016) setting out how the recommendations will be implemented.
• Smart power: A National Infrastructure Commission Report (published by the NIC on 4 March 2016).
  • See also the government response to the NIC's Smart Power report (13 April 2016).
• The government has published its formal response to its 10-week consultation on the governance, structure and operation of the NIC, which was held between 7 January and 17 March 2016. Click here for the report (dated May 2016). The majority of responses (a breakdown of which can be found in Annex A) were in favour of the NIC. The government's next step is to introduce legislation to place the NIC on a permanent, independent footing as soon as parliamentary time allows.
• Also worth noting is Chancellor George Osborne's letter to Lord Adonis of 16 March 2016, setting out two new studies that the NIC will undertake. The first focuses on the Cambridge – Milton Keynes – Oxford corridor and the second on how the UK can become a world leader in 5G infrastructure deployment. The NIC's recommendations on the latter will underpin the 5G strategy that the government committed to in the March 2016 budget.
• "Creating a great place for living: enabling resilience in the water sector" (published by The Department for Environment, Food and Rural Affairs (Defra) and the Environment Agency (EA)). The report sets out plans for the long-term resilience of the water sector which are intended to bring about a cleaner, healthier environment benefiting people and the economy.
• A new National Infrastructure Delivery Plan 2016-21 has been published that "brings together the government's plans for economic infrastructure over the next 5 years with those to support delivery of housing and social infrastructure. This is reflected by the government's commitment to invest over £100 billion by 2020-21, alongside significant on-going private sector investment, in our infrastructure".
• The NIC has launched a consultation: The National Infrastructure Assessment: process and methodology. The consultation document sets out a plan for producing the National infrastructure Assessment. The NIC acknowledges that developing the National Infrastructure Assessment will be "an enormous piece of work" and one not to be undertaken lightly. "Every aspect of the UK's economic infrastructure will need to be studied, assessed, and understood. But, just as importantly, the National Infrastructure Commission will need a firm grasp on the interrelationships between and across sectors as well as within them." (Lord Adonis, see the consultation's foreword.) Views are sought and the 10-week consultation closes on 5 August 2016.
• The House of Commons library has published an Infrastructure Policy. This note examines the current state of infrastructure in the UK, current levels of investment and recent government policy.   

Construction contract news

• The Joint Contracts Tribunal (JCT) has launched a new website with a dedicated online store at: www.jctltd.co.uk. Those awaiting the JCT 2016 edition might want to sign up for updates here: http://corporate.jctltd.co.uk/jct-network-sign-up.
• The JCT has confirmed that the JCT Minor Works, 2016 edition, will be ready for despatch from 24 June 2016. (See its pre-order page here.)
• The National Access and Scaffolding Confederation (NASC) has updated its Guide to Managing and Appointing Scaffolding Contractors (see the press release). The guide can be downloaded here.
• Building information modelling (BIM) level 2 is required on all government projects (from 4 April 2016). Further information can be found on the BIM level 2 website hosted by the British Standards Institution.
• The National Building Specification (NBS) has published its National BIM Report 2016. The report is based on a survey of BIM adoption in the UK. The NBS reported the following key findings: 54% of respondents were aware of BIM and using it in at least some of their projects, with a further 42% at least aware of BIM; 86% of respondents expected to be using BIM within a year and 97% expected to use it within five years; and 65% of respondents believed that BIM is not yet sufficiently standardised. The report also highlights the launch of an EU BIM Task Group, which aims to "normalise the use and specification of BIM by European public clients and policy makers".
• The government gave support to BIM level 3 in its Budget 2016: "The government will develop the next digital standard for the construction sector – Building Information Modelling 3 – to save owners of built assets billions of pounds a year in unnecessary costs, and maintain the UK's global leadership in digital construction." (See section 7.49.)
• The Chartered Institute of Building has published user notes for Time and Cost Management Contract 2015 (the revised edition of the 2013 Complex Projects Contract). These notes explain the contract documents, the parties' roles and responsibilities and some of the contract's key features. It also includes a model project timeline and a series of flow charts illustrating some of the contract processes.

For further information about JCT or other standard form contracts, BIM and the Time and Cost Management Contract 2015, please contact John Woolley, Jane Miles or Shaun Tame.

Industry news

Health and Safety

The Health and Safety Executive (HSE) has launched a strategy to help Great Britain Work Well. The HSE recognises that workplace ill health can cause pain and suffering to individuals but can also damage and disrupt family life, businesses and the economy. Its report identifies six key themes as a priority that will #HelpGBWorkWell:

• Acting together: Promoting broader ownership of health and safety in Great Britain.
• Tackling ill health: Highlighting and tackling the costs of work-related ill health.
• Managing risk well: Simplifying risk management and helping businesses to grow.
• Supporting small employers: Giving SMEs simple advice so they know what they have to do.
• Keeping pace with change: Anticipating and tackling new health and safety challenges. Sharing our success: Promoting the benefits of Great Britain's world-class health and safety system.

For more information, visit the strategy homepage on the HSE website.

Competition in the cement industry

• The Competition and Markets Authority (the CMA) has introduced measures that will restrict the disclosure and publication of UK cement production and sales volume data. These measures, introduced in response to the CMA's findings that certain practices were having an adverse effect on competition within the cement industry, are contained within the Cement Market Data Order and the final undertakings, which came into force on 13 and 14 April 2016 respectively. Further information can be found in the CMA's press release.

Consumer Code for Homebuilders

• The Consumer Code for Homebuilders is an "industry led code of conduct for builders, introduced in 2010 which was developed to make the home buying process fairer and more transparent for purchasers". It is subject to regular review and, following a consultation in October 2015, the Code's management board sought feedback from the industry on some of its proposed changes. (The consultation closed on 30 April 2016.) The proposals include requirements that high-pressure selling techniques should not be used on customers and all customers reserving a property be given a hard copy of the Code. In addition, the key information set out in the reservation agreement should include how much the builder can retain from a customer's reservation fee to cover costs in the event of a cancellation. Click here to read the Consumer Code Consultation on Proposed Changes.

The Green Deal

• The National Audit Office (NAO) has published its report, Green Deal and Energy Company Obligation, which concludes that the the Green Deal has not achieved value for money and that demand for Green Deal finance fell well below the government's expectations. Read the NAO's summary and download the report here.

The apprenticeship levy

• The apprenticeship levy is scheduled to come into effect in April 2017. The levy will be payable by persons who are liable for employers' NICs. It will be 0.5% of that person's NICs pay bill for a tax year less an annual allowance of £15,000 (ignoring certain thresholds and exemptions).
• The Department for Business, Innovation & Skills (BIS) has published a factsheet, Enterprise Bill: Institute for Apprenticeships, which relates to the government's commitment to reach three million apprenticeship starts by 2020. The aim is to establish a new body, the Institute for Apprenticeships (IfA), "to deliver a genuinely world-class apprentice programme in the context of the apprenticeship levy" that will "support employer-led reforms and regulate the quality of apprenticeships". For further reading, see: Department for Innovation & Skills on the Enterprise Bill.
• BIS guidance has also been issued on the Apprenticeship levy: how it will work (21 April 2016). The guidance explains who the levy affects, how much you will pay and what happens once the money has been paid.

Compensation for blacklisting

• Compensation pay-outs exceeding £10 million are to be paid to those construction workers blacklisted for their connections to trade unions following a settlement agreement. The union Unite has confirmed that pay-outs ranging from £25,000 to £200,000 per claimant will be made depending on the amount of loss of income or the seriousness of the defamation.

Statutes, regulations and industry practice update

• The new Insurance Act 2015 is due to come into force on 12 August 2016 and is set to have far-reaching effects on how businesses handle their insurance policies and renewals. Our latest Construction Briefing sets out the key considerations.
• The Third Parties (Rights against Insurers) Regulations 2016 were made on 29 April 2016. The regulations correct omissions from the Third Parties (Rights against Insurers) Act 2010 so that it can finally be brought into force. The 2010 Act provides for the rights of third parties against insurers of liabilities to third parties in cases where the insured is insolvent.
• The  Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences, Definitive Guideline is now effective for sentences made on or after 1 February 2016. Courts will apply the guidelines when sentencing a company or organisation for health and safety offences. For further information, read our recent explanation of the guideline  here or contact Sam Boileau.
• A Treasury Order has relaxed the compliance test for sub-contractors to be permitted to receive gross payments under the construction industry scheme (CIS). Made on 17 March 2016, the Income Tax (Construction Industry Scheme) (Amendment of Schedule 11 to the Finance Act 2004) Order 2016 (SI 2016/404) took effect from 6 April 2016.
• Various amendments to the Building Regulations came into force in April and May 2016. In brief:
  • The Building Regulations &c. (Amendment) Regulations 2016 (SI 2016/285) came into force on 6 April 2016 and remove from the Building Regulations regime those provisions relating to energy performance certificates for new and converted buildings. (These requirements are now part of the Energy Performance of Buildings (England and Wales) Regulations 2012 (SI 2012/3118).)

  Approved Document L has been updated to reflect these changes. See the Department for Communities and Local Government: statutory guidance, Conservation of fuel and power: Approved Document L. See also: Approved Document L1A: conservation of fuel and power in new dwellings, 2013 edition with 2016 amendments and Approved Document L1B: conservation of fuel and power in existing dwellings, 2010 edition (incorporating 2010, 2011, 2013 and 2016 amendments).

• In addition, Approved Document R (physical infrastructure for high speed electronic communications networks) as well as a guidance circular came into force on 9 May 2016 by virtue of the Building (Amendment) Regulations 2016 (SI 2016/490). The regulations are designed to enable the easy connection of broadband services to buildings and apply in England and to excepted energy buildings in Wales. There are transitional provisions for works notified to a local authority before 1 January 2017. See the Department for Communities and Local Government press release and the circular letter.

• See also Roy Pinnock's  blog post "Ready for broadband" which considers the implementation of these new rules and the impact on construction projects – particularly new build projects.

Procurement update

• Bassett MarkThe final changes to the public procurement regime have been implemented with the coming into force on 18 April 2016 of two sets of regulations: the Concession Contracts Regulations (SI 2016/273); and the Utilities Contracts Regulations (SI 2016/274).
  • The Concession Contracts Regulations 2016 cover distinct types of contracts where the risk in the delivery of the works or service is passed to the contractor. Their implementation represents a significant extension of the procurement rules.
  • Mark Bassett looks at some of the most important characteristics of concession contracts and the requirements placed on awarding bodies by the Regulations here.
  • Mark has also written about the long-awaited Utilities Contracts Regulations 2016 which came into force on 18 April 2016. Mark considers the key changes and explains how the new regulations clarify a number of previously contentious areas here.
  • The Crown Commercial Service (CCS) published PPN Information Note 02/16 on 17 March 2016, which confirms that the new rules for utilities and concession contracts apply to new procurement exercises started on or after 18 April 2016 (except to the extent set out in the relevant regulations).

• For the first time, public sector steel contracts must now consider UK steel. With the British steel industry in the news recently, the government hopes to promote UK steel for use on UK projects by extending existing guidance(*) on procuring steel in major projects to the whole of the public sector with immediate effect. (See the Cabinet's press release, 3 April 2016.)
  • Build UK supports the government approach set out in PPN 15/16 and has published practical guidance to support its members in adopting a robust and fair process for the procurement of steel. http://builduk-newsline.org.uk/other-news-article.aspx?NewsArticleId=105. Here's the Build UK guidance note.

(* The Procurement Policy Note (PPN) 16/15: procuring steel in major projects (November 2015, updated 14 December 2015).)

• The process of awarding public sector contracts, from the bidding stage all the way through to the construction phases, will be open to public scrutiny for the first time by October 2016. This government commitment was made with a series of others, which were published on 12 May 2016 in the policy paper: UK Open Government National Action Plan 2016-18. The aim of "Commitment 5: open contracting" is "to ensure citizens can see a clear public record of how government money is spent on public contracts and with what results". For further information, see this press release from WiredGov.

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