Cornerstone - Time to listen and speak out?

16 July 2019

The Government frequently consults on all manner of issues. On 19 June 2019, the Department for Business, Energy & Industrial Strategy (BEIS) responded, after many months, to a call for evidence
it had put out in respect of late payment to small businesses.

Slightly earlier in June 2019, the Ministry of Housing, Communities and Local Government (MHCLG) put out a call for views on a “radically new building and fire safety system which puts residents’ safety at its heart”. Both could have a significant effect on construction firms.

Getting businesses paid

Small businesses are almost always dependent on cash flow, with those in the construction industry particularly exposed. The Construction Act (as it is colloquially known) aims to help small businesses by mandating interim payments and offering adjudication as a fast-track dispute resolution method - but that only helps so far.

The Government is aware of the problem, and has itself put in place further (non-construction specific) measures to help – such as its Prompt Payment Code, the Payment Practices Reporting Duty, and the Small Business Commissioner, who supports small businesses in resolving payment disputes with larger businesses.

Following a consultation last year and an interim response earlier in the year, BEIS has now outlined new initiatives that it hopes will further enhance the hand of small businesses. They include giving the Small Business Commissioner the ability to fine large businesses and impose binding payment plans, and placing an obligation on board directors of larger firms to report on payment issues. In an attempt to lead the way, any supplier who bids for a government contract above £5m per annum will be expected to pay 95% of invoices in 60 days across all their businesses from 1 September 2019.

These ideas are at an early stage, but may help small businesses get paid quicker - particularly given that many construction projects involve business that work with government, so if the commitment to pay regularly within 60 days trickles down, it could have a real impact. But while the Government does what it can, our experience is that businesses can do little better than to keep on top of payment applications and notices, and to act quickly and shout loudly if payment is delayed.

‘Building a safer future’

MHCLG’s consultation follows the Hackitt Review of Building Regulations and Fire Safety, published in May 2018, which itself followed the tragedy at Grenfell Tower. In its words, it “proposes fundamental reform of building safety requirements so that residents are safe, and feel safe, in their homes”.

The consultation seeks views on a proposed new regime that would apply to tall (more than 18m high) residential buildings. Arguably the central feature of that regime would be to create five specific roles responsible for safety during construction, and one continuing role - the ‘accountable person’ - who would be responsible for higher risk buildings once occupied. There would be some overlap with existing roles under the CDM Regulations so alignment with those is proposed, which may lead to amendment to the existing CDM Regulations.

The regime also seeks to strengthen residents’ right to information and give them an ability to raise concerns, following criticism that it is too easy for residents to be ignored at present. A new building safety regulator is also proposed to oversee the new regime, with that body given enhanced enforcement powers including criminal sanctions.

In parallel, the Home Office is asking for views on the Regulatory Reform (Fire Safety) Order 2005, which regulates fire safety in non-residential properties. The Government wants to ensure that the Fire Safety Order is fit for purpose and is in step with any changes to the residential regime that are brought about by MHCLG.

Both consultations are open for comment until 31 July 2019. The Government welcomes comment from anyone with an interest in or knowledge of the issues – including occupiers, contractors, developers and consultants. A formal survey can be completed or, for brevity, comments can simply be emailed to the relevant department, details of which are available on the Government website.

Building and in particular fire safety has been in the spotlight over the last two years, for understandable (and tragic) reasons. These consultations have the potential to shape the next decade plus of construction and so anyone with an interest, which is likely to be most in the industry, is encouraged to consider the proposals and comment as they see fit.