The Week That Was - 21 July 2023

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

Cladding – dizzying costs?

The cost of removing unsafe cladding remains unknown.  In addition to a pledge of £5.1bn from the Government, the Building Safety Act 2022 (BSA) also includes measures intended to protect leaseholders from huge bills and to force building owners to pay.  The Department for Levelling Up, Housing and Communities estimates there are more than 9,000 high-rise (18 metres or taller) and medium-rise (11-18 metres) residential buildings that may require remediation. In 2020, the Government's own estimate was £15bn.  Others now estimate the cost at closer to £50bn. 

The availability and cost of insulation, replacement cladding and labour remain issues and 2022-2023 has seen increases in panel prices alone of up to 45 per cent.  Scaffolding and access machinery costs are similarly high. There have been 1,215 applications for increased funding under the BSA with only 14% approved and 90% of these have been for private sector buildings. 

The new system of remediation orders and remediation contribution orders introduced by the BSA gives powers to courts to determine the costs and responsibility for fixing unsafe buildings.  The first remediation contribution order has already been made and according to the Government 12 other applications were pending by the end of 2022. 

However, there are likely to be disputes between developers and their subcontractors over remediation and whether improvements to present standards are to be covered.  Unhelpfully this issue is not addressed in the legislation.

For more information see here.

Disability rights in high-rise buildings? 

On 14 July 2023 the High Court (Mrs Justice Stacey) dismissed a judicial review by the Cladding Leaseholder Disability Action Group (Claddag) which would have required the Government to implement specific evacuation plans for disabled high-rise residents recommended in October 2019. 

The Grenfell Inquiry recommended that there should be a legal requirement for owners and managers of high-rise residential buildings to prepare "PEEPS" (personal emergency evacuation plans) for residents with mobility issues or visual, hearing or cognitive impairments.  In the Grenfell fire, which killed 72 people in June 2017, 41% of the tower block's disabled residents died.  However, a Home Office consultation found the Grenfell Tower Inquiry's recommendations would be too costly and impractical to implement.

Mrs Justice Stacey ruled that the Government was entitled to decide not to implement the recommendation after weighing up the fire-safety implications against the costs of delivering it.  The decision was largely political and was not unlawful.  The Government is currently investigating a scheme called "Emergency Evacuation Information Sharing Plus" with disability campaigners remaining dissatisfied.

For more information see here.

Government to miss target to build 40 new hospitals by 2030

The National Audit Office (NAO) has issued a report into the Government's plan to build 40 new hospitals by 2030, warning that the Government is at risk of missing its target. 

The Government's project has been beset by delays, with many of the projected elements of the building programmes being scheduled to start in 2025. The plans to standardise design to modularise and cut costs has also been delayed until May 2024. 

Further, when the plan was originally set out in October 2020, 8 hospital construction projects already underway were not included in the target.  However, recent statements by the Government regarding 40 new hospitals now include these 8 projects, referred to as "legacy hospitals".  Adopting the definition used by the Government when announcing the plan originally, the NAO considers that the Government is on track to deliver 32 of the 40 new proposed hospitals in time. 

The NAO has also warned that cost-cutting and inaccurate modelling of future demand could mean the new hospitals delivered could be too small and that bunching of hospital schemes by the Government risks capacity constraints for the four contractors identified to deliver the programme (ISG, Kier, Laing O'Rourke and Wates).

For more information, see here.

Government grants development consent order for Stonehenge tunnel (again)

The Government has granted a second development consent order for the proposed £1.7bn A303 Stonehenge tunnel scheme after Courts rejected the first order. 

The proposals by National Highways for the tunnel were originally granted in 2020, but were quashed by the High Court following a legal challenge.  Despite that obstacle, National Highways has proceeded regardless, procuring contractors and preparing a further application for another development consent order, which has now been granted.  Opponents now have 6 weeks to instigate a legal challenge. 

The scheme involves overhauling eight miles of the A303, a major road from London to the South West, to include dual carriageways, a tunnel at least two miles long underneath the World Heritage Site (albeit 50 metres further away from the monument than the current road) and new junctions either site of the site. 

Despite a further order having been granted, regardless of any further objections construction will not commence soon, with the tunnel listed in National Highways' road investment strategy for projects starting in the period between 2026 and 2030. 

For more information, please see here.

Accrual of causes of action in construction claims for economic loss

The Court of Appeal decided in URS Corporation Ltd v BDW Trading Ltd that (i) a tortious cause of action for economic loss by a developer against its structural engineering consultant accrued at the latest at the date of practical completion; and (ii) there was no requirement for a third-party claim before bringing a claim for contribution under the Civil Liability (Contribution) Act 1978.

The Court found that conclusion was in accordance with the general principle that the policy of the law should be to advance, rather than hold back, the accrual of a cause of action.  The cause of action for a contribution claim accrued simply where the claimant could be found liable to the third party, the defendant was also liable to the third party, and those respective liabilities were in respect of the same damage suffered by the third party.

The full judgment can be found here.

New-build construction output falls to lowest level since June 2022

Building.co.uk reports that the latest official figures from the Office of National Statistics indicate that new-build construction work in May fell to its lowest level in almost a year in the wake of falling private housing and commercial workloads. The figures show that monthly new-build output dropped 0.4% in April, with £15.4bn of work done in the month.  The drivers of the decline are reported to be a fall in private housebuilding work and a fall in private commercial work. 

It is reported that the decline in housebuilding work comes amid growing concerns over the impact of rising interest rates on the sector.

The full article can be found here.

Authors for this week's edition: Harry Collins, James McKay and Jonathan Chambers

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content.