The Week That Was - 8 November 2024

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

Scottish appellate court rules that notification of loss and expense is a condition precedent for JCT contract claims

The Inner House of the Court of Session upheld a decision that a notification of loss and expense under the 2016 JCT Standard Building Contract for Scotland is a condition precedent to recovery.  The commercial judge found that no entitlement to loss and expense could arise unless the contractor complied with the notification requirements.  The contract’s language was clear, and the phrase “subject to … compliance with” was interpreted as a condition precedent. 

While currently specific to Scotland, this decision is likely to have broader implications since this wording is also contained within the English version of this contract.  The Inner House emphasised that, as standard contracts are professionally drafted, they should be interpreted primarily through textual analysis: this underlines the importance for contractors and employers of understanding their obligations under standard contracts.  It remains to be seen whether courts in England and Wales will follow suit.

You can read more here.

Considerate Constructors Scheme acquires Building a Safer Future programme

The Considerate Constructors Scheme (CCS) has acquired the Building a Safer Future (BSF) programme, which was launched in response to the Grenfell Tower fire to promote building safety through accountability, transparency and best practices.  BSF initially focused on high-rise residential buildings, but now covers all building heights, as well as all construction activity and companies.

CCS had already managed the programme since 2020. The work of BSF is supported by a Charter with five commitments, offering companies the chance to become Registered Signatories or participate in the Champions programme.

Peter Caplehorn, Non-Executive Director of CCS, has expressed that this acquisition highlights CCS's dedication to safety and standards in construction, aligning with BSF's shared goals of collaboration and continuous improvement.

You can read more here.

Budget 2024 and the construction sector

The Autumn 2024 Budget's impact on the construction sector was, as expected, principally focused on residential property. Key measures included the provision of £500m in additional funding for the Affordable Homes Programme (reaching £3.1b overall); an increase in remediation funding for unsafe housing to over £1b for FY 2025-26; and allocation of £3.4b in funding to progress 350,000 homes through the Warm Homes Plan by 2028.

The announcements were met with a mixed reaction by the sector, with the Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn highlighting the Office for Budget Responsibility's scepticism that the combination of funding and proposed planning reforms would be sufficient for the Government to meet its target of 1.5 million new homes over the course of this Parliament.

The Budget can be read in full here.

Construction Products Association forecasts sector growth

The Construction Products Association (CPA) has released its autumn forecast, projecting an increase in total output of 6.3% by the end of 2026. This is driven by a recovery in demand for private housing, following sharp falls in interest, and consequently mortgage rates, which heralds a better year for homebuilders in particular. However, core industry issues remain present, with local authorities continuing to have insufficiently resourced planning departments; and uncertainty about the Building Safety Act and Regulator leading to reticence to commence high-rise housing projects. Non-residential sub-sectors are projected to experience lesser growth – however, the CPA qualified this, noting that the Government was, by some distance, the sector's single largest client, and its analysis was prepared prior to the Autumn budget.

The CPA's Economics Director, Noble Francis, reiterated this, commenting that "broader UK economic growth… appears to be leading to improving consumer and business investment", but that "the Government's Autumn Budget will be key to ensuring that this remains the case".

You can read the press release here.

Over £500k 'potentially' lost to building safety fraud, NAO reveals

The Ministry of Housing, Communities and Local Government (MHCLG) could have lost over £500,000 due to "potential fraud" of the Building Safety Fund (the Fund), the government scheme established to fund the cost of fixing fire safety issues of high-rises in England. The Fund aims to support building owners or developers who cannot afford to fix cladding issues. 

The National Audit Office (NAO) published a report earlier this week on the progress of cladding remediation which has disclosed suspected fraud by one applicant of the Building Safety Fund in 2023/24. The Infrastructure and Projects Authority highlighted the need for a full fraud risk assessment of the scheme and the NAO advised that MHCLG was slow to address any fraud risks on the Fund. 

An external review of the case to examine the processes and controls in place was commissioned in January 2024. That review highlighted that there has not been a fraud measurement programme in place thus far, but that levels of fraud detected are significantly lower than would be expected given its size and risk. MHCLG has since advised that they have a dedicated counter-fraud team to ensure that all allegations are thoroughly investigated. .

You can read more here.

MPs to investigate cladding remediation progress

The Public Accounts Committee (PAC) has announced a probe into the Government's progress in remediating high-rise buildings with dangerous cladding. The inquiry will assess whether recent government initiatives have successfully remedied system-wide issues and made meaningful progress in the past four years. It will also investigate how effective government schemes have been in identifying and remediating unsafe cladding as well as managing the associated costs. 

PAC has proposed that senior officials from the MHCLG and Homes England will be summoned to give evidence. Hearings will focus on four key areas: progress and timelines to understand the realistic expectations for completion; protection of public funds in order to safeguard taxpayer investment; the Government's approach to building safety risks; and efficient deployment of £1billion announced for cladding remediation. 

In response to the 2017 Grenfell Tower tragedy and its aftermath, the Government has committed £5.1bn for cladding removal and replacement, vowing this would be the limit of taxpayer funding for remediation. The committee has advised that, despite this commitment, MHCLG’s figures from January indicate that only 4,000 out of nearly 8,000 affected buildings have completed remediation. 

You can read more here.

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.

Authors: Keira-Anne Dowsell, Abbie Dyas and Joe Towse