Local Democracy, Economic Development And Construction Bill [HL] - continued          House of Commons

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Clause 110 - Requirements in connection with changes to existing combined arrangements

255.     This clause sets out the requirements applying to the Secretary of State’s power to make orders under clauses 101, 102, 103 and 104 (relating to the constitutional arrangements, functions, funding, boundaries and dissolution of the combined authority) in relation to an existing combined authority.

256.     The Secretary of State may make an order if the Secretary of State considers that the making of the order is likely to improve the exercise of statutory functions relating to transport or economic development and regeneration, the effectiveness and efficiency of transport or the economic conditions in the combined authority’s area. Before making the order the Secretary of State must consult such of the bodies specified in clause 108(2) and such other persons as the Secretary of State considers appropriate.

257.     The Secretary of State must also have regard to the need to reflect the identities and interests of local communities and to secure effective and convenient local government.

Clause 111 - Incidental etc provision

258.     This clause provides that the Secretary of State may make incidental, consequential, transitional or supplementary provision in support of an order made under this Part.

259.     Subsection (2) allows the Secretary of State to make orders making amendments, repeals or revocations to, or applying or disapplying, primary and subordinate legislation in consequence of making an order, for instance to reflect the fact that a new EPB or combined authority has been established.

Clause 112 - Transfer of property, rights and liabilities

260.     This clause specifies that the Secretary of State may make provision by order for the transfer of property, rights and liabilities for the purpose of, or in consequence of, an order under this Part. This includes the transfer of rights and liabilities under a contract of employment, to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 will apply.

Clause 113 - Consequential amendments

261.     Clause 113 allows the Secretary of State, by order, to make provision in consequence of any provision made by this Part. This includes a power to amend, repeal or revoke provision contained in an enactment passed or made before the day on which the Bill becomes an Act.

Clause 114 - Orders

262.     This clause sets out the procedure for making orders under the Part.

263.     Subsection (1) requires an order under the Part to be made by statutory instrument.

264.     Subsections (2) and (3) provide that an order under the Part is subject to the affirmative resolution procedure unless it is an order under clause 113 alone and only amends legislation subject to the negative resolution procedure.

265.     Subsection (4) enables the draft of an order to proceed as if it was not a hybrid instrument. This avoids the need for special procedures which apply to instruments which have a differential effect on people or places to be applied to these orders.

Clause 115 - Guidance

266.     Subsection (1) provides that the Secretary of State can issue guidance about anything which could be done under or by virtue of Part 6 by an authority referred to in subsection (5).

267.      The authority must have regard to any guidance given in exercising any function conferred or imposed by virtue of this Part.

268.     Subsections (3) and (4) specify that the guidance must be given in writing and may be varied or revoked by further guidance in writing and that the guidance may make different provision for different cases.

Clause 116 - Amendments relating to EPBs and combined authorities

269.     This clause introduces Schedule 6 which makes a number of amendments to apply existing provisions of local government and transport law to EPBs and combined authorities.

Clause 117 - Interpretation

270.     This clause provides definitions for Part 6.

PART 7: MULTI-AREA AGREEMENTS

Introduction

271.     This Part makes certain arrangements for multi-area agreements (“MAAs”) which are agreements between two or more local authorities and certain partner authorities, approved by the Secretary of State. It gives the Secretary of State the power to direct a nominated local authority (the “responsible authority”) to prepare an MAA in consultation with partner authorities and others specified in guidance (which might include persons from the voluntary and community sector and local businesses). The local authority and partner authorities are placed under a duty to co-operate with each other in determining local improvement targets for the area to be included in the MAA, and a duty to have regard to the targets.

Clause 118 - Multi-area agreements

272.     This clause defines a multi-area agreement.

273.     Subsection (2) explains that a multi-area agreement is a document specifying improvement targets for a geographic area for which there are two or more local authorities. Subsection (3) provides that this area can be non-contiguous so that it may, for example, cover the area of two local authorities which are separated by the area of a third local authority which is not to be part of the multi-area agreement.

274.     Subsection (4) defines an improvement target as a target for improvement in the economic, social or environmental well-being of the area or part of the area covered by the multi-area agreement. For example, an improvement target might specify an improvement to be achieved in the whole of the area covered by the agreement, or it might apply only to specific ward(s) in the area. The target must also ‘relate’ to a local authority for the area, a partner authority, or another person acting, or having functions exercisable, in the area.

275.     Subsection (5) provides that for an improvement target to relate to an individual or body, that individual or body must be able to contribute to the target being achieved through its actions and they must have agreed that the target should apply to them. Where an individual or body can have no impact on the achievement of a target through its actions and/or has not agreed to the target it will not relate to them and they will not be required to have regard to it.

276.     Subsection (6) stipulates that an individual or body is taken to have consented to a target applying to it if it has agreed to the target (or any subsequent change to it) being specified in the multi-area agreement. The authority preparing the multi-area agreement (“the responsible authority”) will therefore have consented to all targets as in drawing up the agreement it will have agreed to the inclusion of those targets.

Clause 119 - Local authorities

277.     This clause defines “local authority” for the purpose of this Part.

Clause 120 - Partner authorities

278.     This clause sets out a list of public bodies and persons that will be “partner authorities” for the purpose of a multi-area agreement. This largely follows the list of bodies named for the purpose of agreeing a Local Area Agreement as set out in section 104 of the Local Government and Public Involvement in Health Act 2007. The Government intends that the list of named partner authorities for the purposes of multi-area agreements and local area agreements should be consistent unless there is a good reason for there to be a difference.

279.     In some cases the statutory reference does not make it immediately clear what the nature of the body or person is. Subsection (4)(b) refers to the English Sports Council which is known as Sports England. Subsection (4)(e) refers to the Historic Buildings and Monuments Commission which is known as English Heritage. Subsection (4)(j)(i) refers to the Secretary of State in relation to the Secretary of State’s functions under section 2 of the Employment and Training Act 1973. These functions are exercised by Jobcentre Plus. Similarly the functions described in subsection (4)(j)(ii) and (iii) are exercised by the Highways Agency.

280.     Subsection (5) allows the Secretary of State to amend the list of partner authorities, by order, by adding any person with functions of a public nature, deleting any person, or by adding or deleting references to the Secretary of State's functions. The Secretary of State cannot exercise this power without first consulting appropriately (subsection (6)).

Clause 121 - Proposal for multi-area agreement

281.     This clause provides that any group of two or more local authorities may approach the Secretary of State and request that the Secretary of State direct a multi-area agreement to be prepared for their area and submitted to the Secretary of State. It is the Secretary of State’s agreement to such a request (clause 122) that is the trigger for duties being applied to local and partner authorities, as set out in clause 123.

282.     Subsections (2) and (3) stipulate that all local authorities covered by the area of the proposed multi-area agreement, other than district councils in a county council area, must be party to any request for the Secretary of State to make a direction, whilst also expressly allowing such district councils to be part of the request if they want to join it.

283.     Subsections (4) and (5) specify that a request under this clause must be made in writing and set out the information the request must include together with the requirement that it should be prepared having regard to any guidance that the Secretary of State has issued. The request must name a local authority that will be responsible for preparing and submitting the draft multi-area agreement (the “responsible authority”). The area covered by the multi-area agreement does not have to include the whole area of a local authority that is party to the agreement - it may include part of a local authority area.

Clause 122 - Direction to prepare and submit draft multi-area agreement

284.     This clause provides for the Secretary of State, in response to a request made under clause 121, to direct the responsible authority to prepare and submit a draft multi-area agreement. The Secretary of State may specify the period of time within which the draft multi-area agreement must be prepared. The Secretary of State can vary or revoke a direction (subsection (4)).

285.     Subsections (2) and (3) specify the information that the draft multi-area agreement must include: the period of time for which the agreement has effect and in respect of each improvement target, who it relates to (see clause 118(5)) and the geographic area covered by it if it does not apply to the whole area of the multi-area agreement.

Clause 123 - Preparation of draft multi-area agreement

286.     This clause places duties on the responsible authority and other local and partner authorities where a direction has been issued under clause 122, following a request under clause 121. Local and partner authorities will not be subject to duties under this clause where they are developing a multi-area agreement without first obtaining a direction.

287.     Subsections (1) to (3) place duties on the responsible authority to consult key stakeholders, to co-operate with local and partner authorities in determining the targets which are to relate to them and to have regard to guidance issued by the Secretary of State.

288.     Subsection (4) places similar duties on local and partner authorities: a duty to co-operate with the responsible authority in determining the improvement targets that are to relate to them and a duty to have regard to guidance issued by the Secretary of State.

Clause 124 - Approval of draft multi-area agreement

289.     This clause provides for the Secretary of State to approve, require modifications to or reject a draft multi-area agreement that is submitted in accordance with a direction issued under clause 122. The approval brings the multi-area agreement into effect for the period specified in the agreement.

290.     Subsection (3) provides that where the Secretary of State requires modifications to a draft multi-area agreement, this acts as a new direction under clause 122 and therefore the duties on the responsible authority and local and partner authorities in connection with preparation of the agreement will continue to apply.

291.     Subsection (4) stipulates that where the Secretary of State rejects a draft multi-area agreement then all directions and duties applicable to that agreement cease. If the local authorities concerned want to continue to pursue a multi-area agreement then they may do so without the benefit of a direction (and associated duties) or would need to submit a new request to the Secretary of State under clause 121.

Clause 125 - Submission of existing multi-area agreement

292.     This clause provides for a multi-area agreement that is prepared through procedures other than following a direction from the Secretary of State under clause 122 to be submitted with a request that the Secretary of State approve it. This clause allows local authorities to submit a multi-area agreement agreed prior to clause 122 coming into force, or one that has been prepared without first seeking a direction.

293.     Subsection (3) stipulates that all local authorities covered by the area of the multi-area agreement, other than district councils in a county council area, must be party to any request for the Secretary of State to approve the agreement whilst also expressly allowing district councils to be party to the request if they want to join it. This is consistent with who may request a direction to prepare and submit a multi-area agreement (see clause 121).

294.     Subsection (4) requires local authorities making the request to consult any other local authority, as well as partner authorities, for the area covered by the multi-area agreement, prior to making the request. Subsection (7)(d) requires the local authorities making the request to report the outcome of their consultation under this subsection.

295.     Subsections (5) to (7) stipulate the information that must accompany the request. These information requirements are consistent with the requirements for a proposal for a direction under clause 121 together with the requirements for a draft multi-area agreement in clause 122.

Clause 126 - Approval of an existing multi-area agreement

296.     This clause provides for the Secretary of State to be able to approve a multi-area agreement submitted under clause 125. Once approved, the multi-area agreement takes effect in the same way as one prepared following a direction, and for the period specified in it.

Clause 127 - Duty to have regard to improvement targets

297.     This clause places a duty on all local and partner authorities for the area covered by a multi-area agreement approved by the Secretary of State under clause 124 or 126 to have regard, when exercising their functions, to each improvement target in the agreement that relates to them. This duty does not apply where the agreement concerned has not been approved in accordance with clause 124 or 126. Signatories to a multi-area agreement agreed with Government prior to the commencement of these provisions will not, therefore, be subject to this duty unless that agreement has been subsequently approved by the Secretary of State under clause 126.

Clause 128 - Responsible authorities

298.     This clause defines who the responsible authority is and provides a mechanism for this to be changed by the local authorities to whom improvement targets in a multi-area agreement relate, with the agreement of the Secretary of State.

Clause 129 - Revision proposals

299.     This clause provides a mechanism for a multi-area agreement that has been approved by the Secretary of State to be amended.

300.     Subsection (1) provides that a proposal to modify an approved multi-area agreement can be prepared and submitted to the Secretary of State by the responsible authority at any time while the agreement is in force, but must be prepared and submitted if the Secretary of State directs the authority to do so. A direction under this subsection may stipulate the time period within which the revision proposal must be submitted and can be varied or revoked (subsection (5)).

301.     Subsection (2) sets out the types of changes to an approved multi-area agreement that will require a revision proposal. Enlarging the area covered by the multi-area agreement may mean extending it to cover more of the area of a local authority that is already a signatory to the agreement, or, it may entail adding a local authority to the agreement whose area was previously outside the boundaries covered by the agreement. A revision proposal will not be required where a district council, in an area where there is also a county council, whose area was covered by the multi-area agreement but did not originally agree to it, subsequently decides that it does want to be party to the agreement.

302.     Subsections (3) and (4) stipulate that where changes to an improvement target or the addition of an improvement target is proposed, the revision proposal must specify who it relates to (see clause 118(5)) and the geographic area covered by it if it does not apply to the whole area of the multi-area agreement. This is consistent with the information requirement for a draft multi-area agreement set out in clause 122.

Clause 130 - Preparation of revision proposal

303.     This clause places equivalent duties on the responsible authority to consult and co-operate and have regard to guidance, and on other local and partner authorities to co-operate and have regard to guidance, when preparing a revision proposal as is placed on them when they are preparing a draft multi-area agreement by clause 123.

304.     Where the proposal is to enlarge the area covered by the agreement, the definition of the “agreement area” in subsection (1)(a) and the reference to the agreement area in subsections (2) and (4) make it clear that it is all local authorities in the enlarged area that must be consulted and co-operated with by the responsible authority and who must, in turn, co-operate with the responsible authority.

Clause 131 - Approval of the revision proposal

305.     Subsection (1) provides that the Secretary of State may approve or reject a revision proposal that is submitted by the responsible authority. Where the revision proposal is submitted following a direction, the clause provides that the Secretary of State will also be able to request that the proposal be modified.

306.     Subsection (2) specifies that the changes will have effect in the multi-area agreement at the point the Secretary of State approves the revision proposal.

307.     Subsection (3) provides that where the Secretary of State requires a modification to a revision proposal, this takes effect as a further direction to prepare a revision proposal, and so the duties on the responsible authority and local and partner authorities in relation to preparation of a revision proposal will still apply.

Clause 132 - Duty to publish information about multi-area agreements

308.     This clause places a duty on the responsible authority to publish information about the multi-area agreement and any subsequent changes that are made to it through a revision proposal but leaves the decision as to what information is to be published and the manner of publication to the responsible authority.

Clause 133 - Consultation on guidance

309.     This clause requires the Secretary of State to consult representatives of local government and, if appropriate, other people with an interest in multi-area agreements before issuing the guidance that responsible, local and partner authorities will have to have regard to in preparing agreements and revision proposals.

PART 8: CONSTRUCTION CONTRACTS

Background

310.     In March 2004, the Chancellor of the Exchequer announced a review of Part 2 (sections 104 to 117) of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”) as regards England and Wales. This review was published in September 2004. As a consequence of its findings, the Secretary of State for Trade and Industry and the Welsh Assembly Government together consulted on broad proposals to amend Part 2 of the 1996 Act. This consultation took place between March and June 2005. This was followed by a second consultation in the summer of 2007 which set out detailed amendments to Part 2 of the 1996 Act.

311.     Scottish Ministers undertook a consultation exercise in 2007 (similar to the consultation held that year in respect of England and Wales) and have continued to work with what is now the relevant Whitehall Department — the Department for Business, Enterprise and Regulatory Reform (“BERR”) — and the Welsh Assembly Government to facilitate consistency as regards the content and timing of new legislation. In July 2008, BERR published the Draft Construction Contracts Bill, and a form of the draft clauses published is now being taken forward in the Bill.

Introduction

312.     Part 2 of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”) concerns “construction contracts”. Pursuant to section 104, these are agreements for the carrying out of “construction operations”. Construction operations include the construction, alteration, repair, maintenance, extension, decoration and demolition of buildings; preparatory work such as site clearance, earth-moving and excavation; and the installation of fittings such as heating, lighting, drainage and sanitation systems (section 105). Contracts with householders are excluded, however. By virtue of section 107, Part 2 only applies to construction contracts which are “in writing”.

313.     Section 108(1) of the 1996 Act gives each party to a construction contract the right to refer a dispute to “adjudication” and, in this regard, section 108(2) to (4) requires the parties to include terms in their contract:

  • enabling either party to give notice to the other at any time of the intention to refer a dispute to adjudication;

  • requiring the adjudicator to reach a decision within a certain time period;

  • allowing for the extension of such period;

  • imposing a duty of impartiality upon the adjudicator;

  • enabling the adjudicator to take the initiative as regards determining the facts and the law;

  • providing (in the absence of contrary agreement) that an adjudicator’s decision is binding in the interim; and

  • relieving the adjudicator (and his employees and agents) of liability if acting in good faith.

314.     Section 109 of the 1996 Act provides that contractors (those performing the work) are entitled to periodic payments (unless the work is or is estimated to take less than 45 days). Section 110(1) stipulates that construction contracts are to contain an “adequate mechanism” for determining what and when payments become due under the contract and are to provide, in respect of each such payment, a final date by which settlement must be made - the “final date for payment”. Section 110(2) requires the payer to give the contractor/payee notice (in advance of each payment) of the sum which he proposes to pay.

315.     If construction contracts do not contain provisions which are consistent with section 108(2) to (4) and section 110 (or, as regards section 109, the parties fail to agree upon the amounts or the frequency or circumstances of payments), the terms of the relevant Scheme for Construction Contracts apply - one Scheme in respect of contracts for construction operations carried out in England and Wales, and the other in respect of contracts for construction operations carried out in Scotland. Where either Scheme applies, such terms have effect as implied terms of the relevant contract - in effect supplying the missing contractual provision.

316.     In addition, Part 2 of the 1996 Act:

  • requires the giving of an appropriate notice by the payer where the payer proposes to withhold moneys (which notice may, if various conditions are met, be the same notice as that given by the payer of the sum which he proposes to pay) (section 111);

  • allows a contractor to stop working where the payer owes the contractor money (section 112); and

  • renders ineffective clauses in construction contracts which make payments conditional on the payer having been paid by a third party (section 113).

  • Summary

317.     Part 8 of the Bill amends Part 2 of the 1996 Act. It is comprised of seven clauses, a brief description of which follows:

  • Clause 135 removes the current limitation of Part 2 to contracts which are in writing;

  • Clause 136 introduces a provision to facilitate the correction of clerical or typographical errors in a adjudicator’s decision;

  • Clause 137 makes agreements about the allocation of the costs of adjudication ineffective, unless such agreements are entered into after the appointment of the adjudicator;

  • Clause 138 addresses the issue of making periodic payments under a construction contract conditional upon obligations under another contract, and the issue of making the date a payment becomes due dependent upon the giving of a notice by the payer of the sum the payer proposes to pay;

  • Clause 139 amends the existing provisions relating to the notices which a payer gives of the sum which the payer proposes to pay and introduces provisions relating to the giving of notices by the payee;

  • Clause 140 introduces (in most cases) a statutory requirement to pay sums specified in these notices;

  • Clause 141 amends the existing provisions relating to a contractor’s right to stop working when the contractor has not been paid.

 
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