92.The Hackitt report found that “a lack of skills, knowledge and experience and a lack of any formal process for assuring the skills of those engaged at every stage of the life cycle of higher risk residential buildings” was a “major flaw in the current regulatory system”. To remedy this, Part 3 of the draft Bill provides in skeleton form for the establishment of a dutyholder regime at the design and construction phase of higher-risk buildings based on the principle that those who create a risk should be responsible for managing it. It does this by providing, in clause 38, that building regulations may require the appointment of dutyholders and specify their general duties and, in clause 39, that building regulations may impose competence requirements on those dutyholders. Finally, it includes (in clause 39) provisions to improve competence levels in the building control sector.
93.Whilst there was unanimous support for the policy intention of raising levels of industry competence, we were told that real culture change could only be driven by the industry itself. The LGA told us:
Dame Judith’s report saw a culture change in the building industry as an essential pillar of the new system. Such a change cannot be guaranteed in legislation and will only take place once the industry recognises the need for change and acts upon it.
94.The submissions from the Chartered Institute of Architectural Technologists and the Chartered Institution of Building Services Engineers made the same point. Similarly, we heard that a focus on dutyholder roles would not suffice to drive up competence throughout the industry. The Institute of Workplace and Facilities Management talked about an “entire ecosystem of stakeholders working in buildings in a manner that affects fire and structural safety” and concluded that unless competence was embedded throughout that ecosystem “it will not only be difficult for the three key competent roles to discharge their duties” but “the whole culture change ambition outlined by Dame Hackitt will remain elusive.
95.Everyone agreed, however, that a robust regulatory framework was a necessary prerequisite to driving up competence levels, and there was broad support for the principle of the dutyholder regime and the system of Gateways. Graham Watts said: “the principle of the gateways and the clear accountability of duty holders is the backbone of this Bill, and we absolutely support it.” The LGA said that the Gateways “sit at the very heart of the regime”.
96.According to the explanatory notes, the Government intend the dutyholder roles to which it will require appointments under clause 38 to include those appointed under the Construction (Design and Management) Regulations 2015, of which the most important are the principal designer and principal contractor. There was support for alignment with the CDM regulations, but we were told that the proposed exercise of powers under the Bill added further competences, in particular to the role of principal designer. This was welcomed by some. Dr Scott Steedman, director of standards at the British Standards Institution, welcomed the read-across but noted that the Bill needed “to go beyond” CDM without creating new roles. He concluded:
I am a supporter of the idea of a principal designer having to demonstrate additional competencies that relate to this issue of major incidents, preventing the occurrence or controlling the impact of major incidents in the future, or over the long term. There is a read-across, but it is a different set of skills.
97.On the other hand, the Construction Industry Council, noting that the roles of principal designer and contractor envisaged for the new dutyholder regime would require different competences from those in the CDM regulations, thought this “doubling-up” of responsibilities would require careful consideration. It even wondered if the new regime was not based on an “incorrect assumption” about the role of principal designer and suggested a different title to differentiate it from the role in the CDM regulations. The same concern was echoed by the Chartered Institute of Architectural Technologists.
99.We recommend that the Government work with the industry to identify and resolve any potential confusion, including, if necessary, by redefining the role of principal designer intended under the proposed new dutyholder regime. We also recommend that the role be defined in secondary legislation and that this be published alongside the Bill.
100.We heard concern about the ability of dutyholders to access professional indemnity insurance. Graham Watts, from the CIC, described the market as “very, very challenging” and not far from “market failure”, whilst Adrian Dobson, from RIBA, said it was “nearly at crisis point”. The Association for Project Safety said its members had “expressed concerns about the ability of practitioners to obtain professional indemnity insurance as the scope of responsibilities explored seems extremely wide”. The International Underwriting Association said the “new ‘dutyholder’ regime will likely open up additional areas of risk for insurers during the design and construction of buildings”.
101.Some witnesses told us that once the Government had published the precise responsibilities of the various dutyholder roles the industry would be able to develop the right insurance products. James Dalton, from the Association of British Insurers, said the important thing was “clarity of role, responsibility and accountability” because that was “what an insurer can price a risk based on”. Sarah Albon thought it “should be possible for the insurance industry to come up with appropriate products” and pointed to other, more hazardous sites, such as offshore oil refineries, where that had happened. She added that “provided the roles and responsibilities are clearly defined, and any limitation on them is also clearly defined, I expect that the insurance market will respond.” Dame Judith Hackitt agreed and thought that “fear will diminish as we are clear about people’s roles and responsibilities.”
102.We think that the potential liability of dutyholders during the construction of a higher-risk building, and extent to which insurance may be needed for them, is unclear and will depend on how the Government exercises the powers in clause 38 providing for the general duties of dutyholders to be prescribed in building regulations.
103.We are persuaded that dutyholders at the design and construction phase could struggle to access professional indemnity insurance, although we think this will depend on how the Government chooses to exercise its powers in clause 38. For this reason, we believe that early publication of the general duties of dutyholders could help to alleviate concern in the industry and facilitate the development of appropriate insurance products.
104.We recommend that the Government consult further with the insurance industry and introduce the Bill only when it (a) can publish for simultaneous consideration draft building regulations showing how it will exercise its powers under clause 38 (dutyholders and general duties) and (b) has commissioned an evaluation of the availability of adequate insurance for all dutyholders, and reported accordingly to Parliament.
105.The Hackitt report called for the establishment of “formal accreditation of those engaged at every stage of the life cycle of HRRBs” but said that this process should “be led by those industry bodies which cover the sectors and roles involved in building work”. In this respect, we heard examples of the various standards being developed by industry to raise levels of competence in design and construction, such as the Electrotechnical Assessment Standards (EAS) 2020, which came into force on 1 September 2020, but we were also told that third-party accreditation and registration for such schemes was essential. Dr Scott Steedman, director of the British Standard Institution, told us it was “really important” there was “independent third-party accreditation of the industry schemes that the various associations and professional bodies are developing or improving”. The Institution of Structural Engineers said it was “inconceivable that professional practitioners operating on higher-risk structures will not have a demonstrable record of tested competence and qualification in structural engineering” and that it was working with the Department and the HSE on structural safety registers of competence”.
106.The Specialist Engineering Contractors’ Group argued for a system of licensing based on accreditation by reputable industry accreditation bodies, whilst the International Underwriting Association said that “mandatory Third Party Certification for construction firms” would make the industry safer, give insurers greater confidence and bring consistency to legislation. Among many others, we also heard from the Association of Specialist Fire Protection about the need for third-party accreditation of installers of passive fire protection and from Eaton UK about the importance of accreditation and registration schemes for installers of electrical items. We note, however, that none of the submissions made specific recommendations for how the draft Bill could be amended to facilitate third-party accreditation.
107.It seems to us that few measures are more important to raising levels of industry competence than a system of third-party accreditation and registration for design and construction professionals and that the Government must include provision in the Bill itself for the establishment and national oversight of such a system.
108.We strongly recommend that the Government include provisions in the Bill itself for establishing a national system of third-party accreditation and registration for all professionals working on the design and construction of higher-risk buildings.
109.The Gateway process is both an essential part of the new regulatory regime and completely missing from the Bill, all the detail having been left to delegated legislation, the proposed content of which is set out in the explanatory notes. As the LGA told us:
Despite their absence from the Bill, these Gateways sit at the very core of the new system. They provide the regulator with an opportunity to ensure new buildings meet the right standards and without them it will be difficult for the Building Safety Regulator to prevent more dangerous buildings from being constructed. Without them, the Bill cannot achieve the Government’s aims for new buildings.
110.Likewise, Adrian Dobson, from RIBA, said that the principles of the process were “very good” but thought the Bill lacked detail. We should acknowledge, however, that the evidence was generally relaxed on this point.
111.We accept that the detail of the Gateways is best left to secondary legislation, but we think it is essential that this detail be published as soon as possible so that the industry can start to prepare for implementation. We recommend that the details of the Gateway process be published in draft secondary legislation at the same time as the Bill.
112.The biggest criticism of the Gateways process, based on the proposals in the explanatory notes, concerned the impact on Gateway one of the Government’s proposed extension of permitted development rights (PDR). According to the explanatory notes, “the requirements of Planning Gateway one will not apply” where under PDR a planning application is not required, and yet, as Adrian Dobson explained, “you could easily imagine that there could be quite a lot of conversion to multiple occupancy residential accommodation through permitted development”. London Councils noted “the propensity of these buildings to have safety issues” and asked that the provisions be amended, concluding: “We cannot compromise safety for the pace and scale of development”. The Greater Manchester High Rise Task Force, noting the “numerous examples in Greater Manchester of conversions undertaken without planning approval under permitted development posing a risk to residents”, described the exemption as “astonishing”.
113.We are concerned that the Government’s proposed extension of permitted development rights would allow many building projects to bypass Gateway one and thereby weaken the whole regulatory framework for the design and construction of higher-risk buildings. We urge the Government, if it does proceed with its PDR proposals, nonetheless to find a way of retaining the benefits of Gateway one.
114.We heard a further concern that, as the explanatory notes explain, Gateway one will occur “before dutyholders are required to be in place”, its requirements instead being met “by those applying for planning permission”. As Peter Caplehorn, CEO of the Construction Products Association, told us in oral evidence:
At the moment, the documentation says that gateway one would be instigated prior to any professionals being engaged. I fail to see how that is going to happen, in that gateway one effectively requires you to have a set of planning documents and a fire assessment at that stage, as I understand it. That needs to be done by a professional. It needs to be done properly.
115.The same concern was echoed by Adrian Dobson, from RIBA, and Graham Watts, chief executive of the Construction Industry Council.
116.We are persuaded that Gateway process would be greatly enhanced by a requirement to appoint dutyholders before Gateway one. We recommend that the secondary legislation that will establish the Gateway process mandate the appointment of dutyholders before Gateway one.
117.The Bill seeks to improve competence levels and accountability in the building control sector by creating a unified professional and regulatory structure for building control by amending the Building Act 1984. Under clause 44, the regulator must establish and maintain a register of building inspectors (individuals) and building control approvers (either organisations or individuals). The Bill also removes the ability of dutyholders to choose their own building control body in respect of higher-risk buildings by mandating that only the regulator may be the building control authority for such work. It also provides that local authorities will be the default provider of building control work on out-of-scope buildings. Part 2 of the Building Act 1984 sets out the mechanism by which responsibility for providing building control services can transfer to approved inspectors.
118.Currently anyone undertaking building work can choose their own building control body, be that a local authority or private building control body. The Hackitt report, though it welcomed this part-privatisation, concluded that client choice had resulted in conflicts of interest and “incentives for building control competitors to attract business by offering minimal interventions”. In line with its recommendation, the draft Bill removes dutyholder choice, though only in respect of higher-risk buildings, and thereby excludes private sector building control bodies from all in-scope building work.
119.The evidence conveyed great concern about the Bill’s failure to remove dutyholder choice and competition entirely from the building control sector. Roy Wilsher, chair of the National Fire Chiefs’ Council, told us: “We do not think people should be allowed to appoint their own inspector to sign off the work. We think it should be independent.” The LGA criticised the competition inherent in dutyholder choice, arguing that it “is only when regulators are uninhibited by competition that they can truly act as regulators”, and was “disappointed” therefore that the Bill did not remove it entirely from the industry, as it would leave in place “one of the root causes of the current crisis”.
120.Local Authority Building Control welcomed the removal of competition from in-scope buildings but regretted that “‘least intervention at the least price’ will remain the culture for out of scope buildings” and claimed there was already evidence of increased competition for out-of-scope buildings. Lorna Stimpson, its chief executive, told us in oral evidence that there “should not be a choice of regulator”:
I believe that the construction industry as a whole has dictated to us over the last 30-odd years just how much regulation it is prepared to pay for. We have become a commodity, and that cannot continue. We are providing inspection regimes based on how much they are prepared to pay us to do that inspection. That cannot be right, in terms of regulation.
121.The evidence from approved inspectors was mixed. Steve Wood, CEO of the National House Building Council, the largest approved inspector in England and Wales, said the NHBC had “no problem” with the duty-holder not appointing the building control body, though the NHBC’s written submission argued against local authorities being the default building control authority. On the other hand, the Association of Consultant Approved Inspectors, argued that “the removal of all choice and competition” would “only serve to stifle innovation and incremental improvements across the sector, whilst, in a joint submission, Quadrant Building Control and Gateway Building Control said that “the removal of choice and competition for in-scope buildings will inevitably lead to a stagnation of standards through a lack of incentive for continual improvement”. On balance, whilst we understand this argument, we cannot ignore the financial interest that private building control bodies have in maintaining dutyholder choice.
122.We are concerned that the Bill only removes dutyholder choice in respect of higher-risk buildings. As a result, the majority of building control work will remain exposed to the weaknesses and conflicts of interest identified by Dame Judith Hackitt. We see no good reason not to replace dutyholder choice with a system of independent appointment for all out-of-scope work.
123.We recommend that dutyholder choice be removed entirely from the building control system and replaced by a system of independent appointment, and that this be made explicit either in the Bill or in secondary legislation to be published alongside it.
124.We also heard from private building control bodies about the conflict of interest arising from the regulator’s role as both the regulator of the new building control regime and the building control authority for higher-risk buildings. Under the amendments introduced by clause 46, the regulator must obtain and consider the advice of a registered building inspector, possibly its own employee. That inspector will be regulated by the regulator under the amendments in clause 44. The NHBC told us that a “regulator should not be involved with the functional delivery of the service it is regulating”, whilst the Future of Building Control Working Group drew our attention “to the potential conflicts of interest where the BSR is acting as both the standard setting body and the building control authority” and requested that this “be acknowledged and clearly addressed in whatever structures and operations are taken forward to regulate performance.”
125.CICAIR, the official register of approved inspectors, and itself a member of the working group, also criticised the regulator’s dual role in its own submission but was more explicit in calling for “an independent designated body responsible for registration and audit of all Building Control Bodies and individual Building Control professionals” to avoid any “potential suggestion of conflicts of interest”. It was worried that the current proposal “could lead to the accusation of the regulator marking its own homework.” The Association of Consultant Approved Inspectors, also a member of the working group, in raising the same concern, asked how the performance of the regulator itself, in its capacity as a building control authority, would be monitored and assessed and thought that this raised questions of equity and accountability.
126.In response to this criticism, Sarah Albon, chief executive of the HSE, told us in oral evidence that she understood the concern and stressed the importance of having “the right kinds of Chinese walls”, but she insisted that fundamentally there was no serious conflict of interest:
at the heart of what we are doing, we do not have a conflicting interest. We are interested in the safety of residents and the safety of these buildings. Whether we look at that through the lens of regulatory requirement or building control, for us it is all about trying to make sure the building is safe. We do not have any other competing commercial interests… We are not going to have any incentive, as the building control body, to give landlords an answer they might want to hear. Rather, it will all be about safety.
127.A single statutory body having responsibility for potentially conflicting functions creates tensions, but there are models available for operational independence within a single body. For example, the Bank of England must maintain operational independence between its resolution functions for failing banks and supervisory function in relation to capital requirements.
128.We understand the concern from the private building control profession about the conflict of interest arising from the regulator’s dual role as building control body for higher-risk buildings and regulator of the building control profession. While we recognise that starting afresh with this Bill would be time-consuming, this is an issue which needs to be addressed if there is to be public confidence in the new system.
129.The Government should provide clear justification for combining in one body both regulation of the industry and decision-making in relation to higher-risk buildings. If this is desirable, there must be a clear statutory requirement that those involved in decision-making about individual cases of professional competence are wholly operationally independent of those involved in regulation of higher-risk buildings.
130.There was concern, too, about the provisions in clause 44 for the audit and registration of building control professionals. As the explanatory notes make clear, these provisions will only apply to building control approvers; local authorities, as the default building control authorities in their areas, will be exempt, though the 1984 Act, as amended by clause 47, provides for a failing authority’s duties to be transferred to another local authority. The Royal Institution of Chartered Surveyors criticised this arrangement, which it described as a “two-tier system”, and the “lack of audit function over local authority building control bodies”, which “should be subject to the same audit regime as private sector building control.” We heard from Lorna Stimpson, however, that the majority of LABC teams are already externally audited by UKAS.
131.We understand the argument that local authority building control teams should be audited in the same way as registered building control approvers, and we are only partially convinced by the provisions allowing for the duties of a failing local authority to be transferred to another local authority. We think the Bill should make explicit provision for the regulator to monitor and assure the competency of local authority building control, perhaps by mandating UKAS accreditation for all LABC teams.
132.We recommend that the Bill place an explicit duty on the regulator to monitor and assure the competence of local authority building control teams through provisions comparable to those for the registration of building control approvers, perhaps by mandating UKAS accreditation for all LABC teams.
126 , October 2019, paras 5.1
127 LGA ()
128 Chartered Institute of Architectural Technologists (CIAT) () Chartered Institution of Building Services Engineers ()
129 Institute of Workplace and Facilities Management (IWFM) ()
131 LGA ()
133 Construction Industry Council ()
134 Chartered Institute of Architectural Technologists (CIAT) ()
135 Construction Leadership Council Professional Indemnity Insurance Sub-Group (); International Underwriting Association (); Construction Industry Council (); British Property Federation (); Working Group 8 of the Competence Steering Group (); Chartered Institute of Building ()
136 Association for Project Safety [APS] ()
137 Construction Leadership Council Professional Indemnity Insurance Sub-Group (); International Underwriting Association ()
140 Inserting new paragraph 5A into Schedule 1 of the 1984 Act.
141 , 17 May 2018, p 74, para 5.3
142 ECA (); Specialist Engineering Contractors’ (SEC) Group ()
143 International Underwriting Association (); Chartered Institute of Building (); United Kingdom Accreditation Service (); Association for Specialist Fire Protection (); Specialist Engineering Contractors’ (SEC) Group (); Institution of Structural Engineers (); ECA ()
145 Institution of Structural Engineers ()
146 International Underwriting Association ()
147 Association for Specialist Fire Protection (); Eaton UK ()
148 LGA ()
150 c 11–12
151 [CM 264 (2019–21)-EN], para 44
153 London Councils ()
154 Greater Manchester High Rise Task Force ()
155 [Bill 264 (2019–21)-EN), para 41
159 , 17 May 2018, page 41, para 2.41
161 LGA ()
162 LABC ()
163 [Lorna Stimpson]
165 National House Building Council (NHBC) ()
166 Association of Consultant Approved Inspectors ()
167 Quadrant Building Control (); Gateway Building Control ()
168 National House Building Council (NHBC) ()
169 Future of Building Control Working Group (). The group was established in February 2020, at the invitation of MHCLG, and included representatives from the Association of Consultant Approved Inspectors, Construction Industry Council, Construction Industry Council Approved Inspector Register, Chartered Association of Building Engineers, Chartered Institute of Building, Local Authority Building Control, National House Building Council, Royal Institution of Chartered Surveyors. Its report, , was published in July 2020.
170 Construction Industry Council Approved Inspectors Register (). The submission from the Construction Industry Council, which operates CICAIR, made the same recommendation; Construction Industry Council ()
171 Association of Consultant Approved Inspectors ()
173 See section 30C of the Bank of England Act 1998, which requires the Bank to make arrangements, and issue a statement of those arrangements, to ensure operational independence of those functions in accordance with the relevant EU Regulations.
174 [Bill 264 (2019–21)-EN), para 397
175 Royal Institution of Chartered Surveyors ()