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Construction Industry: Payment Practices

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My right honourable friend the Minister of State for Industry and the Regions (Alun Michael).

I am pleased to announce that today, with Edwina Hart AM MBE, the Welsh Assembly Government Minister for Social Justice and Regeneration, I am publishing the analysis of our consultation, held last year, on Improving Payment Practices in the Construction Industry.

The consultation proposed a number of amendments to Part II of the Housing Grants, Construction and Regeneration Act 1996 and the Scheme for Construction Contracts (England and Wales) Regulations 1998. In the light of the consultation response I am proposing to:

Our aim is to improve upon the existing legislative framework, which is generally recognised as making a valuable contribution to fairness in the way construction contracts are agreed and operated. The legislation is largely working as was intended, thanks to the willingness of the construction industry and its clients to develop their culture in the light of a changed legal framework. This is in the context of an ongoing process of change and improvement in the construction industry.
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The consultation has demonstrated strong support for continued regulation of construction contracts and the current process improving the current framework. We have received 356 consultation responses—a startling demonstration of the level of interest in these issues in the construction industry and among its stakeholders. We are very grateful to all those who responded. They have had to consider some difficult and complex issues, which have required careful analysis and innovative solutions. Launching this consultation last year, my predecessor as Minister with responsibility for construction, Nigel Griffiths, observed that,

That is something that all the responses have recognised.

The analysis also sets out the next steps we intend to take, working with the construction industry over the coming months, to ensure the package of amendments is based upon a clear and thorough understanding of all the issues, when it is published for further consultation. The DTI has already asked a sounding board of key figures in the industry to assist in the development of the proposals to ensure they match the needs of the construction industry and its clients, as well the strict requirements of the regulatory reform order framework. The sounding board members are:

Richard Bayfield: immediate past chairman of the Society of Construction Law, a chartered civil engineer and project management consultant on dispute avoidance and resolution. He is an adviser on the DTI sponsored Constructing Excellence programme.

Chris Dancaster: chairman of the Royal Institution of Chartered Surveyors' Dispute Resolution Faculty Board and an adjudicator, arbitrator and mediator. Both he and Richard Bayfield were members of the adjudication group during Sir Michael Latham's review of the Construction Act.

Richard Haryott: chaired the payment working group during Sir Michael Latham's review of the Construction Act. He is chairman of the Ove Arup Foundation, having been a director of Arup for over 20 years with extensive experience of the design and implementation of major projects.

Sir Michael Latham: chaired the review of the Construction Act, which led to the DTI/Welsh Assembly Government consultation last year. Author of the 1994 report Constructing the Team.

His Honour Humphrey Lloyd QC: barrister and arbitrator specialising in construction law until he became a judge of the technology and construction court in 1993. Having retired from the bench in 2005, he continues to act as an arbitrator.

Peter Rogers: director and co-founder of Stanhope plc and chairman of Constructing Excellence. He has recently stepped down as chairman of the Strategic Forum for Construction and is chairing the taskforce on the construction industry's contribution to the 2012 Olympics.
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The sounding board will advise Ministers as the DTI develops the proposals in detail and improves its understanding of their potential impacts. The members are not intended to represent specific sectors within the construction industry.

I am looking forward to involving the sounding board in a process of dialogue over the coming months with the construction industry and its stakeholders. This will include a post-consultation event which I will be hosting on 14 February. Assuming it is possible to implement these measures via a regulatory reform order, the DTI then intends to issue a further consultation on a final package of amendments in the spring.

The analysis is available at

Gas Quality

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My honourable friend the Minister of State for Energy (Malcolm Wicks) has made the following Written Ministerial Statement.

On 8 January 2004, in a Written Ministerial Statement (Official Report, House of Commons; cols. 13–14WS), the then Minister with responsibility for energy launched the second phase of a three-phase strategy addressing the issue of future changes to the quality of gas imports to Great Britain. I can now inform the House that assessment of the available policy options, under phase 2 of the exercise, is complete. All of the available evidence points to a strong case for retaining the current gas quality specifications, and during the Christmas Recess the Government launched a public consultation on this basis.

Phase 1 of this exercise, an independent scoping report commissioned by the Government, was completed in November 2003. It confirmed that the Wobbe Index specification of certain anticipated gas imports is, before processing, likely to fall outside the current limits of the Health and Safety Executive's Gas Safety (Management) Regulations (GS(M)R). In light of Great Britain's increasing dependence on imported gas, phase 2 of the exercise was launched to identify an appropriate policy response.

As stated in previous announcements, our broad policy options appear to be to retain the current specifications, requiring off-specification imports to be blended or processed so that the gas composition complies with existing limits, or to amend the current specifications to reflect more closely the expected quality of future gas supplies.

During the course of phase 2 the department has let a variety of independent technical research contracts, and officials have worked closely with key stakeholders, to evaluate these options. The results show that treating off-specification imports is technically feasible and relatively cost-effective, but that the investment required risks deterring certain
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supplies at the gas quality margins. Alternatively, amending Great Britain's gas quality specifications could improve access to more diverse sources of supply, thus safeguarding against supply shortfalls and maintaining competition in the British gas supply market. However, introducing such changes would pose a potential threat to the safety of many gas appliances, and would risk increasing environmental emissions. Changes to Great Britain's gas quality regulations could not therefore be implemented without first undertaking a nation-wide program to manage at-risk appliances. This would be extremely expensive. The Government therefore propose to retain the current gas quality specifications and has moved to public consultation on this basis.

During the consultation period the department plans to hold a workshop, to provide an opportunity for stakeholders to register their interest, and to brief them.

I shall report to the House in due course on the outcome of this consultation and on the timetable for the remainder of the exercise.

This exercise has been developed by the DTI as a member of the Sustainable Energy Policy Network (SEPN) which is working to deliver the Energy White Paper Our Energy Future—creating a low carbon economy.
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Nicaragua: British Embassy

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman): Copies of the reply to a freedom of information request relating to the decision to close the British Embassy in Nicaragua in 2003 have been placed in the Library of the House.

Prisons: Hydebank House

The Minister of State, Northern Ireland Office (Lord Rooker): My right honourable friend the Secretary of State for Northern Ireland (Peter Hain) has made the following Ministerial Statement.

I wish to announce that with effect from 23 January 2006, in accordance with the powers conferred on me by Rule 5(1) of the Prisons and Young Offenders Centre Rules (Northern Ireland) 1995, the boundaries of Hydebank Wood Prison are hereby altered to include that part of Hydebank Wood Young Offenders Centre known as Beech House. The area to be included is indicated on the site map, which I have today placed in the Libraries of both Houses, by the words "Beech House".
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