On 16 January 2006 the government published the latest round of its review of the Construction Act. The new paper analyses the results of the government’s consultation paper of March 2005 and the 356 responses received by the deadline of June 2005. It sets out the government’s proposals for change.
The following summarises the changes proposed and not proposed to the Construction Act in the government’s latest paper. It also compares them with the proposals in the consultation paper of March 2005.
Overall the proposals amount to tweaking rather than wholesale change. This seems only right given that the Act has generally worked well.
Matters excluded from formal consultation
A number of important matters have been included from the formal consultation process including the following:
- Whether to widen the scope of the Act to include:
– Partly oral and entirely oral contracts. The government is to consider further the possibility of amending the Act by primary legislation. The January 2006 paper says that “This is likely to be a matter for consultation in the future”. The government wants to change the Act by Regulatory Reform Order but this is only available for reducing regulatory burdens (whereas such a change would extend them).
– PFI/PPP project agreements, contracts in respect of residential buildings for owner-occupiers and contracts for operations related process plant. The government ruled out extending the scope of the Act to cover such contracts in October 2004.
- Whether to provide a statutory limit on payment period lengths. The government ruled out legislative change on this in the March 2005 consultation paper.
- Whether to empower payers to redirect payments owed to insolvent contractors to their creditor sub-contractors and suppliers. Again the government ruled out action on this in the March 2005 consultation paper.
- Whether to introduce a single set of procedural rules for all adjudications. The January 2006 paper says that “The industry may wish to consider whether to bring its own standard adjudication procedures more closely into line with one another”.
In Spring 2006 another consultation paper on amendments is due. From the results of that paper conclusions should be drawn in time for the 2006-7 parliamentary session.
This article first appeared in our Construction and development legal update Spring 2006. To view this publication, please click here to open it as a pdf in a new window.