The yr forward in development regulation | Remark


A year ago, when I was thinking about what 2020 could mean for the industry, no one could foresee the impending turmoil – a global pandemic hadn’t crossed anybody’s mind. Covid-19, uncertainty about the terms of our exit from the EU and ongoing concerns about building and fire safety made for a difficult year, but construction in the UK has continued. Construction continued during the pandemic, when there were safe operating procedures for sites, and the ONS figures showed that construction output was slowly increasing towards the end of 2020.

Just one week before the end of the transition period, a trade and cooperation agreement was signed between the EU and Great Britain on December 24, 2020. The trade agreement means that no tariffs or quotas on goods exported to or imported from the EU will apply to goods that conform to the relevant rules of origin but now require customs declarations. Delays are expected as new transit processes are introduced and we are still catching up to the effects of lockdowns across Europe. From 1st January 2022 a UK labeling system will be introduced for products intended to be used in the UK market to replace the CE system.

In terms of resources, contractors and consultants across the supply chain are likely to feel the impact of a shortage of skilled labor and design professionals on-site when stricter immigration regulations come into effect. Anyone wishing to work in the UK is now subject to a points-based application system designed to attract “skilled workers”. Note, however, that the trade agreement does not provide for mutual recognition of professional qualifications.

With uncertainty about the cost and availability of materials and resources, pricing and programming new projects remains a challenge. In the case of existing projects, it will be interesting to see whether so-called Brexit clauses in contracts, which enable contracts to be renegotiated or terminated, come into force and, if so, how these are interpreted by the judges and the courts.

What the industry needs is clarity about the revised regulatory system, the exact types of buildings it will include, and who will regulate that system

Building and fire safety issues are expected to be the focus well into 2021. Phase 2 of the Grenfell investigation to investigate the causes of the fire began in early 2020, but as progress slowed by the pandemic, the Phase 2 report by Sir Martin Moore-Bick is not expected to be published until 2022. About three and a half years after the fire, apart from a ban on flammable cladding in buildings over 18 m, we are still waiting for clarity on what the regulatory environment will look like after Grenfell.

We have seen several government consultations since the fire. The Building Security Act, published in July 2020, has made slow progress in parliament, but is not expected to come into force until late 2021 and may be further delayed. The industry is likely to continue to face a patchwork of interim measures. Guides (no change in law) and poorly thought out solutions to specific problems like the EWS1 form. These measures are designed to create trust, but appear to do exactly the opposite. What the industry needs is clarity about the revised regulatory system, the exact types of buildings it will include, and who will regulate that system. Only then can effective training and further education be established.

Unfortunately, the range of issues that continue to affect the industry will not help alleviate the difficulties of obtaining professional indemnity insurance or the soaring premium increases that we saw in 2020. Fewer insurers cover construction risks, and those who do often limit coverage with exclusions for cladding risks and fire safety issues. The specialist knowledge of architects, building surveyors, fire service engineers and facade engineers is required in order to assess the safety of exterior wall systems and the need for renovation. However, this is often without limiting their own liability and often without the convenience of adequate professional liability insurance.

The rise in construction disputes towards the end of 2020 is likely to continue until 2021. Virtual court hearings, minutes of meetings and mediations have shown that the legal process can be continued remotely. The London Court of International Arbitration and the International Chamber of Commerce have issued new arbitration rules. Both contain provisions to streamline the arbitration process and to expedite the process. With the backlog in the courts caused by covid-19, we’re adding more arbitration, jurisdiction and ADR to resolve disputes.

While the industry struggles with the impact of covid-19, our exit from the EU, and the excitement over fire safety, one positive outcome is the focus this has placed on expertise in the industry and raising standards. The Competency Steering Group’s recently published final report, Setting the Bar, offers a blueprint for improving skills and promoting cultural change. The consultations will take place until 2021 and will lead to an overarching competence framework that will be anchored in a UK standard by March 2022. Thirteen working groups have defined industry-specific framework conditions that provide the skills, knowledge, experience and behavior required to perform certain roles. The focus on education and best practices is gratifying.

Another positive result is the government’s publication of the construction book for public sector works. The goals are commendable: to maintain projects and programs from the start.

When embedded in the industry, both initiatives will improve project results, reducing the disputes and claims that undermine the economic and social contribution of the construction industry. Certainly 2021 will be a year like no other as construction in the UK gets a future post-pandemic and post-Brexit under control.

Sheena Sood is a Senior Partner at lawyers Beale & Co.