Local Democracy, Economic Development and Construction Bill [HL]

We come to Part 8. Some of us would have liked to have reached this point a little earlier, but this is the eighth day in Committee, so there is a certain symmetry to reaching Part 8. Part 8 is a discrete part of the Bill; it does not have a great deal of connection with all the parts of the Bill that we have dealt with so far. I make no complaint about that because if Her Majesty’s Government think, as they surely do, that some improvements can be made to the Housing Grants, Construction and Regeneration Act 1996, this is a convenient vehicle and that is fine with me. Indeed, I take the view, as my noble friend the Minister will appreciate, that Part 8 can be improved further by my amendments to what I will now call the construction Act 1996. My noble friend the Minister will be aware that behind these amendments lies a great deal of skill and energy of the Specialist Engineering Contractors’ Group, which is really an umbrella body for a number of significant trade associations in the construction industry, which comprises some 60,000 firms in total. The 1996 Act has been very helpful for the construction industry. It introduced a right of adjudication as a speedy and inexpensive method of resolving disputes, ostensibly on a temporary basis, but in many cases provided a sticking and more lasting settlement. Unfortunately, over the 10 years since then, bespoke procedures have commonly been inserted in construction contracts. Apart from the minimum of eight adjudication requirements set out in the statute, contract procedures can prevail. Freedom of contract is a fine concept, which is especially valid when parties to the contract are of similar bargaining strengths and each is advised by a lawyer who is well able to seek their way through every aspect of the contract. However, in the construction industry, most smaller and medium-sized enterprises, including subcontractors, do not have that facility. Fairness between all parties—major contractors, subcontractors, SMEs in their thousands—suggests that the statutory scheme of adjudication, which the 1996 Act introduced, should be a mandatory, self-contained scheme that cannot be overridden by contractual provisions that diverge from the scheme. The Government have recognised that bespoke adjudication procedures, devised no doubt by major contractors on a take-it-or-leave-it basis for other contracting parties, can result in abuse. For example, it has been decided that the Bill in Clause 135 should ban any clause requiring the party referring a dispute to adjudication to pay the other side’s legal costs, even when the decision is in his favour. We are hardly likely to have the convenient vehicle of primary legislation frequently enough—every year or two—to cope with some of the other abuses that may arise. Surely it would be better to have a standard procedure as provided by the principal amendment in this group, Amendment 204A. Greater fairness and clarity would be achieved. I understand that that small but vital member of the Commonwealth, New Zealand, has introduced construction contracts whereby all are subject to adjudication procedure. Perhaps we should follow that, as we have done in other matters, such as the parliamentary ombudsman scheme which we are now so proud of. We may not even remember that it originated from somewhere else in the Commonwealth. My other amendments in this group are consequential on that basic proposition of having one mandatory adjudication scheme. One of the amendments bans contractual provisions that require a party to provide security for any costs incurred by the other party. That is similar to the provision in Clause 135 that the Government themselves are dealing with, and disallows provision for costs made after giving notice of intention to go to adjudication. That is because allocation of costs is inappropriate to an adjudication system where there are no winners or losers. In any case, a clause enabling people to give notice after they intend to go to adjudication providing for costs could easily be abused. One final aspect of this collection of amendments is in proposed new Section 108(6), which enables easy enforcement of debts irrespective of counterclaims, as is the case where a cheque is dishonoured. The cheque must be paid, irrespective of some counterclaim that it is feasible someone may have. I have argued the main point of the amendments. I beg to move.