UK Parliament / Open data

Local Democracy, Economic Development and Construction Bill [Lords]

What is important is that we get this right, and there have been a number of discussions about how to do that. We should look on the bright side and say, "Here we are, debating these proposals today." I am pleased that a number of proposals have support from Opposition parties, even though there is a desire on the part of some right hon. and hon. Members to go further than we have and to put forward different ideas. The important thing is that we have the Bill before us today, and I hope that means the Opposition will support the overall direction of the Bill on Third Reading. Having addressed the importance of the debate and the attempt to find a solution to some of the issues that have been raised, I shall move on to some of the points that have been made in the debate. The hon. Member for Peterborough (Mr. Jackson) asked about the single statutory adjudication review. I assure him that the secondary legislation will be reviewed in the light of the responses to the consultation. We hope to consult early in the new year. Of course, the statutory scheme will continue to apply where parties make inadequate provision in their contract for adjudication. We will deal with that in secondary legislation. Only this morning, I was discussing with officials the fact that the ideas advanced by my right hon. Friend the Member for Greenwich and Woolwich were the inspiration for amendment 22. But, I want to assure him that there will not be a lacuna. We will allow a particular type of pre-dispute agreement, regarding costs—a clause in the parties' construction contract to the effect that an adjudicator will be able to allocate his own costs as part of his decision. I shall now address new clause 3. As the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) has said, the new clause would introduce to the 1996 Act a provision enabling firms to request security regarding payments from the payer. That would give the payee under a construction contract the statutory right to demand adequate security from the payer in the form of a charge or a bank guarantee in respect of the payer's payments under the contract. If no security were forthcoming, the payee would be entitled to suspend performance until it was. Moreover, the payer would have to pay the payee an additional sum reflecting the extra costs that the payee incurred in stopping work. Consequently, if the main contractor were to fail, his other creditors—quite possibly not construction firms—would be in a much weaker position. Depending on the type of security, there would be fewer assets available to satisfy claims. Any trading partner of the contractor would be able to request such security during the normal course of business, but that partner would not be able to demand it. The ability to demand security would put the construction sub-contractor in an unjustifiably stronger position.
Type
Proceeding contribution
Reference
497 c185 
Session
2008-09
Chamber / Committee
House of Commons chamber
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