Local Democracy, Economic Development and Construction Bill [HL]

I shall speak also to Amendment 9. Amendment 4 addresses the Secretary of State’s power to disapply the operation of Part 2 of the Housing Grants, Construction and Regeneration Act 1996 from types of construction contract. While the Bill has been going through Parliament, we have been approached by a number of stakeholders from within the industry and also its customers who are concerned about the nature of the Secretary of State’s power to exclude contracts from the provisions of the 1996 Act. Currently the 1996 Act contains an "all or nothing" power so that the Secretary of State can disapply all the provisions of Part 2 of the 1996 Act from types of contract. We would like to substitute a new power enabling the Secretary of State to disapply any, not necessarily all, of the provisions of Part 2 of the 1996 Act. The current power in the 1996 Act is a blunt one. Amendment 4 will allow the Secretary of State to exercise the disapplication power in a proportionate manner. This approach will give us the flexibility to deal with specific issues of direct concern with particular types of contract. Importantly, it will allow us to ensure that as many of the valuable features of the 1996 Act as amended by this Bill continue to apply—for instance, the right to stage payments, the right to adjudication and the right to suspend performance in cases of non-payment as appropriate. The legislation will also be able to respond proportionately to future contractual innovations. The current order-making power is subject to the affirmative procedure, and that will be the case with the new power. The next amendments in this group are Commons Amendments 5 and 6, which are minor amendments to Clause 137, concerning pre-dispute agreements regarding adjudication costs. The 1996 Act was silent on the costs of adjudication and this has led to a practice in the industry whereby the party with the most bargaining power can insert a clause into the construction contract requiring that if the weaker party wants to go to adjudication to determine a dispute, they would have to pay all the superior party’s legal and other costs, and all the fees and expenses of the adjudicator. Clearly, such practices are unacceptable and are directly intended to work against the intent of the 1996 Act. Clause 137 therefore inserts new Section 108A into the 1996 Act, and this prevents parties to construction contracts from entering into agreements before a dispute has arisen as to who should pick up the costs of an adjudication. A consequence of this broad and simple prohibition is that pre-dispute agreements between the parties to the effect that an adjudicator can allocate his fees and expenses as part of his decision are also caught. Allowing the parties to agree in their construction contract that the adjudicator has this power is current good practice, which we would like to preserve. This amendment achieves this by carving out such agreements from the general prohibition. This is wholly in line with the amendment suggested by my noble friend Lord Brett during report on 22 April. I beg to move.