Readers will no doubt be aware of the proposals currently afoot to amend the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act).  

A brief history  

The Department for Business Enterprise & Regulatory Reform (BERR) published a draft Bill in July 2008 (summarised in our July 2008 Updater).  

Many interested parties in the construction industry (including Norton Rose Group) commented to BERR on this draft Bill (see our August 2008 Updater).  

The current position  

The Local Democracy, Economic Development and Construction Bill (the draft Bill) is currently at the committee stage before the House of Lords.  

We understand that BERR anticipates that the draft Bill will be enacted by the end of 2009 and that it is unlikely that the amended provisions will become operative until a couple of years after that.  

Whilst some changes have been included within the draft Bill to reflect comments received by BERR, the vast majority of the concerns we raised have not been reflected in the draft Bill.  

The major issues  

Our major concerns on the draft Bill relate to:  

  • The provisions which prohibit contractual clauses which make payment conditional upon (a) the performance of obligations under another contract; or (b) a decision by any party as to whether obligations under another contract have been performed.

These provisions will affect (amongst other things) the “Equivalent Project Relief” clauses included in all PFI sub-contracts. This extract (from our comments to BERR submitted in August 2008) summarises our concerns (in relation to the previously published Bill) which have not been addressed; and  

  • The complexity of the new regime for payment provisions in construction contracts. This extract (from our comments to BERR submitted in August 2008) summarises our concerns (in relation to the previously published Bill) which have not been addressed.