In his first column, in April 1987, our legal columnist, criticised the CITB levy. As a new training charge looms, he assesses the 30 years since: ‘disputomania’, adjudication, and what happens next
Here we go again … A training levy - the “apprenticeship levy” - kicked in on 6 April 2017. It’s a neat 0.5% on your wage bill, if you are a big boy employer. Yes, that’s on top of your CITB training levy, if you are a constructor.
Now, let me tell you a story. In 1964, the government introduced industrial training levies. They were for all parts of commerce, as well as construction. It established 31 industrial training boards (ITBs): hopeless, useless and resented. Margaret Thatcher abolished 29 of the ITBs at a stroke. Of the two left, one was the Construction Industry Training Board (CITB) (along with the Engineering Industry Training Board). The CITB stayed by the skin of its teeth.
Let me tell you another story. My very first page here was precisely 30 years ago. It was about the CITB. More particularly it was about the daftness of how the CITB levy was collected. That criticism is not about the notion of having a CITB. It was about slamming the industry with a tax (the levy) and the bitter resentment it was causing and that much of the world of building was telling the CITB to go to hell no matter what was available in the training levy. That page, 30 years ago, campaigned for a change in levy collection. It said put the training levy on basic building materials: 2p on plasterboard, 2p on bricks, and more besides. I still believe that is the trick that will give us all the cash for training. But it’s like talking to a brick wall.
Another piece, three years ago, described the plethora of contract documents contractors had to contend with. I believed then that hardly any constructor reads, let alone understands, those documents. I still wholly believe that even if folk attempt to read the clauses, sub-clauses and more besides, they will not be understood. Except that every corner of the construction world those 30 years on has cottoned on to the business of claims. Building things seems to have become a sideline, while the rest of us have happily become disputomaniacs about building.
The big disputes industry is not just a UK epidemic. Consultant Arcadis have been tracking global construction disputes. Asia, Europe, the Middle East and North America have almost identical causes of disputes:
- Failure to administer the contract How come? Construction folk are busy every day doing the putter-uppering. Niceties as to contractual procedures, letters and notices are a complete pain in the neck and in any case frequently written in language of lawyers, so get put to one side.
- Poorly drafted claims documents True. For goodness’ sake, drafting a claim is lawyer’s work, but that’s expensive. So the chaps in the office write amateur claims.
- Errors and omissions in the contract documents Agreed. Time and again the dispute is about what the contract is thought to mean. Even the unfiddled well-known standard forms are open to interpretation and then can be exploited.
- Failure to understand and/or comply with contractual obligations by the employer/contractor/subcontractor Do you see how all these points overlap? The contractual rules are unfathomable to the lads doing the actual building work
- Failure to make interim awards on extensions of time and compensation This is the big tease, the big notion of wait and see, the big opportunity to put pressure and expense on constructors to scramble to make up time. It causes ructions on site and poor rushed work as well.
Needless to say morale sags, profits evaporate and the claims game thrives. We have more claimsters, lawyers, and consultants than we do bricklayers.
By the time of the mid-1990s litigation was severely criticised. Lord Woolf’s 1995 report declared litigation was not fit for purpose. Arbitration aped litigation and was condemned for its expense and delay. Building magazine, at that time, beat the drum for dispute resolution to be much more commercially savvy.
And parliament listened to theses voices and to the Latham report. It’s now 19 years that we have had adjudication: 28-days of crash-bang-wallop dispute deciding. It has at its heart the question of “which party will pro tem have the cash?” It’s not a forum for deciding the dispute, not the forum for an ultimate decision on the rights to the cash. It is not litigation. It is not a trial. It’s not an inquiry, which tests the evidence and story of witnesses, nor expert witnesses. It’s 28 days to do the best to say who will pay or hold the money. The 19 years since have seen an unwitting pull for adjudication to adopt litigation process. Stop it. That idea is not working. It is putting up the cost. The innovation of 28-day adjudication here in the UK has in these years seen the idea take off in New Zealand, Australia, Singapore, Malaysia and Ireland. The amount we have learned about the idea is huge.
So the challenge now has to be dispute avoidance. We still don’t understand collaboration, but it is vital. We don’t understand how to simplify contractual bumf. We don’t understand how to avoid disputes. That idea must be a drum for Building magazine to beat. Beat it.
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple
To read Tony Bingham’s debut from April 1987, as well as the 2014 piece he references, download the PDFs from the Related files section