The changes give local authorities the power to set their own building control charges, allowing them to reduce their fees on bigger projects and compete more effectively with private sector approved inspectors.
But industry sources believe the changes could mean increased costs for small contractors. Local authorities had been subsidising building control fees on small, non-profit-making commercial and domestic projects.
One local authority building surveyor said: "Approved inspectors are picking all the profitable commercial projects and we are stuck with all the messy little projects that no one wants." In one London borough, building inspection fees on a 6 m2 domestic extension have risen 100%, whereas fees for a £1m commercial development in the same borough have dropped almost 20%.
It is not only in London that changes of this type are occurring. "The Local Government Association helped all local authorities nationally set a fee structure by publishing a schedule of advisory charges," said Trevor Haynes, building policy officer at the LGA.
"Most local authorities have accepted this structure by basing their fees within 10% of it." Most London boroughs will be adopting exactly the same fee structure.
But some local authorities are concerned that, even with the new charge structure, it will be difficult for them to compete with the private sector. The local authority source said: "If we lose too many big jobs, there is no way we can break even, and fees on small schemes will have to rise considerably." But Haynes said: "There is no possibility of a Dutch auction on prices. The message from developers is that they want a quality service." Bob Williams of private sector approved inspector TPS Special Services agrees: "Our clients come to us for a professional service. Fees are not that important." Local authority prices are not fixed, however, and charges could rise still further. To assess the viability of the price structure, local authorities will have to submit their accounts after three years.
Larger authorities are under pressure to break even, but smaller authorities are expected to recover 90% of the cost of the service.