Industry trade bodies remain divided over the draft of the revamped Construction Act, unveiled by the government this week, writes Dan Stewart.

The changes, designed to improve payment flow through the supply chain and to reform disputes procedures (see box below), largely mirror the measures detailed in the most recent consultation in June 2007.

The business department says the changes could save the industry up to £1bn a year.

The bill, which will reform the Housing Grants, Construction and Regeneration Act 1996, is now unlikely to change substantially before it becomes law during the next parliamentary session.

However, the Construction Confederation has called for improved guidance on existing laws rather than new legislation.

Stephen Ratcliffe, its chief executive, said: “We believe there is a risk that these changes will actually bring more red tape and increased costs to the industry.”

We will continue to push for one statutory procedure for adjudication

Rudi Klein, Sec Group

The changes were mostly welcomed, however, by specialist groups. Suzannah Nichol, chief executive of the National Specialist Contractors Council, said they were a “significant step in the right direction”.

Rudi Klein, chair of the Specialist Engineering Contractors’ Group, said: “These are significant developments, but we will continue to push the government to legislate for one procedure for adjudication.”

The business department estimates that, if enacted, the clauses could reduce the cost of adjudication by £5.8m, and save the industry £1bn by improving payment frameworks.

The department will now undertake a final, technical consultation on the exact clauses to be included in the act during the summer, before it passes through the Houses of Parliament next year.

What reforms are being proposed

  • Remove the requirement that construction contracts be in writing
  • Introduce a proper framework for adjudication costs
  • Remove restrictions on which party can issue payment notices, giving greater powers to subcontractors
  • Introduce a “fall back” provision, which will allow contractors to issue a payment notice if the payer fails to do so
  • Ban “pay when certified” clauses
  • Reinforce the right to suspend work in the event of non-payment