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Payments reform in by 2010, says HVCA chief

Amendments to the Construction Act will be introduced during the next parliamentary session, the Heating and Ventilating Contractors’ Association has predicted.

The forecast was delivered by Gareth Vaughan during the president’s address at the annual HVCA President’s Luncheon, held in London last week.

He said: “We know that the Government has been engaged for some years now in a review of this Act, with the intention of adding rigour to certain of its key payment and adjudication provisions.

“I am pleased to be able to confirm that, at last, amendments to the legislation will almost certainly be introduced during the course of the next Parliament.”

The Construction Act amendments (the consultation paper on the draft clauses in the Construction Contracts Bill closed recently) seek to improve cash flow along the construction industry’s supply chain, resolve payment disputes and encourage disputing parties to resolve conflicts via adjudication, as opposed to through the courts.

One draft clause proposes to remove the requirement for construction contracts to be made in writing in order for the Construction Act to apply.

Another proposal includes introducing a statutory framework for the costs of adjudication.

Amendments to the construction contracts legislation, which are contained within Part II of the Housing Grants, Construction and Regeneration Act 1996, were announced in Gordon Brown’s draft Queen’s Speech in May.

At the time there were fears that, with 18 separate bills announced in the draft legislative programme 2008-2009, the Government would not have the time to ensure that the amendments make it into the next parliamentary session. Governments are renowned for over-publishing their legislative programme.

But Mr Vaughan’s comments were endorsed by Rod Pettigrew, the HVCA’s head of legal and commercial work, who explained that the HVCA had been advised by civil servants to expect the amendments to be included in the Queen’s speech in December.
He said: “Our expectation is that, following the Queen’s speech, the draft amendments will become part of the Government’s next legislative programme.

“We expect to see the primary legislation pass through both houses between December and July.

“This will then be followed by the secondary legislation, which we believe will take longer. We expect the provisions of the Act to come into effect in 2010.”

Mr Pettigrew added: “This is great news and, while we welcome some parts of the bill, we still feel that there is a bit more tweaking to do.

“The HVCA and the Specialist Engineering Contractors’ Group have been heavily engaged in this for a long time now and we want the Government to get the legislation right.”

Professor Rudi Klein, chief executive of the SEC Group, said: “In terms of what Berr is proposing, I think it is on the right track. We do have some reservations.

“I think the provisions allowing the payer to submit two payment notices needs to be looked at again. We would also like to see an outlawing of cross-contracts set-offs.”

A Berr spokesman would neither confirm nor deny whether the amendments would be mentioned in the Queen’s speech. 

The Contractors Confederation has vowed to fight for main contractors’ interests once the Draft Bill clauses are published for pre-legislative scrutiny.