Construction (Design and Management) Regulations 2015 — Motion to Take Note

– in the House of Lords at 1:00 pm on 26th March 2015.

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Moved by Lord Stevenson of Balmacara

That this House takes note of the Construction (Design and Management) Regulations 2015. (SI 2015/51)

Relevant document: 26th Report from the Secondary Legislation Scrutiny Committee

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 1:02 pm, 26th March 2015

My Lords, I declare an interest that my wife is a practising lawyer who deals with construction contracts.

I should make it clear that we support the important work that the HSE does and we are obviously very keen to do what we can to support it and further improve the safety record of the construction industry. As the Olympics project showed, we can and do undertake major projects without fatalities, but 45 fatalities a year in the sector is too many and too high a price to pay.

I am grateful to the noble Lord, Lord Freud, for agreeing to take this short debate at unreasonably short notice, which is entirely my fault. I want to use the opportunity to invite him to respond to a couple of points raised by the Secondary Legislation Scrutiny Committee, which I think will be helpful in getting the message out about the changes that are being made.

I understand that the HSE policy objectives with these regulations are, according to its own documentation, to:

“Maintain or improve worker protection … Simplify the regulatory package … Improve health and safety standards on small construction sites … Discourage bureaucracy … Meet better regulation principles”.

Of course, we support all those laudable objectives.

My first point relates to the inclusion from 6 April of all domestic construction within the scope of the CDM regulations. These are negative regulations, which stem from powers in the 1992 EU directive. The Secondary Legislation Scrutiny Committee notes that the 2015 regulations remove the exemption previously given under the 2007 regulations to domestic home owners—what the committee calls “domestic clients”. The point is made that the way in which the regulations are framed and the Explanatory Memorandum rather conceal the fact that it is slightly unusual to make this major change, involving quite a large number of people across the country—who are going to be brought for the first time into a regulatory structure which, after all, has criminal penalties when things go wrong—through the negative procedure, which means that of course Parliament has no opportunity directly to discuss it, other than through this sort of format. The noble Lord may feel that I am being unnecessarily bureaucratic in that—perish the thought—but I wonder whether he might reflect on the possibility that a change of this order might better have been done either by primary legislation or through an affirmative resolution, which would have given us a chance to discuss it.

In some sense, there is no need to panic. However, I left in my house this morning two tradesmen—who amazingly turned up on time—doing some work; one a joiner and one a plumber. Long may they continue to work there and I hope that they are still there when I get back. The point I make is that I left them without any requirement to enforce any form of regulatory environment because my house, being a domestic premise, is excluded from the arrangements. However, it occurred to me as I left that, after 6 April, the situation will have changed.

Will the situation have changed or will it not? I think that it will have changed. Persons who are currently excluded under the regulations will be included; for example, all householders and anybody involving themselves with domestic work on their premises. The reason it may not have an impact, as I am sure the Minister will come on to, is that the approach taken by the HSE in dealing with the very large number of additional persons concerned with the CDM regulations is that they will be deemed to have had a process undertaken under which the responsibilities that they would have accepted under the regulations have been deemed to have been passed to the contractor. Whether the contractor knows that or not is another matter. The issue—one should be quite open about this—is that the requirements on the client which apply in commercial situations are mainly ones of organisation, notification and information, and therefore are not onerous. It would be, in ordinary parlance, quite acceptable to expect that a competent contractor would understand the issues that are raised by taking on a domestic contract and would be expected to undertake the deemed responsibilities that are going across. We arrive, as the Secondary Legislation Scrutiny Committee says, in a not unreasonable place.

I have a slight worry, however, and wonder whether the Minister might respond to this. Whereas before, 23 million or so households were excluded, they are now included, and I am not quite sure why that has happened and would be grateful if he could explain why we should not be concerned about that.

The second point I want to raise is a sector-specific concern. The Minister will be aware of the considerable concerns expressed by the creative industries and the entertainment sector. The argument is made that the creative industries engage in the construction of temporary demountable structures—for ease, I will call them TDS—which are a small but integrated part of their normal production processes and mainly involve the building of theatre and TV or film sets and the erection of marquee structures and stands within conference facilities. It is well understood within the sector that the construction of a new studio or a permanent production facility falls within the directive and should therefore be considered within the CDM 2015 regulations. However, the sector does not apply the CDM regulations to smaller scale, very temporary works and relies on a well understood risk management process and procedures that are deemed proportionate and suitable to manage the risks arising from these activities. The sector argues that it has a good safety track record and good risk management processes in place. The point at issue is that the HSE, on reviewing the situation, has decided that the CDM regulations must be applied to the construction of all temporary dismountable structures, regardless of size, scope or scale. The HSE has argued that it has no discretion on this because the UK has obligations under the EU directive. That directive is the 1992 EU directive and has not changed, so why is this happening? It would be interesting if the Minister could explain why there has been an alteration in this.

I would like to end by saying that the Minister is, I think, aware that the sector has been in quite detailed correspondence and meetings with the HSE. Indeed, I have a copy of a letter, dated 19 March, from the chairman to Pact, one of the leading bodies in the sector, acting on behalf of many of the companies involved. In the letter, the chairman says that she understands the sector’s concerns and the strength of feeling that underpins them—she certainly would not be able to miss it because there has been quite vigorous correspondence, I understand. She goes on to say, and this is the point that I want the Minister to respond to, that she shares the sector’s,

“unease about how this Directive, which fits well with mainstream construction work, is interpreted by those for whom construction work is only a small and occasional part of their business”.

In other words, she seems to be saying that she rather agrees with the sector that maybe it is not proportionate to require the CDM regulations in their full force to be applied to temporary structures, particularly film sets and the like.

We are in a bit of an odd situation here. On the one hand, the HSE is certain that it has no discretion and that the regulations have to be applied. On the other hand, it says that it sympathises with those who are concerned about having to implement the full process. They cannot both be right, so I hope that the Minister will give his interpretation. We have uncertainty looming on 6 April. Uncertainty is clearly not good for safety, and it would be great if the Minister could make a statement which reassured all the sectors concerned. I beg to move.

Photo of The Bishop of Chester The Bishop of Chester Bishop

My Lords, I have just one brief question for the Minister on the regulations. Paragraph 20 of the impact assessment refers to financial impact. It states that the deemed approach—which is much the better one, I am sure—will cost £1.3 million to homeowners and £4.6 million to contractors. All my experience is that costs to contractors get handed on to the people for whom they are providing their services, so how do we know that the £4.6 million will not simply be handed on to the homeowners to whom the services are being provided? How can one make that distinction?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I thank the noble Lord, Lord Stevenson, for raising this issue and giving me the opportunity to reassure him and others on both the key points that he raises, which are the implications for domestic owners and for the entertainment industry. In particular, I reassure his plumber and joiner that their responsibilities in practice will not change as a result of the introduction of the regulations.

Since their first implementation in 1994, the Construction (Design and Management) Regulations—let us shorten them to CDM—have facilitated widespread culture change, improved ownership of risk, and a reduction in fatal and major incidence rates by two-thirds. That is a good news story in everyone’s book, and I welcome the chance to spell that out.

The CDM 2015 regulations are reformed and simplified. They retain technical standards to be achieved on sites, enable reduction in industry bureaucracy and improved compliance in small businesses, and address two areas of underimplementation of the temporary or mobile construction sites directive. Overall, the regulations are estimated to generate net savings to business of £121 million over 10 years. CDM 2015 is thus a significant enabler of growth in an industry employing more than 2 million people.

Despite the numerous benefits that the revision brings, the Government recognise that some businesses have raised concerns arising from the consequences of implementing certain requirements of the directive. The Government had no realistic option other than to implement these measures to comply with our European obligations and avoid the consequences of failing properly to transpose the directive, but we have done so in a way that minimises overheads, and at the same time have taken the opportunity to make the significant reforms to the regulations that I mentioned.

Those concerns relate to lower thresholds for health and safety co-ordinator appointments and written health and safety plans, and in application to domestic clients for the first time. The regulations have always applied to construction work wherever it is undertaken and whatever its scale, complexity and risk. Some stakeholders in the entertainment industry have been particularly exercised that unduly burdensome administrative requirements will now arise for minor construction work that is part of their day-to-day business.

The Government and HSE are aware that there is a sometimes a tendency in parts of the entertainment sector for overcompliance with health and safety requirements. Indeed, the HSE’s Myth Busters panel has dealt with a number of cases from the entertainment sector where a disproportionate approach or decision has been made. The guidance supporting the CDM regulations 2015 stresses the need for a proportionate and practical approach to the management of risk, and this of course is the Government’s goal, too. The industry needs to respond appropriately, and I am encouraged that the HSE is fully engaged with entertainment industry stakeholders to produce sector-specific guidance. This will help the industry to understand how its current management arrangements can be applied to comply with the CDM regulations 2015, and avoid overcomplicating matters which could incur unnecessary cost.

The right reverend Prelate the Bishop of Chester raised issues on costs added to homeowners. Clearly, in the end the costs will be added to homeowners—that is how it works. Contractors do work for people and add on the costs but those costs are extraordinarily small in an economy of—what are we, £1.5 trillion? Costs of £4.6 million are extremely small, particularly compared with the costs that homeowners would otherwise have had if they were not able to deem the issue down to the contractor, which is what this structure does.

To pick up the point of the noble Lord, Lord Stevenson, on the way in which this legislation was introduced through the negative resolution procedure, all health and safety legislation is made in this way. As I have explained, this change to the domestic client provisions was required to comply with EU law obligations and, as I say, that is the way that we always do these changes in HSE.

I think that I have dealt with all the questions raised. Let me thank the noble Lord again because I hope that I have provided reassurance all around that this provision is proportionate, saves money and makes sure that we are actually complying with our obligations.

Motion agreed.