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Work and Pensions Committee opens investigation into Carillion collapse

The UK government’s Work and Pensions Committee has launched an investigation into the collapse of Carillion.

The Committee has published an initial set of questions to The Pensions Regulator (TPR) and the pension scheme trustees on the demise of the firm with a “giant pension deficit and a mountain of debt”.

The UK’s second largest construction company was placed into compulsory liquidation on Monday following unsuccessful emergency financing talks with its lenders and the banks. The company employs 20,000 people in the UK and has debts of £1.15 billion and a pension shortfall of over half a billion.

Frank Field MP, chair of the Committee, said: “I am pleased that the Liaison Committee will be investigating Carillion – the company’s collapse begs questions across government.

“We have some specific concerns on the pensions side. It beggars belief that a company can be allowed to run with such apparent recklessness—and be so lucrative for the directors and shareholders – when it has a giant pension deficit and a mountain of debt.

“I will be proposing we take evidence from the company directors, the trustees, the pensions regulator and the auditors who somehow concluded Carillion was a going concern.

“Where our concerns overlap we will look to work closely with the Business Committee, as we have done successfully in the past.”

New Chapter architects unveil five-point plan to reform RIAS

A group of Scottish architects have launched their five-point plan for the reform of the Royal Incorporation of Architects in Scotland (RIAS).

Presented today by A New Chapter, an independent association of around 150 Scottish architects formed to galvanising support from for “a new progressive future” for the RIAS, Reform and Action aims to transform the membership body, support architects and champion architecture across Scotland.

Last year the group launched an unprecedented attack on the RIAS, raising concerns at what they said was “a lack of effectiveness, poor governance and insufficient financial accountability in Scottish architecture’s professional body”.

The five-point plan to reform the RIAS includes:

Unity and Support

  • To organise, unite and support architects in their practice for the benefit of society.
  • To encourage cooperation and collegiate working between all parties working within the built environment in Scotland.
  • To advocate for the important role that architecture plays within civic life and the economy and embed this within the way design services are procured and delivered.

Collaboration and Transparency

  • To work collaboratively to foster open-ness and transparency.
  • To promote the practice of architecture with a full and active commitment to equality, diversity and inclusivity.
  • To broaden the membership through the sharing and exchange of information and ideas.

Excellence and Learning

  • To achieve and uphold the highest standards in attainment in architecture and discussion relating to the built environment.
  • To lead the development and implementation of unique, quality educational and developmental projects related to the physical environment.
  • To place ecology, health and well-being at the centre of design and development of the built environment.

Federalism and Internationalism

  • To promote and represent architects at both local and international level.
  • To operate a federal organisation of local chapters.
  • To foster links with international partners with a distinctive Scottish agenda.

Governance and Best Practice

  • To represent members, their finances and their interests in an open, transparent and accountable way.
  • To operate, manage and lead in a clear and democratic manner.
  • To support members in the challenges and opportunities within an ever-changing world.

Neil Baxter left his position as secretary and treasurer of the RIAS just days after A New Chapter demanded a major shake-up of the organisation.

Then, in December, the Office of the Scottish Charity Regulator (OSCR) began a formal investigation into the 101-year-old body after being alerted to serious concerns about the way the organisation is governed.

Police Scotland confirmed it is making its own enquiries into allegations of financial irregularities at the organisation later in the month.

RBS announces £75m fund as banks rally to assist impacted SMEs in Carillion’s supply chain

Royal Bank of Scotland has announced that it is offering a range of “flexible options” to support impacted small business customers in Carillion’s supply chain, providing payment holidays and assistance with their overdraft to help manage any short-term cashflow challenges in the wake of the construction and services giant’s demise.

The bank has over £75 million available to support impacted small businesses and will make more finance available if required to top up the fund.

The measures come days after Keith CochraneCarillion’s interim chief executive, accused the still 73% state-owned lender of taking “unilateral action which in the company’s view undermined the group’s efforts to conserve cash”.

According to a witness statement included in a document Mr Cochrane has prepared as part of the insolvency process, he said the Edinburgh-based bank restricted funding three days before Carillion went under.

RBS responded to the attack saying that it had “provided considerable support and forbearance to Carillion over many months”, arguing the “restructuring plan put forward by the company was not viable”.

Business secretary Greg Clarkeconomic secretary to the Treasury John Glen, and small business minister Andrew Griffiths, met banks this week to seek assurances that they will support small businesses affected by Carillion’s liquidation.

Banks represented at the meeting included Barclays, HSBC, Lloyds, RBS, Santander, Shawbrook and Aldermore. They were joined by the British Business Bank.

Between them, HSBC and Lloyds Banking Group, with the inclusion of RBS’s £75m, have now promised funds worth a combined £225m to help any small business clients affected by the liquidation of Carillion by extending overdrafts, offering repayment holidays and waiving fees.

Barclays said it had decided against setting up a fund for customers hit by Carillion’s collapse, pointing out that it had set up a helpline and saying: “Where clients are impacted we will look at increasing overdrafts, interest-only loan repayments and immediate help with cash flow on a case-by-case basis.”

In a statement RBS said: “We will also support our Commercial customers on a case-by-case basis with their individual requirements.

“We have a proactive, principles-based approach that allows us to assist our customers when there are unexpected external circumstances. This support is available to customers banking with NatWest, Royal Bank of Scotland and Ulster Bank in Northern Ireland.

“We would encourage our impacted customers to get in touch to understand the unique support and guidance that we can offer their business.”

For affected customers that borrow with RBS, the banks said it will offer:

  • a 20% increase in overdraft limit for a period of 3 months, with no additional security.
  • 3 month capital repayment holiday on all loan facilities.
  • no charge any arrangement fees on these facilities.

For affected customers that do not borrow with RBS, the Edinburgh-based firm said it will offer an immediate working capital facility.

Les MathesonCEO for Personal and Business Banking at RBS, said: “We’re committed to providing proactive support for impacted small businesses in Carillion’s supply chain. The steps we’ve taken to help ease cashflow concerns will be of immediate practical benefit and I would encourage any customers affected to get in touch to understand the unique support we can offer them.”

Meanwhile, Nationwide Building Society has also said it would bring 250 Carillion staff in-house to allow them to continue working on a facilities management contract that had been agreed with the now-defunct construction group.

The building society said it would also take on 1,500 staff who work for third-party suppliers related to the contract.

HMRC has outlined the support being offered to those businesses contracted to Carillion that may be concerned about their ability to pay tax. HMRC are providing practical advice and guidance to those affected through its Business Payment Support Service (BPSS).

The Insolvency Service has also confirmed that they have contacted all of Carillion’s private sector service customers, such as those working in facilities and management, with over 90 per cent stating they wish to continue with current arrangements. This will provide funding which enables the Official Receiver to retain the employees working on those contacts.

Land purchase approved for Clydebank’s District Heating Network

Ambitious plans to make Clydebank the “greenest town in Scotland” have taken another step forward after councillors agreed a deal to purchase land to build a District Heating Network energy centre.

Councillors agreed to release £450,000 to buy the required land from Clydeside Regeneration Limited (CRL) during a meeting of West Dunbartonshire Council’s infrastructure, regeneration & economic development (IRED) committee this week.

Planning permission for the energy centre was granted in December with work expected to commence in early 2018 and the Network being commissioned by the end of 2018 and generating heat by early 2019.

It will serve the entire Queens Quay site with potential to expand into the wider Clydebank area.

The energy centre will power the District Heating Network from the site of the former John Brown’s shipyard. The network is part of a wider £250 million regeneration of the area and will see water extracted from the River Clyde through heat pumps and directed to businesses and homes via insulated pipes to be used for heating.

Up to 200 rented homes are being developed on the site by registered social landlords alongside 1000 private homes, and all will benefit from the new system. A number of public buildings may also receive their heating supply via this method, including West College Scotland, Clydebank’s new leisure centre, the new care home and health centre at the site, council offices at Aurora House, the Titan Business Centre, the Town Hall and Clydebank Library.

The IRED committee heard at this week’s meeting how the Network could be expanded into the wider Clydebank area in the coming years and how lessons learned at this stage could even be used to create similar heating schemes elsewhere in West Dunbartonshire.

Councillor Iain McLaren, convener of IRED, said: “We are delighted that the committee agreed the purchase of the land, which really marks the final big step in this incredibly important and ambitious project. With planning permission in place and the purchase of the land for the energy centre agreed, work can start on this first phase of the District Heating Network. I want to thank all of the council officers who have worked so hard behind the scenes to get this deal done.”

The District Heating Network will also make a major contribution towards the council’s climate change targets to reduce CO2 emissions by 15% over the next seven years.

Councillor Diane Docherty, vice convener of IRED, added: “As well as providing heat to homes and businesses in Queens Quay, the District Heating Network will allow the council to generate an income from the sale of energy and to expand the project throughout Clydebank. Being able to offer a discounted tariff to residents will also have a positive impact on tackling fuel poverty.”

Blog: Construction Act reform – potential impact on the industry

Rebecca Barrass

Rebecca Barrass looks at the details of a UK government consultation reviewing changes to construction legislation. 

The government is currently consulting on a proposed package of reforms to the construction provisions contained in Part 2 of the Housing Grants, Construction and Regeneration Act 1996 (“the 1996 Act”). The consultation is running in parallel with a consultation in relation to retention payments in the construction industry, both of which are due to close tonight at 11:45pm.

This is not the first reform we have seen in relation to the 1996 Act. In October 2011, the government introduced amendments to the 1996 Act. Both the 1996 Act and the subsequent amendments sought to recognise the problems faced by contractors in the industry, particularly the prevalence of cash flow issues faced by smaller contractors. The amendments introduced a host of changes with the objective of:

  • increasing transparency in the exchange of information relating to payments;
  • encouraging parties to resolve disputes by adjudication, where appropriate; and
  • strengthening the right to suspend performance.

The amendments, amongst other things, removed the restriction on who can serve payment notices; clarified the content of payment and withholding notices; introduced a “fall back” provision, allowing payees to submit payment notices where the payer fails to do so; and, prohibited “pay when paid” clauses, ensuring that payment is not dependent on payments being made under another contract.

The amendments also introduced changes to the law surrounding adjudication, including removing the possibility of contracting parties allocating the costs of adjudication to a particular party and, inserted provisions to allow parties to suspend performance in the event of non-payment.

The government undertook to review the amendments after five years and the result is the current consultation. The consultation relates to the law and practices that apply in England. However, Scottish businesses should not dismiss it. The relevant law in Scotland does not differ significantly from that in England and the results of the consultation will therefore likely be a good indication of the issues in Scotland. The construction industry, more than any other industry, has a tendency to transcend UK borders.

We see a huge number of Scottish based clients coming to us with disputes that have arisen under contracts governed by English law. Often contractors will have limited opportunity to negotiate the finer contract terms and if working for an English or England based employer, will frequently find themselves tied to a contract governed by English law – often not even realising that is the case!

The primary purpose of the consultation is to establish how effective the 2011 changes have been and whether the above objectives have been met. There is a focus on the clarity and transparency of the payment under the 1996 Act. This was a major aim of the legislation and there is clear motivation to establish whether that has been achieved.

The consultation sets out questions in respect of the 1996 Act’s fitness for purpose, including the complexity of the existing payment framework, the effectiveness of establishing a clear debt or basis of adjudication and the frequency of adjudication. It also looks at the effect of the suspension of performance provisions on payment.

The consultation further considers the measures implemented in 2011 relating to Adjudication. Adjudication was introduced as a means of quickly and cost-effectively resolving disputes that arise under, and typically during, a construction contract. The speed of adjudication as a means of dispute resolution cannot be denied but we are seeing adjudication being used more and more in high value, complex disputes and questions have been raised as to whether adjudication is the appropriate forum for resolving such disputes. The consultation addresses the costs of adjudication, requesting information in relation to the affordability of adjudication, whether there has been a significant decrease to costs, and if parties were more inclined to adjudicate following the 2011 amendments.

When the consultation closes the government will consider the answers received and determine whether there is a need or a want for further reform. The effects of the 1996 Act have been huge and in most respects, beneficial to contractors but no system is without its flaws. We are seeing a big increase in the cases coming to court concerning payment provisions since the 2011 amendments. In recent years the courts have been asked a number of important questions in relation to payment notices, default notices and the applicability of the Scheme for Construction Contracts.

To some extent, we would always expect the courts to determine issues of legislative interpretation but given the government’s resolve to review the current legislation it seems the ideal opportunity to address any issues. Whatever the outcome, and bearing in mind the current government has its hands full with all matters Brexit, the consultation is still an important opportunity to have your say and those in the industry should take full advantage of that opportunity.

  • Rebecca Barrass is a solicitor at MacRoberts

Holyrood overturns decision to reject Aberdeenshire business park

An Aberdeenshire biscuit company has received approval from the Scottish Government to build a business park after the plans were rejected by the local authority.

Dean’s of Huntly has now been granted planning permission in principle and will be able to construct The Ward on the outskirts of the town, adjacent to the A97 Huntly to Banff road.

The ruling overturns a decision by Aberdeenshire Council to reject the application after it deemed the proposal contravened the local development plan.

Councillors also said the scheme was too large to be considered a small-scale development, for which the site had previously been earmarked.

The company hopes the development would solve the lack of office space in the town centre as well as parking issues.

Managing director Bill Dean said: “There’s no real space on the town periphery that’s dedicated to small businesses.

“This will have great access to the A97 and the town roundabout and will be of great benefit to the town.

“We will be looking to start advertising for businesses in the coming months.”

New South Ayrshire school reaches milestone with timber frame in place

The timber frame exterior is now complete as work continues

Plans to transform the education of children and young people with additional support needs in Girvan and South Carrick are now well advanced.

The South Ayrshire Council project to build a new Invergarven School has reached a major milestone, with the timber frame exterior now complete.

Built in 1870, Invergarven is a special school for primary and secondary children and young people with complex additional support needs.

The new £3.7 million facility, which will replace the current building on Henrietta Street, is being built by CBC in the grounds of Girvan Academy, delivering spaces for learning and teaching including a sensory room, life skills kitchen, multi-use hall, hydrotherapy pool and external areas that support outdoor learning.

An artist’s impression of the building

The new school will increase capacity by around a third with 20 children and young people able to be taught at any one time (up from 15 at the old school).

Councillor Peter Henderson, portfolio holder for resources and performance, said the project had now reached an important stage: “With the timber frame shell now in place the new school’s reached its first major milestone, with the contractor now concentrating on making the building wind and watertight.

“There’s still a lot of work to do before the school opens later this year but children, young people and families are already looking forward to using a modern building that will enjoy close ties with neighbouring Girvan Academy.

“We’re committed to making life better for people in South Ayrshire and delivering the best possible education to children and young people. This project is a great example of investing in a rural community and allowing Invergarven to build on its enviable reputation for excellence.”

The new Invergarven School is expected to open in August 2018.

Building Briefs – January 19th

Atlantic Quay Buildings 1, 2 & 3

DWP signs up to Atlantic Quay 1

Moorfield Group and Resonance Capital have secured a new letting at Atlantic Quay 1, Glasgow by signing 15-year lease with the Department for Work and Pensions (DWP) on 85,000 sq. ft.

This follows close on the heels of the long lease of 80,000 sq ft to the Scottish Courts and Tribunals Services at Atlantic Quay 3.

DWP will join a number of high profile organisations already based at Atlantic Quay Buildings 1, 2 and 3, including housebuilder Mactaggart & Mickel and Lloyds Banking Group.

Moorfield Real Estate Fund III purchased Buildings 1, 2 and 3 Atlantic Quay in September 2015 and a comprehensive refurbishment programme to revitalise the scheme will complete in 2018.

 

Public partners reach campus-wide agreement for Edinburgh Bioquarter

Four major public sector organisations have come together behind a new plan to develop Edinburgh BioQuarter.

The five-year collaboration agreement sees the City of Edinburgh Council joining NHS Lothian, Scottish Enterprise and the University of Edinburgh as official partners at the health and science campus.

The four organisations have now appointed a Programme Team, led by director Hans Möller, which will develop and implement a business plan in 2018.

The new joint vision will see the development of an integrated campus-wide approach which involves building better collaborative links between academics, scientists, clinicians, healthcare professionals and entrepreneurs. This also includes a cross-partnership focus on improving travel and transport and local amenities for people visiting the site.

A masterplan for Edinburgh BioQuarter, which allocates space to create a modern high density urban environment, received outline planning approval from the City of Edinburgh Council in 2013. Proposals will see a hotel with conference facilities, gym, cafes, multi-storey car parking and more office and lab space for SMEs.

 

Housing association chair appointed Board member at Clyde Gateway

Robert McLeary

A highly respected and active member of the Rutherglen community is set to take up the vacant position on the board of regeneration body Clyde Gateway URC.

Robert McLeary, the chair of Rutherglen and Cambuslang Housing Association, will be formally appointed to the Board at its next meeting on February 26 in Rutherglen Town Hall. Robert’s appointment will be the conclusion of a recruitment and selection process which set out to identify the most suitable candidate to represent community interests in the South Lanarkshire area.

The vacancy arose from the sudden death, in May 2017, of Tommy Rooney, a community stalwart who served with great distinction on the URC board for more than three years.

Robert, who enjoyed a lengthy career as a Chartered Surveyor before his retirement, has been active in the local community over the past four decades. He was a founder member of the Rutherglen and Cambuslang Housing Association in 1980 and has supported or been involved in an extensive range of community events including Landemer Day and Summerfest.

In addition to having a seat on the URC Board, Robert will also take up a position on the Community Committee alongside representatives from a number of key partner organisations including the Rutherglen-based Healthy’n’Happy Community Development Trust and the Burnhill Action Group.

Robert joins what is a 13-strong board that is chaired by Lord Smith of Kelvin.

 

Macduff harbour ice plant given green light

Macduff harbour is in line for a major upgrade after proposals for a new ice plant were unveiled.

The £350,000 facility is to be built at the port and now Aberdeenshire Council is looking for a company to design and install it.

The plant has been earmarked for the quayside next to the town’s fishmarket and there would also be a conveyor belt for moving ice on to waiting boats.

The local authority has looked into the viability of an ice plant and hope the move will reduce the amount of time and costs for local boats currently travelling for ice.

Potential developers have been told the structure would need to last at least 25 years and noise levels from it should not exceed levels recommended for a residential area.

Aberdeenshire Council is inviting companies to tender bids. The deadline is January 25 at 9.30am.

 

Developers buy House of Fraser Princes Street store

Property developers have snapped up one of Scotland’s most iconic department stores. Edinburgh-based firm Parabola has acquired the House of Fraser store on Princes Street.

Agents handling the sale of the site, which has had a department store on it since 1894, said it had gone for a price “significantly in excess” of its £13.7 million price tag.

Parabola has bought up the House of Fraser site months after unveiling plans for a new £500 million “urban quarter” on the outskirts of Edinburgh.

 

Glasgow office market ‘performed well in 2017’

The total office market take-up in Glasgow in the fourth quarter of 2017 was 330,061 sq ft, resulting in 631,814 sq ft of office space transactions across the whole year, according to the latest research from CBRE Scotland.

Andy Cunningham, senior director in CBRE’s Glasgow office, said: “With a strong total take-up for the year the Glasgow office market has performed well, particularly when you consider the 5-year average annual take-up is normally around 550,000 sq ft.  Notable deals include DWP taking 84,542 sq ft at 1 Atlantic Quay and Scottish Courts & Tribunals acquiring 80,498 sq ft at 3 Atlantic Quay.

“However Glasgow is suffering from a severe shortage of ready-to-occupy Grade A space with only 61,026 sq ft remaining available on the market. With no speculative funding to develop we could be facing a challenge with attracting new inward investment and retaining the city’s businesses.  There is also a considerable time lag for building new offices to be delivered, particularly when you require approximately twelve months for all necessary statutory consents and then approximately 30 months for an average construction period.  This will put pressure on rents for new build Grade A space in order to keep up with costs which could create the conditions for a new headline rent in the city moving forward.

“Developers with credible office development sites still need to satisfy occupiers over concerns such as ownership structure, vacant possession, planning, technical skills and track record to complete high quality space within the set programme. With the market not responding to tenant demand, there is a real potential for pre-lets to be agreed.”

 

Kitchen replacement contract to commence for Cloch Housing Association

CCG Asset Management is to commence a new 3 year kitchen replacement contract for Cloch Housing Association.

The Greenock-based association is part of the IFLAIR Consortium through which this contract has been procured.

Year 1 of the works will be undertaken initially to renew the kitchens in 41 properties within the Inverclyde area.

 

Fresh drive to bring South Ayrshire empty homes back into full time use

Before and after: 96 St Leonard’s Road in Ayr had fallen into disrepair after the previous owner moved away, with the building empty for more than two years.

Owners of unoccupied homes in South Ayrshire are being offered additional help to sell-up to increase the supply of affordable properties to the community.

South Ayrshire Council is making fresh support available for its Empty Homes initiative, which offers a variety of ways to help bring long term empty properties back into use.

The local authority has pledged to build approximately 1,000 new affordable homes in the next five years. The Empty Homes initiative plays a part in bringing long-term empty properties onto the market with 88 brought back into use since 2011, and 470 still available.

Interest free loans of up to £20,000 are available for owners of empty properties to carry out repairs and refurbishments provided properties are rented at affordable rates. Now, new plans have been approved for owners who don’t want to become landlords, which offer interest free home refurbishment loans, which are repaid at the point of sale.

Owners with concerns about finding the right contractor to carry out work on their property will be encouraged to use South Ayrshire Council’s Trusted Trader Scheme, while those using the council’s Housing Options Service will be given advice on how to engage with owners and landlords in areas where they want to live.

More information on the Empty Homes initiative can be found here.

 

Developers to redraw plans for derelict Dundee pub

Developers behind plans to build homes on a derelict Dundee pub site are redrafting plans to reduce the number of properties.

Proposals to build four three-bedroom houses and a block of 12 two-bedroom apartments on the site of the former Jimmy Shand pub in Menzieshill were submitted to Dundee City Council last year.

The plans were withdrawn because too many properties were included. Fewer properties in the revised plans will now be submitted.

And finally… Designers offer concrete pipe solution to housing crisis

Eight foot concrete tubes could be the future of housing, at least that’s the solution to the fast growing population offered by Hong-Kong architectural studio James Law Cybertecture.

OPod Tube Housing was conceived as an experimental, low cost, micro living housing unit to ease Hong Kong’s affordable housing problems. Built from low cost and readily available concrete water pipe, the design utilises a strong concrete structure to house an apartment for one/two persons with living, cooking and bathroom inside 100 sq.ft.

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Each OPod Tube House is equipped with smart phone locks for online access as well as space saving micro-living furniture. OPod Tube Houses can be stacked to become a low rise building that is modular community in a very short time, and can be located and relocated in different sites of Hong Kong.

All images courtesy of James Law Cybertecture

Construction leads and tenders – January 19th

MIXED USE and NON-RESIDENTIAL

Applicant: Mr Jock Borthwick

Planning Authority: Scottish Borders

Details: Construction of industrial building

Location: Workshop Borthwick and Son, Charlesfield Industrial Estate, St Boswells, Melrose

Agent: Robinsons Scotland Ltd, Per Andrew Robb, Broomhouses 2 Industrial Estate, Glasgow Road, Lockerbie

 

RESIDENTIAL – FEWER THAN TEN UNITS

Applicant: Mr Richard Wood

Planning Authority: Scottish Borders

Details: Construction of two dwellinghouses

Location: Land west of 15 The Crofts Ayton

Agent: Hodgson and White Ltd, 50 Hide Hill, Berwick-Upon-Tweed

 

TENDERS

Contract Authority: Ayr Renaissance LLP

Details: Ayr Renaissance has a requirement to appoint a suitably qualified lead consultant and team to undertake a masterplanning options exercise for Burns Statue Square in Ayr; and feasibility and design work for the ‘Afflecks Block’ land to the south of Ayr Town Hall for public open space. The work should also include a high level strategic review of public space in Ayr Town Centre assessing the function of existing and emerging public spaces and setting a hierarchy of spaces which will set the context for the more detailed work on Burns Statue Square and ‘Affleck’s Block’.

Location: Ayr

Contact: patrick.dunne@south-ayrshire.gov.uk

Publication Date: 18/01/2018

 

Contract Authority: North Lanarkshire Council

Details: Proposed Cycle Ramp and Slope Reconstruction

Location: Airdrie

Contact: rimmerd@northlan.gov.uk

Publication Date: 18/01/2018