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Blog: Construction industry votes yes – now CITB must change

Sarah Beale

Sarah Beale

CITB chief executive Sarah Beale on the Levy consensus and the need for reform.

Our industry has decided.

By a clear majority, construction employers have decided to retain CITB’s Levy-raising powers for the next 3 years.

That support isn’t restricted to certain types of firms in particular areas of the country.
In every nation and for every size of employer, at least 3 in 5 firms that took part in the Consensus process supported the continuation of our Levy.

We know, however, that this vote wasn’t a ringing endorsement of CITB. There was, in fact, a united  call for change.

This is a vote that says: “Yes, continue. But only if you change significantly.”

We have heard that call from large employers, we have heard it from the federations, and we have heard it from the SME firms that dominate our industry.
That call will be answered.

CITB is an organisation that, as an absolute necessity, must reform.

We are completely committed to changing our organisation by renewing governance, ensuring accountability and improving outcomes and we stand ready to take the tough decisions to make this happen.

We know that not everyone supported us this time around. Four federations voted no, and a fifth of employers rejected our Levy proposals.

In order to improve our offer to those that didn’t support us as well as those that did, we need to become more accountable, more representative and provide greater impact from our core activity.

The Government’s review of industrial training boards (ITBs) is due over the next few weeks. It, along with our response, will set out a clear path to a focused, modern, reformed CITB. We call on all of our industry – no matter how they voted – to share their views and insight supporting this vital work.

There is a lot going on already.

Plans in train include making the Grants Scheme simpler and easier to access – particularly for smaller firms.

We are developing a national skills register and a training directory of CITB-approved training providers. This quality assurance role is integral to our offer to industry.

Research pieces like our recent future skills reports into immersive learning and offsite construction, will help provide the evidence base for how training needs to change to keep pace with other sectors.

Our funding, increasingly through a commissioning approach, will help direct levy-payers’ money where it can have the most impact.

All these efforts, with more to come, are directed towards CITB becoming  the industry’s Training body, which will offer excellent value in supporting industry’s skills needs of today and tomorrow.

Effectively, industry has given CITB 3 years to change and demonstrate impact.

Now is the time to deliver, and we will.

Blog: Will Dundee’s new local development plan create opportunities?

Ian Livingstone

Ian Livingstone

While Dundee’s proposed new Local Development Plan (LDP) provides continuity, Ian Livingstone says more flexibility is required to attract investment and meet current demands.

Dundee’s latest Proposed Local Development Plan (LDP) was published at the end of August, with a statutory period of public consultation concluding today.

The draft plan sets out Dundee City Council’s spatial strategy and policies for development across the local authority area until 2029.  It identifies land for a wide range of uses and provides specific requirements relative to housing and employment land.

In broad terms, the vision and objectives of the proposed LDP continue in a similar vein to the existing LDP for the city.  There is a focus on Dundee as the economic driver for the Tayside region and development is prioritised at three locations. These are: Linlathen where 40 hectares of employment land is allocated; the Central Waterfront which is identified for mixed use development including commercial, housing and port related uses; and the Western Gateway where 750 houses and 50 ha of employment land is allocated.

According to the proposed LDP, the council aims to construct 480 houses a year in Dundee until 2029. However, little additional greenfield land has been included for residential purposes. In fact, just one new site at Ballumbie, allocating 150 units, has been added. The greenfield land allocation at Dykes of Grey in the existing LDP has been carried forward, but the majority (66%) of housing is skewed towards brownfield land.

Brownfield sites by their very nature are more challenging and costly to redevelop due to the presence of existing buildings and contamination issues arising from previous uses. As such their appeal to housebuilders and developers is restricted.  The effectiveness of these sites in contributing to the housing supply target is therefore limited. The solution would be to allocate more greenfield land, but this is largely prevented due to the sites being located out with the Dundee settlement boundary. Other solutions must therefore be investigate in order for the city to fulfil its housing requirements.

Development opportunities are still available at Dundee Waterfront

Development opportunities are still available at Dundee Waterfront

In contrast to housing land supply, the availability of employment land stock in Dundee is extensive. The most recent Business Land Audit, published alongside the proposed LDP, identified 160 ha of available land. To put this into context, 24.53 ha of land was taken up during 2013-17. Four years prior to that take-up averaged at 0.91 ha per annum.  The supply of employment land relative to demand is therefore extremely healthy. This provides the opportunity for more flexible development to be introduced in areas of the city that were traditionally restricted to business and industrial use, without prejudicing the stock of available employment land.

The council proposes to regenerate the industrial area of Blackness, highlighting the potential to reuse redundant land and buildings for a wider variety of commercial and complementary uses. This is an encouraging start, especially for an area in Dundee that exudes potential, has good connectivity and boasts close links with the universities.

Further potential for mixed use development exists at other central areas that are partially occupied and have the attributes to integrate effectively with the surrounding built and natural environment, such as at Annfield Road and exemplified by the regeneration around Morgan Street. Such development will help to reinvigorate communities and assist with meeting changing business requirements e.g. low cost accommodation for start-up businesses.

At a time when significant and concerted efforts are focused upon the success of the Waterfront, the proposed LDP considers opportunities for other areas of the city to contribute to enhancing the vibrancy of Dundee.  Progressive thought and vision is necessary however to effectively capture and maximise the levels of investor interest expected to arise as a ‘ripple effect’ from the V&A and associated development at the Waterfront.

Overall the proposed LDP provides continuity to the existing LDP. However, given Dundee’s present aspirations, a more proactive approach to the appropriate redevelopment of brownfield land for mix use purposes should be included, as well as a more generous allocation of effective land for housing which is proven as deliverable in the short term. This will provide Dundee with the flexibility required to attract investment and meet the changing demands of the current market.

  • Ian Livingstone is senior planning consultant at Ryden

Blog: The Land and Buildings Transaction Tax is killing the Scottish housing market

Ken McEwan

Ken McEwan

Ken McEwan says we all face having to pick-up the tab for what he refers to as the Scottish Government’s “botched” Land and Buildings Transaction Tax as he appeals for an urgent reform to the property tax.

When the Scottish Government introduced the Land and Buildings Transaction Tax as a replacement for Stamp Duty in 2015, I predicted demand for second homes and buy-to-let properties could fall by up to 50%. It gives me no great pleasure to report that I was right.

Our most recent sales figures show that, in the first year of the tax, sales in those categories halved. We have also seen a 25% drop in demand for homes worth over £500,000 and a fall of 40% in demand for £1 million plus properties. At this end of the market we’re witnessing a virtual stagnation.

The Scottish Government introduced the tax as a copycat measure for a similar levy introduced by the Conservative Government at Westminster.

The LBTT imposes a charge of 2% on homes worth more than £145,000 up to 12% on those which sell for more than £750,000. Buyers of holiday homes, buy-to-let properties and other second homes are charged an additional 3% under the Additional Dwelling Supplement (ADS).

Such punitive rates could be justified in England, particularly in the South East, where there’s a problem with first time buyers gaining a toehold on the property ladder due to inflated prices.

Ministers have a particular policy ambition of cooling down the London market which is distorted by the presence of rich, foreign owners many of whom don’t even live in the properties they buy.

In Scotland the market is entirely different; houses are more affordable compared with average earnings and there’s a shortage of rental property. In the major cities such as Edinburgh, it’s difficult to secure a rental property. Students, professionals, foreign nationals and those on benefits are all competing for the same available rental lets.

The Scottish Property Federation (SPF) has calculated that revenues generated by the LBTT in the past year are £57m down on Scottish Government forecasts because of fewer sales.

Before its introduction, ministers estimated the tax would raise £1.8bn from residential sales by 2021. That has since been revised down to £962m, a drop of 46%.

Any school pupil studying economics will tell you that when taxes rise, consumers change their behaviour accordingly, so it should be no great surprise to ministers that homeowners, faced with a massive increase in the cost of moving house, are opting to stay put.

The Royal Institution of Chartered Surveyors (RICS) said last month that the property market in Scotland was ‘stagnant’ with a fall in the number of new instructions.

A survey by The Halifax, published this week, shows that planning applications for home extensions have risen by 183% in the past five years as homeowners opt to upgrade their existing properties.

Someone buying a home worth £400,000 faces a transaction tax bill of £25,300 which is seen by many as a massive disincentive to move, particularly if they haven’t yet sold their own property.

Buyers earning £50,000-a-year will have to raise the equivalent of their annual salary just to meet the cost of the property tax. It’s clogging up the market right across the property bands.

In June Derek Mackay, the Scottish Finance Secretary hinted at the prospect of a u-turn on the tax by raising the thresholds at which the bands kick-in but there has been no word since and the longer he sits on his hands, the more the slowdown will persist.

The greatest negative impact has been on the purchase of second homes and buy-to-let properties. Tax revenues are small compared with the high risks of restricting liquidity in the buy-to-let market and the knock-on effects on other businesses that rely on a buoyant property market.

Before the LBTT and the ADS were introduced, a Council of Mortgage Lenders survey showed that 79% of properties bought with a buy-to-let mortgage were for those worth less than £145,000.

It was clear then that the introduction of the ADS, which had no consideration for progressive bandwidths, would significantly add to transaction costs and undermine market liquidity.

Though definitive figures have yet to be published, anecdotal evidence suggests the effect has been to reduce the number of buy-to-let landlords, unwilling to take on the extra cost, and to increase rents to cover the rising costs of ownership.

Some landlords with highly-geared portfolios have made losses and are in the ridiculous position of having to pay tax on those losses. This has happened at a time when they have had to weather changes to the Private Housing (Tenancies) Bill, based on improving tenant rights with no consideration for the financial risks and challenges faced by landlords from rogue tenants.

Many landlords are taking the view that they’ve had enough. The LBTT and the 3% ADS are part of a bigger picture which also includes significant reductions in mortgage interest relief and the removal of 10% ‘wear and tear’ relief.

With a significant reduction of available lets in the private rented sector, the Scottish Government will be forced to meet that housing shortage at considerable cost to taxpayers.

  • Ken McEwan is chief executive of Edinburgh-based estate agency McEwan Fraser Legal

Blog: Trams can keep Leith revitalisation on track

edintrams_elmrow_18thMay2017_smallerGVA’s Peter Fraser on why proposals to extend the tram service to Leith could see the area’s conversion into one of the premier places in Edinburgh to live, work and visit.

Other than the famous footballing rivalry between Hearts and Hibernian, you may struggle to find a more divisive subject in Edinburgh than the trams.

However, if done properly, plans to extend the tram service to Leith could be good news for the area as well as the city as a whole. The council has approved the outline business case for the extension and if it happens it could unlock Leith’s potential as a business destination.

Leith has undergone something of a revitalisation in the past few years and people have noticed. It’s been compared to London’s Shoreditch and named one of the trendiest places in the UK.

As well as range of stylish bars and restaurants popping up, Leith has also seen a surge in office take-up. It increased by over 35%, from 31,000 sq. ft. in 2015 to 49,185 sq. ft. in 2016 and this trend has continued this year. Businesses know amenities local to an office are important to attracting and retaining the best staff and Leith ticks those boxes.

Compared to the city centre office rents in Leith are much lower. A refurbished open plan space in Leith is around 40% cheaper than in the centre. Residential prices are also generally lower than across the rest of the city so it’s an attractive place to live and work.

So, how does the tram extension fit in to all this? To continue its resurgence and build on momentum to date, improving public transport to Leith (and, given population growth forecasts, Edinburgh) is essential. Creating ease of access from Leith, through the city centre and out to the airport will only increase the area’s appeal.

Those looking for office space will welcome Leith as an option. Edinburgh is like no other city when it comes to planning due to its UNESCO World Heritage Status, and rightly so. But we face a limited supply of office space in central Edinburgh and whilst the business parks in West Edinburgh are well established, they do not suit all occupiers so another urban business district is needed.

Locations like Leith, which has an abundance of brownfield sites and does not face the same planning restrictions, are essential to meet demand and must be used to address the shortfall.

Edinburgh has won plaudits as a hub for exciting tech firms but a shortage of new development stock will harm its ability to retain these and help new ones flourish. Many well-established tech firms started out in Leith and it retains an appeal for the sector. However, once businesses reach a particular size many find themselves driven to the centre to secure larger offices. Infrastructure development could help Leith retain start-ups or even bring back some that have moved.

We must fully consider the implications of building the tram extension and ensure the mistakes made last time are not repeated. But the extension could be the investment in Edinburgh’s infrastructure that simultaneously addresses the lack of office space, further modernises the city’s public transport network and completes Leith’s conversion into one of the premier places in Edinburgh to live, work and visit.

Blog: Reforming planning needs a positive compelling vision, not just technical change

Henry McLeish

Henry McLeish

Former First Minister and town planner Rt Hon Henry McLeish on the launch of the Scottish Alliance for People and Places.

Those of us with an interest in planning are acutely aware of the issues the system faces. It is complex, is often lost in departmental structures, it is human resource intensive, often disjointed and can create endless conflict between developers and communities with the planning profession stuck in the middle as the arbiters and mediators. It often lacks identity in the new world of local government and is too often at the mercy of political direction and the “market”.

However important the structures, systems and resourcing of the planning system are, which we should attempt to get right in the Scottish Government’s forthcoming Planning Bill, this is not the primary problem we face. Rather, our problem is much more fundamental and existential – namely, people and communities in Scotland often do not see the relevance of the planning system to their everyday lives.

In many communities in Scotland, planning is viewed as an imposition – something done to us by big developers in partnership with local government. It’s about our neighbour’s extension. It’s about stopping the development we don’t like, rather than working together to plan the positive developments we want to see – local parks, schools, hospitals, housing.

We must reach out to communities, and build a compelling narrative for why their positive participation in the decisions about the places in which they live and work is fundamentally important for all our mental, physical and social wellbeing. The question is, how?

I was recently invited to chair a new multi-organisational body, the Scottish Alliance for People and Places, which launched recently in Edinburgh which will aim to answer these questions. The Alliance, unique in Scotland, comprising many well-known organisations across the planning sector, including the RTPI, has been established in recognition of the need for those of us eager to see change in the planning system, to come together and present a united, ambitious and compelling vision for change.

The planning process must acknowledge the positive force that quality economic development can play in creating a more equal society, which is built on fostering strong relationships through consensus and collaboration.

To that end, given that so much of the planning system is geared towards the provision of housing, it must collaborate in the process of delivering sufficient affordable mixed tenure housing. Homelessness is unacceptable. Alongside education and health, housing is a basic human right.

Our economy thrives on investment and innovation – our country needs quality economic development. We must encourage quality development in the right places at the right times by engaging constructively and proactively with business, underpinned by a consensus in the community about what is required in this regard.

In achieving the level of innovation that Scotland requires to compete on the global stage, we must deliver high quality and sustainable digital infrastructure, and accept the fact that digital capability, in the 21st century, is a fundamental utility, like other utilities such as gas, electricity, and roads in modern communities.

It is the role of the Scottish Alliance for People and Places to come together and present innovative and constructive policy solutions, underpinned by an overarching ambitious vision that accepts there is much more work to do than simply tweaking policy.

Ultimately, this means building consensus around developing a planning system that empowers communities to realise a positive and ambitious future, and that recognises that the places in which we live, work and play are fundamental to solving the inequality that exists in our society.

A meaningful and transformational cultural shift is required. However, in order to realise it we must really understand the challenges we face, the scale of the opportunity ahead and present a positive and compelling vision for change.

Blog: Project management – like never before! The technical team behind the Social Bite Village

Gill Henry, head of business development at The Cruden Group and project director of the Social Bite Village

Gill Henry, head of business development at The Cruden Group and project director of the Social Bite Village

In February of this year, Gill Henry, head of business development at The Cruden Group, agreed to take on the role of project director for the Social Bite Village in Edinburgh.

This exciting project is translating Social Bite’s co-founder, Josh Littlejohn’s vision to eradicate homelessness, into reality.

Initially agreeing to work pro-bono one day a week, Gill’s task was to oversee the design, manufacture and on-site delivery of a new community in Granton.

Inevitably, her role has grown exponentially as the project has developed and after several months of leading the technical team, she now takes this opportunity to explain some of the challenges and pressures of making this unique project actually happen.

From a standing start at the end of February this year, using contacts and relationships built up over many years by The Cruden Group, we assembled a multi-disciplined team without whom the project would simply not be where it is today.

In addition, we are also very fortunate that the profile of this project allowed us to engage much more closely than normal with both Scottish Power and Scottish Water, who, along with utility contractor, Clancy Dowcra, have joined the technical team and are working collaboratively with us to make this all happen.


The Social Bite Village technical team

The Social Bite Village technical team

Technical Team

  • Gill Henry – The Cruden Group – Project Director
  • Gill Cooke & Andy Nolan – Will Rudd – Project Engineers
  • Mike Armstrong – Pottie Wilson – Project Cost consultant
  • David Bell – Fouin & Bell – Project Architects
  • Anthony Keenan – Peter Graham & Partners – Principal Designer
  • James Culbertson and Kevin Keenan – Keenan Consultancy – Project M&E advisors
  • Tina Muldowney – Wardell Armstrong – Project Landscape Architect
  • Patrick Barry – Mason Evans – Site Investigation Consultants
  • Matt Stevenson – Carbon Dynamic – Nest house manufacturer
  • Jonathan Avery – Tiny House Scotland – Nest house designer
  • Bob Gould & Ronnie Bathgate – Robertson Group – Groundworker

The team has worked tirelessly to finalise the design of the nest houses with Tiny House designer Jonathon Avery and Carbon Dynamic who are manufacturing the units, develop the site layout, develop and brief and design for the hub, develop the site works and cut and fill design to minimise costs and to secure all necessary consents.

Identifying a suitable principal contractor has also been challenging as we are benefitting from so many free services and materials which the principal/main contractor will be required to co-ordinate.  Luckily we have the knowledge and experience of Mike Armstrong assisting in contractual arrangements which are slightly less standard than normal contracts.

Co-ordinating all of the above, in parallel with structuring legal agreements for the site with landowner EDI, finalising the necessary contracts for the various work packages and managing the site utilities to ensure the project is deliverable, has required a significant amount of resource, commitment and leadership from The Cruden Group.

The proposed site is currently overgrown, self seeded and has a significant slope from top to bottom.  It is also a well used through route for both pedestrians and cyclists. Because the village is temporary, it has been really important to minimise the cost of the infra-structure. We also have to obtain a caravan licence to allow Social Bite to occupy the village.  Working under caravan legislation, we don’t need a building warrant for the structures, just the drainage, which has significantly helped us to achieve the end date for completion.

Launch of the nest house prototype at St Andrew Square in Edinburgh

Launch of the nest house prototype at St Andrew Square in Edinburgh

Led by Gill Cooke, the project engineers Will Rudd worked closely with Mason Evans to identify how best to deal with the ground conditions in a manner that would produce a robust solution on a temporary basis whilst still meeting all the legislative requirements.

The units themselves are very light,  so the groundworks strategy involves scraping back the site, carrying out an extensive cut and fill exercise to platform the site for the units to sit on.  The excess material will be stored on site in a mound so we don’t have to take anything off site, which helps keep the site works cost as low as possible. The point loads of each unit are such that standard foundations are not required, just a layer of hardcore.

Thanks to Jen Knighton and her team at Scottish Water, the drainage and water consents have been in place for some time, well in advance of the planning consent being issued which is testament to the efforts Scottish Water have made to enable the project to start on site as early as possible. Equally, Deborah Philips and her team at Scottish Power have also played a significant role in co-ordination and delivery of multi utilities on site with sub-contractor Clancy Dowcra.

The project is gathering significant momentum now. We are currently finalising a Heads of Terms with EDI for the site and the plan is to now to get the project complete for the end of January 2018 – which is slightly later than originally planned but still only 10 months in total. We are aiming to demonstrate how this very innovative project can be delivered and then potentially rolled out on a more commercial basis.

Josh Littlejohn is extremely persuasive, very talented in mustering support and clear on his vision. With the assistance of Josh and Tony Hackney of BSW the team have collectively managed to procure as many services and materials free gratis as we can with the project benefitting from huge assistance from a wide variety of organisations and individuals.  Josh’s unerring determination and total inability to understand the word ‘no’ has created many challenges along the way for the technical team. At times, trying to translate his vision into practical reality within an extremely challenging programme has been both frustrating and stimulating in equal measures.

The house types set for the Social Bite Village

The house types set for the Social Bite Village

Every project management bone in my body shouts ‘NO NO NO’ on a daily basis, as the sequence and approach we are taking to actually make Josh’s vision happen goes against everything I would normally do in terms of managing a project and the risk associated with it.

However with this in mind we have been able to work, freed from the normal shackles and look at how to do things better, quicker and more innovatively.  It has demanded true partnership working and collaboration which I feel is one of the best outcomes of the project so far.  With everyone so supportive of the vision, we are all working outwith our normal comfort zones to make the project happen.

At time of writing, we are now in week 29 of the project and if I am being honest, I really did not think we would be at this stage so quickly when we didn’t even have a site, brief or design at the beginning of March.

The Carbon Dynamic team is also worth a serious mention. They have been utterly fantastic in terms of driving the project forward and having a prototype ready for St Andrews Square during the festival.

I was involved in installing the prototype on St Andrews Square which was quite possibly one of the most stressful days of my career. We arrived on site just after 5.30am to find two low loaders provided by Ferguson Transport containing the prototype and two forklifts. With tremendous assistance from Grant Stewart of Essential Edinburgh, the Carbon Dynamic team somehow managed to unload the house just as rush hour started and manoeuvre it over the gates, between the trees into position – which took almost 6 hours, the last hour or so under the watchful eye of the Scottish media!

How the Social Bite Village site is laid out

How the Social Bite Village site is laid out

We then spent 12 hours from 3pm in the afternoon to 3am in the morning on September 1, removing it from St Andrews Square on a busy Friday night and moving it out to and installing it at Edinburgh airport, which involved a large crane once we got to the airport.

These aren’t normally the types of activity I would be involved in, but given the profile of the project and the amazing commitment shown by all the partners I am lucky enough to be working with, I felt it was important to assist and lead these moves to ensure the team understands their valuable contributions are genuinely appreciated, which for me, is a big part of being the Project Director especially when most parties are all working on this for no commercial return.

I have no doubt that this project will be delivered.  Whether I will be sane and not an alcoholic at the end of it remains to be seen!  However despite the complexities and frustrations, I am thrilled to be leading the project and to be working with such a fabulous team on what I believe is a particularly important project which will change the way homelessness is managed in Scotland.

I would also like to thank The Cruden Group who have been fantastically supportive in allowing me time to service the project to a significantly greater extent than any of us ever envisaged at the outset.  The Group will also be participating in the “Sleep in the Park” event on December 9.

Blog: Time for a fresh look at the case for compulsory installation of residential sprinklers?

Andrew McFarlane

Andrew McFarlane

Andrew McFarlane makes the case for UK-wide regulation to make sprinklers mandatory in all new build houses.

The enquiry into the Grenfell Tower tragedy is well under way. And although it is sometimes considered trite to say so, lessons will be learned.

One of those will almost certainly concern the much-discussed issue of making mandatory the installation of sprinklers in residential accommodation. Current Scottish regulations require sprinklers in high rise residential buildings which are those over 18m in height, approximately 6 or 7 storeys.

In that context a further consultation on fire and building safety which will better protect all homes, new-build, privately or socially rented or owner occupied, has been launched this month by the Scottish Government.

Around three quarters of all fire-related deaths arise at home. The horrible incident in west London took place against a backdrop of a sharp increase in numbers of fire-related deaths – up 21 per cent between 2014 and 2015.

An ageing population and, some claim, the cuts that have been applied to local authorities’ budgets have played a part in the increased number of deaths. Certainly, evidence suggests that fire response times are getting longer, especially in the UK’s largest cities.

Social housing tenants are at greater risk from fire than other groups because of demographic factors including an ageing population, with the majority of deaths from fire occurring among those over the age of 65. This is because people in this age group find it harder to evacuate a building in time. The disabled are vulnerable for the same reason.

The issue of costs of installing sprinklers in new homes – around £2800 on average comparable to new heating system or rewiring – is at the crux of the issue. But how much value do we place on human lives?

A 2005 review by the UK Government’s Department for Communities and Local Government argued that research suggested that it would not be cost-effective to provide sprinklers in new homes, but that it would be reasonable to provide them in blocks of flats over 30 metres in height and in certain types of care homes.

This is likely to change as a result of the Grenfell Tower enquiry and, at a minimum, the height of buildings which require sprinklers could be reduced to the 18m level currently applying in Scotland. Some will argue that it should fall further to ensure that all three storey buildings have sprinkler systems fitted.

Regulation in Scotland to require sprinklers in care homes, hostels, hotels and other places of multiple occupancy in Scotland was tightened a few years ago, following the number of lives lost in the fire at the Rosepark nursing home in Uddingston, Lanarkshire. The same safety arguments that convinced politicians of the need for sprinklers in care homes apply equally to residential properties.

So is there a case for UK wide regulation to make sprinklers mandatory in all new build houses? I would say yes. Aside from Grenfell Tower, there is a steady, sorrowful stream of news stories each year about deaths at home as a result of fire and smoke inhalation.

Smoke alarms are already installed in new homes as standard though constant reminders, through newspaper and TV advertising, it seems, are necessary to have householders regularly check their batteries.

And whilst some homeowners are concerned about the possibility of their homes being flooded as a consequence of a faulty sprinkler system, the fact is that a properly installed and maintained system should represent only a very low risk of flooding. A soggy carpet is a small price to pay for saving a family’s lives.

Indeed, the statistics show that, in the incidence of fire, a sprinkler system will reduce the damage to a property by an average of 80% and in 95% of cases only one sprinkler is required to tackle a blaze.

Cost is the real issue though, since while the costs of installing sprinklers – of the order of £2,000 to £5,000 depending on size – or around 1% of the total build cost of a new home – this is a cost that, through lower insurance premiums, is capable of being recouped by the householder within four years. By way of comparison, a fire engine costs around £50,000 per year to run, while a full time fire crew costs around £770,000 per year outside London.

So, is this not a small price to pay for the many lives that can be saved as a direct result of installing sprinklers in homes? In Vancouver, Canada, sprinklers have been 100% effective in preventing fire deaths in new homes. They have been compulsory since 2011 in all new homes built in Wales.

The picture is made more complex, however, by the economics of the housebuilding sector. With recent significant rises in the costs of building materials and a skills shortage set to be exacerbated by Brexit, housebuilders are already wary about building houses where their margins are squeezed.

That there is a screaming need for more new houses is indisputable; equally, it is hard to argue that extra costs of installing sprinkler systems in all new houses increases builders’ costs.

Following its 2005 review a spokesman for the Department for Communities and Local Government said: “New regulation on housing needs to be balanced and proportionate.

“Making sprinklers compulsory in all new homes would add an estimated £2,000 to £3,000 to the regulatory cost of a new-build home, meaning fewer new homes, making home ownership less accessible especially for first-time buyers, and potentially pushing up rents in the private rented sector.”

And there you have it. Further investigation of the position in Wales and further drawing the attention of local and national governments to the issue can only be of value. Let’s hear what the Grenfell enquiry has to say.

  • Andrew McFarlane is a consultant to chartered surveyors DM Hall and a specialist in building surveying

Blog: BIM bother – contractor locked out

BIM stockKaren Manning and Lynda Ross answer in the affirmative the question: can a court compel a consultant to provide access to design data stored on a BIM platform pending resolution of a dispute over payment?

A £55 million power station was to be built in the Falkland Islands. During the tender period, the contractor engaged the consultant to provide design consultancy services, for which they received a modest payment, with a view to the consultant carrying out full design services if the bid was successful. Those services included design and the preparation and implementation of building information modelling (BIM).

BIM is a technology-enabled process where information and data is comprised in 3D models allowing it be shared amongst relevant parties. It assists with the design, preparation and integration of different aspects of a project. BIM can be a useful tool for planning and management of the design and construction process and beyond. Project software called ProjectWise was to be used to enable the design teams to manage, share and distribute design data on a single platform.

The bid was successful. However, the contractor and the consultant fell out about the scope of the work and the consultant’s entitlement to payment. This resulted in a dispute about what exactly had been agreed: was there no contract; was there a simple contract without detailed terms and conditions; or was there a contract in the standard terms submitted (which included a cap on liability of £1 million)? A large payment had been paid to account but other invoices remained unpaid.

The consultant issued a notice saying it would suspend performance unless payment was made by 2 June. Payment was not made. On 2 June the consultant denied the contractor access to the servers hosting the design data in ProjectWise by revoking the contractor’s password.

The impact to the contractor was considerable – delay and losses well over the cap of £1 million (if it were applicable). On the other hand, if the consultant was compelled to hand over the password, then it would suffer the loss of a very good bargaining position.

The judge decided, on the balance of convenience, to grant the interim order for access to be restored.

Lessons

  1. As technology advances, access to electronic information and how that is governed will become more and more important.  This will particularly be the case with BIM-enabled projects (which the Government are strongly behind) and a single platform approach.  Where passwords allow access, care should be taken to ensure control of those passwords lies in the correct hands.
  2. Consider whether it is appropriate to have positive BIM and copyright obligations in consultant appointments which survive termination and suspension.
  3. Beware of clauses in appointment terms that are subject to payment of outstanding fees (this is often the case with copyright provisions).
  4. Be clear on the terms which govern any appointment at the outset. The passwords dispute grew out of a disagreement about what the original contract terms were.

Black’s Blog: Revolutionary ideas at Hospitalfield House

Jimmy Black

Jimmy Black

Architect Malcolm Fraser did the impossible at the first Andrew Nicoll Lecture (September 22). He made some revolutionary ideas seem sensible.

He says we should stop building houses out of toxic materials, such as timber coated in preservative. We should stop trying to make new build houses airtight by wrapping them up in polythene. Houses need to breathe … so do the people in them. He gave a favourable mention to Albyn Housing Society’s Fithouses, built offsite by Carbon Dynamics on the Cromarty Firth.

He said the fashion for knocking down sound buildings has to stop. Equalise VAT on repair and new build, take away the incentive to demolish, and turn volume housebuilders into volume house repairers. And he insisted we should build social rented homes with the money we currently spend on housing benefit.

Then he said councils should have the power to force the sale of land. That would tackle land banking, where developers sit on property until prices rise. He pointed out that land values increase massively when councils allow a change of use from, say, industrial to housing. Fraser said councils, not landowners, should benefit, and use the money for infrastructure.

Placemaking came next. He was unimpressed by the layout of many new build estates, the wasteful way so many use land and the failure to provide communal areas where communities can form. “Gobons” … the useless decorative bits stuck on to volume built boxes … came in for scathing criticism. Spend the money on better design and quality was his view. He favoured an updated version of Edinburgh’s Colonies; flats with their own gardens, angled to ensure good sunlight, providing privacy and spaces to be sociable.

Fraser is lobbying hard at Scottish Government level for change to current practice and he believes the important folks are listening. Introducing compulsory sales means taking on powerful lobbies and will require political courage.

Andrew Nicoll was a creative and innovative architect. Funding permitting, there will be another Andrew Nicoll lecture at Hospitalfield House in 2018.

  • A former convener of housing at Dundee City Council, Jimmy Black now works for Dundee Voluntary Action on Technology Enabled Care and writes here in a personal capacity.

Blog: The age-old question: salary or dividends?

Roger Campbell

Roger Campbell

Roger Campbell outlines what construction directors should consider when deciding whether to take profits as a salary or dividend.

As a matter of course, many directors of construction companies will seek advice on optimising their tax efficient remuneration. The most popular question being ‘should I extract profits as a salary or dividend?

This has become even more prominent following the introduction of the ‘dividend allowance’ from 2016. Of course, the answer changes depending on the current regime, and particularly as the taxation of dividends now seems to be fair game when Budget day comes around.

Drawing dividends

The ‘dividend allowance’ was introduced in 2016, and was set at a level of £5,000. In March 2017, the government announced that this allowance will reduce to £2,000 with effect from 6 April 2018 (from 2018/19 onwards). This news came before we’d even started to see the effect of the initial change. The purpose of the allowance is to ensure that dividends up to the limit are taxed at 0% instead of the taxpayer’s marginal dividend rate (which can be up to 38.1%).

Prior to the dividend allowance being introduced on 6 April 2016, any dividends drawn which were within the ‘basic rate band’ would be free from income tax due to the ‘notional tax credit’.

Consider a combination

Taking into account the reduced dividend allowance, and assuming the individual has no other income, the most tax efficient remuneration strategy is to draw a salary up to the National Insurance Contributions (NIC) Primary Threshold (PT), (which is currently £8,164) and draw the remainder of distributable (after deducting corporation tax) profits as a dividend. This was also the case prior to the introduction of the reduced dividend allowance.

However, if the National Insurance ‘Employment Allowance’ is available, meaning no NIC is payable on the salary drawn by the director or shareholder, then the salary could be increased to the personal allowance (which is currently £11,500).

It’s not always an easy answer

Generally, there will be corporate tax and income tax liabilities arising with the above remuneration strategy. For the company, dividends are paid out of their ‘after corporation tax’ profits. For the individual, any dividend income that is in excess of any available personal and dividend allowances would be subject to income tax at the appropriate rate.

Due to the progressive nature of the income tax regime and how it interacts with dividends, whilst it is always more tax efficient to use a dividend strategy to extract profits, the tax saving is maximised where total earnings are in the region of £43,000 for Scottish taxpayers and £45,000 for UK taxpayers (excluding Scotland).

Of course, there are some disadvantages to taking the majority of income via the dividend route. To start with, a salary can be taken whatever the financial state of the business, whereas a dividend can only be taken from distributable reserves – so it’s less dependable within some business models. Further to this, if you are on a ‘salary’ of £8,164 – £11,500, sorting out secured lending can be challenging, as many rigid high street lenders don’t recognise income from dividends.

That said, despite the recent pinch, using the salary/dividend combination is still more tax efficient – both for the director as an individual, and for the company itself – and the most effective route for those directors wanting to make the most of their money.

  • Roger Campbell is a manager and tax specialist at accountants and business advisers Scott-Moncrieff