There has been a lot happening in the UK construction industry in relation to Covid-19 in the last two weeks, both in relation to how construction sites should stay open and the financial incentives that have been made available to the construction industry. We have summarised the key points chronologically so far in April and what the current position is.
We won’t go right back to the beginning but will start on 31 March 2020 when the Government wrote to the construction industry effectively saying that work on construction sites should continue and acknowledged that, on the health and safety front, the industry had worked to develop Site Operating Procedures (version 1 of which was issued on 23 March 2020).
In response, on 1 April the Construction Leadership Council wrote to Boris Johnson, who was by this time suffering from COVID-19 himself, setting out what they had done to keep construction going, with a wish list of what they would like in return which apart from “clear and visible encouragement that the production of building materials continues” included:
- Suspension of PAYE and CIS in April and May
- Deferment/cancellation of Apprenticeship Levy payments during the crisis
- Encouragement of all public sector clients, utilities and firms in the private sector working on public infrastructure to expedite cashflow through the supply chain by making use of flexibility in public procurement which the Government had announced in March
- Support for directors of micro businesses
- Retention release
- Extension of the £25,000 business continuity grants scheme to the construction sector
Health and Safety
On the health and safety front, on 3 April, the Health and Safety Executive, the TUC and CBI issued a joint statement about social distancing. Although not specific to the construction industry it applied to it. On 6 April, the Scottish Government went out on a limb (from the rest of the UK) and advised that only essential businesses or those supporting essential businesses should remain open. The effect of this was that construction sites in Scotland relating to non- essential businesses were advised to close.
On 6 April the Government issued a guidance note for construction contracts – Procurement Policy Note 02/20. This is an important document. The guidance sets out the various forms of relief that contracting authorities should consider and can agree with a supplier. The options set out were:
- Accelerated payment of invoices
- Certification of interim valuations where work has not been undertaken, based on previous valuations
- Amendment to existing payment mechanism to make more regular payments or reorder existing payment schedule
- Provision of advanced payment to the supplier
The note also attaches draft deeds of variation for NEC3 [ECC] and JCT DB 2016 if any of the above options are agreed. It goes without saying that legal advice should be sought before entering into such deeds.
Health and safety again
Returning to health and safety, on 7 April the Government issued guidance on social distancing in the workplace. It referred, among others to construction and to manufacturing and processing businesses.
There was a flurry of activity on 8 April:
- The Government issued a letter to those working in manufacturing and industry that they were an essential business. This may ease concerns of contractors worried about supply chains
- The Construction Leadership Council issued a statement on payment and contracts. In essence it embraced the guidance note for construction contracts – Procurement Policy Note 02/20 and asked the construction industry itself to adopt similar practices
There was a bit of a lull over the Easter break, but on 14 April, the Construction Leadership Council issued version 3 of the Site Operating Procedures (don’t ask about version 2- it’s a long story). This confirms that the Health and Safety Executive is the relevant enforcing authority.
This also deals with:
- Travel to work
- Driving to work
- Site access and egress points
- Hand washing
- Toilet facilities
- Canteen and rest areas
- Changing facilities, showers and drying rooms
- Work planning to avoid close working
- First aid and emergency service response
- Conclusion (so far..)
So, in a nutshell, the construction industry is to carry on (at least in England, Wales and Northern Ireland) and public bodies who are undertaking works are required to consider implementing certain financial measures to help out their contractors. Main contractors are, in turn, are expected to behave fairly towards their sub-contractors.
Watch this space or go to our construction blog as to what will happen next. At the time of writing (17 April) a letter has been issued which is a joint pledge from the housing secretary, mayors and local leaders to ensure that essential building work to replace unsafe cladding on high rise buildings continues during the COVID-19 emergency.
Alison Garrett is senior legal adviser at leading law firm Mills & Reeve.