Building standards - verification delivery model consultation: partial business and regulatory impact assessment:

Partial Business and Regulatory Impact Assessment

1. Title of Proposal

Building Standards: Increase in Building Warrant Fees.

2. Purpose and Intended Effect

The aim of this policy is to increase building warrant fees. The increase in fees is required to strengthen the building standards system and improve compliance with building regulations in Scotland.

2.1 Background and information

Following the tragic fire at Grenfell Tower in 2017 and the construction failings of Edinburgh School buildings, a Ministerial Working Group was set up to review building and fire safety regulatory frameworks. The Group commissioned two Expert Review panels; Compliance and Enforcement and Fire Safety that subsequently published their own recommendations.

The Building Standards Futures Board was set up at the beginning of 2019 to provide guidance and direction on the development and implementation of the recommendations made by the Review Panels and workstreams were established to undertake this work. The Compliance and Enforcement Panel found that the building standards system in Scotland was not broken but did need strengthened in some areas. Both Review panels identified the potential for a ‘national or central hub’ that would provide expertise in specialist and safety critical areas of design of complex buildings.

The Verification Delivery Model Working Group (DMWG) was set up to review the current verification delivery model (VDM) while providing advice and comment on potential revisions to the VDM. The Group considered the potential for a national/central Hub with regional strengthening as proposed by Local Authority Building Standards Scotland (LABSS). To test this proposal, a pilot Hub was established in May 2022 for a 2-year period. The pilot Hub has been well received and has already had a positive impact on the resilience of the building standards system through increased stakeholder engagement and support, the transfer of the Scottish Type Approval Scheme and the Dispute Resolution scheme into the Hub, and the increased partnership working between local authorities. A business case for a permanent Hub following the pilot phase is being prepared.

It is proposed that by increasing building warrant fees, a proportion of fees will be used to fund a permanent Hub that will provide support and assistance to all 32 local authorities as well as the wider construction industry.

There are also key changes to the building standards system being brought forward through the work of the Futures Board which are likely to impact on the work of verifiers which will require additional financial support. The Compliance Plan Approach is in the process of developing a new Compliance Plan Manager role within the system for high risk building warrant projects which will seek to improve compliance with building regulations and other changes which will be rolled out to support improved levels of compliance across all building warrant projects.

The Digital Transformation workstream is in-scope of the Digital Planning Programme and the redesign of the eDevelopment Portal. It is also taking forward digital transformation of the building standards system in Scotland working with local authority verifiers, sharing best practice, creating guidance and driving change.

Local authority building standards verification teams are funded through the income generated from building warrant fees. Changes to the system, being brought forward through the Futures Board will put an additional requirement on resources and budget within local authorities. It is intended to increase building warrant fees to provide the additional funding to local authorities to support this requirement and strengthen the building standards system.

While work is underway to strengthen and improve the verification standards and compliance within the building standards system, it is acknowledged that a higher standard and more robust construction will also be needed within the construction industry and organisations. This is currently being addressed through the work of various stakeholders.

Changes to technical standards from December 2024 will introduce new minimum environmental design standard for all new-build housing to meet a Scottish equivalent to the Passivhaus standard, in order to improve energy efficiency and thermal performance. These changes, while improving standards, will introduce a further need for robust compliance.

The proposal to increase building warrant fees has led to research in the following areas:

• Fees Part 1 Research: To Review Building Standards Income and Level of Reinvestment in Service Delivery was undertaken in 2022 and looked at the 2017 building warrant fees increase, where fees were being spent and the level of reinvestment.
• Fees Part 2 Research: To Provide a Future Building Warrant Fees Model was undertaken at the start of 2023 and focusses on developing a flexible fee model for a future Building Standards Hub as well as anticipating the financial support required for other changes.

A public consultation on an increase in building warrant fees will be required before a final decision will be taken on any changes to building warrant fees and the subsequent fee regulations to effect a change in fees.

2.2 Objective

The policy aim is to increase building warrant fees to facilitate the strengthening and improvement of service delivery within the building standards system in Scotland. A small component of the increase in fees would be used to fund a future BSH. The BSH will be a central resource that will support and provide assistance to all 32 local authority verifiers as well as the wider construction sector. It is intended that the BSH will support national developments to strengthen the building standards system through work on the provision of Fire expertise, Digital transformation and Learning and Development. The increase in fees will also be used to support other improvements to the building standards system being developed through improved compliance and enforcement and other workstreams.

The existing funding that supports the running of Scottish Government’s Building Standards Division (BSD) will be increased to allow an uplift in line with inflation each year and to fund other activity such as monitoring the implementation of the Futures Board recommendations and the introduction of enhanced monitoring and auditing controls.

3. Consultation

3.1 Within Government

Before making or amending provisions within the building standards system, Scottish Ministers are required, under section 1(2) of the Building (Scotland) Act 2003, to consult “such persons as appear to them to be representative of the interests concerned”.

Prior to public consultation on proposed changes, this duty is discharged through the development of proposals by the Verification Delivery Model Working Group (WG), consisting of representatives from a variety of organisations such as COSLA, LABSS, CIOB, Homes for Scotland and SNIPEF. It is also discharged through the Delivery Model Development Group (DMDG) comprised of Scottish Government Building Standards Officials, representatives of LABSS, Fife Council and Directors of the pilot Building Standards Hub.

Proposals created by these Groups were escalated to the Futures Board whose remit is to provide advice and oversee the activities that will improve the performance, expertise and sustainability of building standard services across Scotland.

BSD consulted with Scottish Government Colleagues in Local Government Finance Settlement unit for advice on changing building warrant fees and mechanisms to ensure funds are available to verifiers.

3.2 Public Consultation

Prior to public consultation on proposed changes, research has been undertaken to review the previous fees increase from 2017, the level on income and look at the benefits and lessons learned. Phase two of this research is currently underway and focusses on developing a flexible fee model. The final report for this is expected around the start of June 2023.

As noted in 3.1, to develop the policy, high level proposals are taken to the Futures Board and then recommendations escalated to the Minister for consideration and final sign off. Proposals will also be shared with members of the Building Standards Stakeholders Working Group.

The outcome of the research on fees will be delivered to the relevant working groups and escalated to the Futures Board and Minister, to sign off on the decision for a public consultation, before fees can be increased.

A public consultation will take place to attempt to engage all users of the building standards service and seek a variety of opinions and views to proposed changes to the building standards fee model. Several changes are being considered such as a percentage increase in fees at each value work band and introducing additional payable fees for compliance discussions (pre-application discussions on High Risk Buildings (HRB).

A consultation will usually run for 12 weeks, however as this will coincide with school summer holidays, it is proposed to run for 14 weeks to account for this. A number of discussions have been held with stakeholders both individually and as part of wider Working Groups to seek their views and opinions to assist in developing this policy. Through research carried out by an independent contractor, several local authorities, stakeholders and organisations were consulted through questionnaires, informal discussions and specific case studies to develop this work.