Building standards - building warrant fees: consultation

Part 1: Building Warrant Fees

Overview of the Existing Building Standards Fees Model

The building standards system in Scotland operates under the Building (Scotland) Act 2003, introduced in 2005. It is a pre-emptive system meaning that before any work that requires a building warrant can start, the building warrant must be submitted to the relevant building standards verifier for assessment and approval against the Mandatory Functional Standards. Verifiers are appointed by Scottish Ministers to administer the building standards system in Scotland. The 32 local authorities are currently appointed as verifiers to deliver the building standards service in their own geographical areas. Their role is to protect the public interest by providing an independent check of applications for building warrants. This includes checking the design phase before granting the warrant and checking during the construction phase before accepting a completion certificate prior to new buildings being occupied.

The Act gives further powers to Scottish Ministers to create the regulations and procedures contained within the building standards service. This includes the building warrant fee regulations. The current verification service fee structure was initially established in The Building (Fees) (Scotland) Regulations 2004. Building warrant fees are set on a sliding scale and are based on the 'value of work' of the project being undertaken.

Building warrant fees are used by verifiers to deliver the building standards verification (building warrant) service. Funding is also provided via Grant Aided Expenditure calculations (GAE) to support the building standards statutory enforcement role. The verification service is intended to be self-financing and as such it is expected that fee income should cover the cost of providing the verification service. It is however, at the discretion of local authorities how the fee income is used to fund the verification process, to meet the requirements of Scottish Government's Building Standards Performance and Operating Frameworks for Verifiers.

Key Performance Outcome 5 (KPO5) within the Performance Framework requires local authorities to budget for appropriate funding to cover verification staff costs, plus an additional 30% for non-staff verification costs. As a condition of appointment verifiers agree to abide by both the Building Standards Performance and Operating Frameworks for Verifiers.

The Current Building Warrant Fee Scale

In July 2017 there was a change to the building standards fee levels to increase the income of the system to achieve full cost recovery for verification. Before that, the fees had not been changed since 2005. The current minimum building warrant application fee for work valued up to £5,000 is £150 and fees increase in stepped increments based on the value of work. Stepped increments are capped at £253 for every additional £100,000, or part thereof, over £1 million. Discounts to building warrant fees are available under certain circumstances for example, fees are discounted where certificates from approved certifiers of design or construction are submitted with a warrant application. Certification of design or construction can be used as a means of demonstrating compliance with building standards regulations. A detailed breakdown of how fees are currently calculated can be found at the Building (Miscellaneous Amendments) (Scotland) Regulations 2017.

Changes to the Building Standards System - Futures Board Work Streams

A number of changes to the building standards system are currently being developed through the building standards Futures Board work streams. It is intended that these changes will strengthen and sustain the building standards system and will be introduced over the next few years. It is crucial that we provide sufficient funding to local authority verifiers to prepare accordingly as the proposed changes will place an additional resource requirement on verifier staff, in relation to cost and time. Work is being progressed through four main work steams.

The Compliance Plan Approach work stream is focussing on the development of a new, extended and strengthened 'Compliance Plan' approach, and the creation of a Compliance Plan Manager (CPM) oversight role acting on behalf of the 'Relevant Person' (normally the building owner or developer) to deliver buildings in accordance with the approved plans, details and the building regulations. The aim being to provide the necessary support to the owner/developer to meet their obligation to control the work on site, build in accordance with the approved plans and details and be able to evidence and legally certify this by signing and making the Completion Certificate Submission. The CPM also has a key role to ensure that verifiers are notified at all the key inspection stages identified in the Building Warrant Compliance Plan and are provided with all the agreed compliance evidence.

Under the current system, along with an approved building warrant, which includes the stamped and approved drawings, the verifier creates and issues a Construction Compliance and Notification Plan (CCNP) in line with a nationally adopted risk assessment methodology contained in the Verification During Construction Handbooks, produced by Local Authority Building Standards Scotland (LABSS) and the Building Standards Division. At present applicants/contractors do not always inform verifiers when construction projects reach the inspection stages identified within the CCNP. This means verifiers are not always provided with the chance to inspect works at the critical stages. The changes will make notification a mandatory requirement and it will be the CPM, designer, and contractor's responsibility to develop and submit the new Compliance Plan instead of the verifier. This change will make the process of compliance, and appropriate compliance inspection stages, more visible and better understood by those persons, the Relevant Person (normally the building owner or developer), responsible for ensuring compliance under the building standards system.

The introduction of the new compliance processes will increase notifications and the subsequent requirement of the verifier to carry out the planned inspections and checks at the relevant notification stages. A survey of local authority verifiers found that this could potentially add up to 50% of additional work. An average of 30% was assumed to inform policy and test the new fee model but this will be subject to further research and refinement over the planned 3 year staged fee increases with the intention that the necessary funding for the strengthened system is identified and fully delivered by year 3.

The Verification Delivery Model Working Group (WG), following consideration of earlier Review Panel recommendations, related research and delivery model options, considered that the appropriate strengthening could be the provision of a central building standards support hub combined with a degree of strengthened complimentary regional working by local authority building standards teams. The Hub should not replicate activities carried out by Scottish Government or verifiers but should provide additional resilience and consistency within the building standards system. The WG also noted and appreciated that LABSS was already active in a central building standards system support role. They agreed that the Options Appraisal from LABSS on a proposed central Building Standards Hub, including proposals for enhanced regional partnerships as a solution, should be investigated.

A central Building Standards Hub (BSH) with regional strengthening is currently being tested through a 2-year pilot phase. The Building Standards Hub Pilot is currently staffed by two full time Hub Directors, a Learning and Development Manager with administration support and is working in partnership with BSD and LABSS to investigate and scope the services a central BSH could provide. The pilot is hosted by Fife Council and there is agreement that any permanent hub should be hosted within a local authority. The Hub will be established to support all 32 local authority verifiers and the wider construction sector.

The Hub will bring in existing LABSS building standards system services that support delivery of the verification service such as the Scottish Type Approval Scheme (STAS, Technical & Procedural Information Papers and the Customer Dispute Resolution Process), with a focus on delivering these with enhanced administration and coordination. LABSS provides these services on a voluntary basis and research has identified that this is not a sustainable option in the longer term. As well as developing these services the Hub is looking to improve and support other specialisms and services currently required by local authority building standards teams including the facilitation of workload sharing. This will specifically include a role in supporting the verification of fire safety engineering solutions for complex buildings and potential wider hub roles and activities.

In terms of financing the Hub, the building standards system is designed to be self-financing and as such a Building Standards Hub that supports the delivery of the system should be funded by building warrant fees.

The structure and staffing of the permanent Building Standards Hub will be implemented as part of a phased approach and will include technical and business support as well as learning and development with scope for future development. The expected initial costs of the Building Standards Hub will be in the region of £1 million per annum.

The Digital Transformation work stream is investigating options for the digital transformation of the building standards system in Scotland, including working with other work streams to support the overall Futures Board programme. The work stream is also part of the six year Scottish Government Digital Planning Programme.

The work stream will explore how greater and effective use of digital technology can support and enhance the delivery of the Scottish building standards system. The digitalisation of building standards will lead to an enhanced and efficient building standards system.

Engagement with stakeholders is continuing and support is being provided to local authority building standards. For example, through joint development with LABSS, national guidance on the use of Remote Verification Inspection for building standards compliance is being produced.

The Workforce Strategy work stream has entered the final phase of its three-year Strategy (October 2020 to October 2023). The Strategy is based around four key themes - sustainable workforce, skilled workforce, professional framework, and a profession for everyone.

A Professional Competency Framework for Verifiers and a Competency Assessment System were implemented in June 2021 to support the development of competence across all job roles in the building standards profession. The introduction of a Modern Apprentice (MA) pathway for Building Standards saw the addition of 14 modern apprentices into the workforce from August 2022. Work is underway to identify MA positions and students for cohort 2 to help balance the age profile of the profession. These positions are however dependant on funding being made available within local authorities. Raising the profile of the building standards profession is the key aim of the Ambassador Network established under the work stream where building standards officers participate in outreach activities with schools, colleges, universities and with other construction professionals to ensure building standards is perceived as a rewarding career choice. An online training platform is being developed to provide access to short self-led training modules to upskill staff on topics covering technical matters and procedural aspects of the building standards system. The modules will address skills gaps identified by the Competency Assessment System.

Research Findings - Building Warrant Fees

BSD commissioned two linked research projects on the building standards fees system: Fees Research Part 1 and Part 2. Fees Research Part 1 reviewed the building standards income and level of reinvestment in service delivery, and Fees Research Part 2 looked to provide a building warrant fees model which is flexible to allow changes to building standards fees over a 3 year period. Links to the reports can be found in Annex A.

Fees Part 1 analysed the income and expenditure of each local authority verifier and level of reinvestment in service delivery. It identified the effect on certification and verifiers following the increase in fees in 2017 and provided initial modelling for a new building standards fee system. The research also undertook an online survey with all 32 local authority verifiers and in-depth case studies with specific authorities and sought to consider:

• The extent to which fee income covers the cost of delivering the verification service.
• The role of grant aided expenditure (GAE) in supporting statutory functions.
• The level of re-investment in the service following the 2017 fee increase.
• Future changes to the verification delivery model and effects on workload.
• Additional data to assist with modelling fee income.

Asked if current fees are sufficient to support the delivery of verification services the majority of local authority respondents (58%) felt current fees are not sufficient.

Local authority verifiers were also asked what pressures (and current fee level) were impacting on the delivery of verification services:

• Work of the Futures Board e.g., increased compliance workload through more CCNP notices. Fees are insufficient to cover inspections in line with Construction Compliance Notification Plans (CCNP). More time is required for case officer training and development, detailed plan assessments and additional compliance checks.
• Operating Framework and Performance Framework - fees are not sufficient to enable them to meet the requirements of the Frameworks.
• Development of back-office systems or information management over the longer term is being affected.
• Domestic work - customers expect additional advice and service from the local authority that is not built into fees.

Fees Part 2 provided a building standards fee model which is flexible to allow changes to the building standards fees and valid for 3 years. The contractor was asked to consider the future changes to the building standards system such as the Building Standards Hub and Compliance Plan Approach, taking into account inflation, and provide a flexible three year fees model.

Changes to fees will be legislated annually over the 3 year design life of the fees model, subject to evidence of satisfactory implementation. Changes beyond the initial increase in year 1 and for inflation proofing will be informed by ongoing research, enhanced reporting and additional verification and certification auditing. These activities will support the intention to refine and deliver the resources the strengthened building standards system requires by year 3.

The research reviewed a number of aspects of the current fee system, including reviewing the Key Performance Outcome 5 finance requirements and the appropriateness of the current fee model for the proposed verification of High Risk Buildings. It also reviewed the resourcing of official enforcement undertaken by verifiers and the additional work and engagement required by verifiers in the lead up to or instead of any official enforcement action being taken. As part of a wider Scottish Government's work on a New Deal with Local Government, BSD asked the contractor to consider the advantages and disadvantages of a devolved fee setting for building warrant fees.

Several disadvantages of the current fee structure were identified including:

• No inflation increases for fixed fees.
• Limited inflation proofing provided by the value of work based scale of fees is provided by construction costs inflation.
• Limitations on incorporating new activities into the structure.
• Establishing the cost of delivering the verification service.

The current model established a set of fee rates in 2017. The fee rates, which are based on value of work, contain an element of inflation proofing but the fixed fee elements have lost value in real terms since 2017.

Research, surveys and case studies with local authority verifiers have shown that not all the income generated from building warrant customer fees is allocated to local authority verifiers to carry out their verification role. Local authorities decide how income is allocated and spent.

The proposal to increase fees will also introduce requirements for enhanced monitoring, auditing and reporting by the BSD to provide assurance to Scottish Ministers that the strengthened system is being implemented and delivered as planned by local authority verifiers. The resources needed to support the implementation phase and for further development of the system will also be considered.

The fees research provides a breakdown of the likely increased future cost of the building standards verification service. It also identifies potential increases to building warrant fees to fund the proposed changes.

This public consultation seeks comments on the proposals to increase fees across all 'value of work' bands, add an annual inflation uplift and introduce a new fee calculation model that allows for future adjustments within the 3 year lifespan of the model that may be made on the basis of further research, evidence and reporting.

Question 1.1 - Do you agree building warrant fees should be increased to strengthen the building standards system in Scotland?

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree

Please select only one answer and provide your reasoning in the box below.

Question 1.2 - Do you agree that a proportion of the building warrant fee should be used to support a central Building Standards Hub?

Strongly agree

Agree

Neither agree nor disagree

Disagree

Strongly disagree

Please select only one answer and provide your reasoning in the box below.

Question 1.3 - Do you support the introduction of enhanced verification and certification auditing, monitoring and reporting of fee investment to support the implementation of the strengthened building standards system over the next 3 years?

Yes

Not sure

No

Please select only one answer and provide your reasoning in the box below.

Question 1.4 - Do you agree that, before any planned increases or adjustments to building warrant fees in the second and third year, progress should be reviewed against suitable criteria towards the planned outcomes?

Yes

Not sure

No

Please select only one answer and provide your reasoning in the box below.