Consultation on Building Warrant Fees

Section 1: Introduction and Background

Introduction

The purpose of this consultation is to seek views on increasing building warrant and other associated fees to make the building standards system achieve full cost recovery and place it on a sustainable footing for the future.

The Scottish Government is committed to ensuring that building standards is adequately funded to deliver a system that is accessible, affordable and which provides a high-quality service to those who use it.

Beyond this overriding objective, the Scottish Government believes that the fees charged to 'true' users of the building standards system should cover the cost to public funds of providing those services. This means that those who make use of the system should meet, or contribute towards, the associated cost to the public purse.

These users are those who apply for permission to build, through the submission of building warrant applications, and are required to construct buildings in such a way that satisfy matters that are in the 'public interest'.

A review of fees is overdue as there has been no increase since the introduction of the present building standards system in 2005. The responsibility for setting building warrant fees is reserved to Scottish Ministers and the system is administered currently by the 32 local authority Verifiers. The intention has always been to make and keep the system running on a cost recovery basis, this was intimated in the July 2001 consultation paper from the Scottish Executive - 'Improving Building Standards'. To date this has only been achieved in terms of the operational side of the system, that is, those applying for building warrant pay a fee to the Verifier to cover the independent checking process.

It was appropriate that between 1999 and 2005, when the current system was being devised, that the 'public purse' paid for the original development work. It was also felt reasonable that during the ten year bedding-in period of the system, maintenance costs should fall to the Scottish Government. However Scottish Ministers now wish to take this to the next level and place the entire system on a cost recovery basis. This includes drafting of legislation, technical and procedural guidance and also the other construction related work of the Scottish Government Building Standards Division.

In this review of fees, the proposal is to increase fee levels to cover the costs of the local authority Verification services and also the costs of the Scottish Government, specifically the Building Standards Division ( BSD). The proposal seeks to provide a net income gain to local authorities. Scottish Government would expect to see this additional building warrant fee income reinvested in improving local authority Verification services.

Background

Verification of compliance with building regulations is currently undertaken by the 32 Scottish local authorities in their role as Verifiers and each authority is responsible for verification in their own geographical area. Verifiers grant building warrants and accept completion certificates when they are satisfied that construction work complies with the building regulations under the Building (Scotland) Act 2003 (The Act).

Current building warrant and associated fees are set out in The Building (Fees) (Scotland) Amendment Regulations 2004. The fee paid for a building warrant for construction of a building is based on the value of the project and is set on a sliding scale. For example, the minimum fee (for works up to £5,000 in value) is £100. A building warrant for a project with a value of £120,000 (a small new house) would cost just over £1,000 in fees and for a construction value of £30 million (a school) the warrant fee would be £77,130. There are also certain fixed fees for a number of items (e.g. demolition) and for projects with a value of under £5,000. A copy of the current fee scale (before discounts) is included in the Procedural Handbook 3rd Edition Version 1.4.

Until now there has been a general expectation that income from fees should cover the costs of the Verification service and that the costs of Verification and the fees paid should be closely aligned. There has also been evidence that fees for larger projects provide some cross subsidy to the fees levied for smaller projects.

The fees structure has not changed since 2005. It follows that the minimum and fixed fees are now less in real terms (by about 40%) than at the time they were introduced. There have, moreover, been significant changes impacting on the process of verification and the likely costs of verification since the fee structure was last altered. These include a new Performance Framework for Building Standards, the development of the "Reasonable Inquiry" process for on-site building regulation compliance checking and the introduction of a number of procedure and technical changes in standards. Recent research conducted for BSD suggests that for some local authority Verification services the level of income from fees is a contributing factor to under-resourcing of verification work.

Another consideration in this review of fees is the influence Certification of Design and Construction has on the overall fee system. Certification can be used as a means of demonstrating compliance with Building Standards. The Scottish Government wishes to encourage greater use of Certification however it has become apparent that the current fee discounts for submission of certificates neither reflects the comparative costs of verification nor provides a clear incentive to use Certification.

The Scottish Government is also seeking to introduce an alternative funding mechanism to recognise the role of BSD in supporting the building standards system.

The proposal includes increasing fee levels to cover the building standards related running costs of BSD. This essentially passes the whole cost of managing and maintaining the building standards system (by BSD and local authority Verifiers) to the users of the system.

To facilitate this, local authorities would continue to collect building warrant and associated fees from applicants and would transfer an agreed proportion to Scottish Government for the running of BSD. At this time it is envisaged that the transfer process would be similar to that currently utilised for the eDevelopment portal.