Building standards fee income and re-investment in service delivery: review

4. Changes Arising from 2017 Fees Increase

4.1 Introduction

4.1.1 The 2017 changes to fees regulations were to provide additional building warrant related fee income across Scotland. The changes were expected to provide every local authority with additional funding to help support their verification service and further improve performance. It was also proposed to provide funding for running BSD by adjusting the Local Government Finance Settlement accordingly.

4.1.2 At the time of the fee increase, it was recognised that the levels of fee income and verification costs vary between local authorities and as a result, some authorities may not always achieve full cost recovery.

4.1.3 This section considers the effect of the fees increase on the level of funding provided to local authorities through their grant settlement, the impact of the increase on local authority income and the extent to which any increased fee income has been re-invested in the service.

4.2 Grant Aided Expenditure

4.2.1 Local authorities receive a General Revenue Grant (GRG) from the Scottish Government to support their general net revenue expenditure. Grant aided expenditure (GAE) calculations determine what share of total revenue funding each local authority should receive on the basis of relative need. Each individual sub-service has its own methodology to allocate the pre-determined Spending Review total amongst local authorities, taking account of relative need.

4.2.2 For building standards, the GAE methodology distributes the funding using the number of building warrants in an earlier year. For example, the 2020/21 allocation across authorities is based on the distribution of building warrants across authorities for 2018/19.

4.2.3 In 2016/17 and 2017/18, the pre-determined allocation for building standards in Scotland was £5.3 million. In 2018/19, this was reduced by £1.5 million to £3.8 million and has remained at this level since. The £1.5 million downward adjustment to the local government finance settlement was to release £1.5 million of funding for BSD following the increase to fees in 2017.

4.2.4 Figure 4.1 shows the level of GAE funding for building standards and the number of building warrants used in the allocation formula in that year. While the pre-determined allocation for building standards has not changed since 2018/19, the number of building warrants varies from year-to-year. As a result, the GAE allocation for each authority varies from year to year.

4.2.5 The effect of the reduction in the finance settlement was to reduce the GAE allocation from approximately £110 per building warrant in 2016/17 to approximately £80 per building warrant in the period since the change to the settlement.

4.2.6 It is important to note that the GAE allocation for building standards is not (or ever has been) a budget or spending target. It is not intended to be used by local authorities to allocate resources. The decision about the amount allocated to individual services are made by the local authority on the basis of local needs, having first fulfilled its statutory obligations and the jointly agreed set of national and local priorities. Within building standards, the key statutory functions relate to enforcement and maintenance of the building standards register.

4.2.7 The online survey asked authorities if their building standards service received its share of the GAE for the provision of other (non-verification) building standards services. Of the 16^[13] respondents answering this question, 13 (81%) stated that that they do not receive any GAE income. Only three respondents (19%) reported receipt of this income from their authorities although two of the responses were qualified. One respondent was “not aware” of receiving the funds while the other was not able to confirm the position with the finance team. One of the case study authorities also highlighted that they were not aware they received GAE funding as GAE does not appear as an entry in the budget.

4.2.8 The one authority which confirmed they received their share of GAE used the income to support enforcement of dangerous buildings and the building standards register. The income covered the staff costs and overheads for enforcement and staff costs of the building standards register.

4.2.9 For the 13 authorities which did not receive a share of the GAE allocation, all are expected to fund enforcement activities and the building standards register from their building warrant fee income. The majority also have to fund licensing and safety at sports ground work from their building warrant fee income. Details are shown in Figure 4.2.

4.2.10 Several survey respondents suggested that GAE income should be ring-fenced to building standards. It was also suggested that the GAE funding mechanism should take into account the nature and complexity of the building standards service in the area.

4.2.11 As stated in paragraph 4.2.3 above, £1.5 million was taken from the GAE allocation to local authorities following the building standards fees increase. The survey asked if the finance department in their authority expect to receive a contribution from verification fee income to cover this reduced GAE allocation. Of the 15 respondents answering the question, seven (47%) stated their finance departments expected a contribution from fee income.

4.2.12 Two authorities provided estimates of the amounts paid to finance departments in 2021/22. Comparison of these estimates with the published GAE allocations shows that the amounts repaid were lower than the GAE allocation.

Other Sources of Income

4.2.13 Table 4.1 shows whether building standards departments received any other income for services provided. The most common source of income was ‘other’ sources including copy plans and letters of comfort (15 respondents or 88%^[14]). Seven authorities (41%^[4]) received income from licensing and three authorities (18%^[4]) received income from safety at sports grounds work. The level of income from licensing and safety at sports grounds varies considerably across authorities but, for the majority of respondents providing details, it was generally less than £15,000.

4.2.14 Income for services such as letters of comfort and copy plans was generally higher with an average^[15] income of approximately £19,000. The range was almost £1,300 (0.4% of fee income) to £80,000 (1.8% of fee income).

Table 4.1: Number of Authorities with Additional Sources of Income

	Yes	No	No answer	Total
Licensing	7	10	2	19
Safety at Sports Grounds	3	14	2	19
Other (e.g. copy plans, letters of comfort)	15	2	2	19

4.3 Re-Investment in the Service

4.3.1 Figures 2.8 and 2.9 showed that change in fee income between 2016/17 and 2018/19 by local authority. For Scotland, the 2017 fees increase is estimated to have led to an increase in income of £8.43 million (paragraph 2.3.2). The extent to which additional fees have been re-invested in the service was considered in the survey of local authorities and the detailed consultations.

Survey of Local Authorities

4.3.2 The survey asked authorities if any of the additional income from the fees increase has been available to invest in building standards. Of the 13 responses to this question, eight (62%) reported that the additional income had been available to invest in building standards verification services. This investment was primarily related to staffing and for four authorities included:

• The basic cost (excluding on-costs) of an additional building standards assistant post.
• Two building inspectors in one authority and one inspector in another.
• The creation of a new assistant technician post.

4.3.3 The total cost of these investments was almost £170,000 which represents approximately 16% of the additional fee income received by these four authorities between 2016/17 and 2018/19.

4.3.4 There was some investment in training, technology and other services including:

• Two staff in one authority attending university.
• Two authorities each investing between £20,000 and £30,000 on new computers and screens to help with mobile inspection/working.
• One authority spending £15,000 per annum on fire engineering services.

4.3.5 The authorities making these investments in building standards service have been able to maintain the investment since 2018/19 and, in two authorities, there has been an increase in investment including:

• An additional member of staff (technical) and investment in tablets for inspectors.
• An additional building surveyor.

4.3.6 Since 2018/19, one authority has also been able to add one member of staff within the department structure and replace one surveyor post with two inspector posts.

4.3.7 The effect on those authorities which reported that investment in additional staff had been maintained include:

• The investment in staffing has enabled them to meet KPO targets and to provide a better verification service (two authorities).
• There have been efficiency and productivity improvements as senior staff have been relieved from procedural checking and processing duties with a new post in place to provide dedicated support in this area.
• Another authority has been able to grow and invest in entry level posts and to realise new workstreams as a result of investment in additional staff being maintained.
• However, for one authority, there has been no impact on the service from the increased investment because workloads have increased.

4.3.8 Examples of the effects of investment in training and technology on the building standards service include:

• Recognition that the investment in training has given them the ability to provide encouragement and support to staff to develop skills and competencies (three authorities).
• Investment in technology has enabled the upgrade of equipment to facilitate site inspections and home/out-of-office working (four authorities).
• One authority noted that they had invested in training staff who then left to go to another local authority and while this helps the building standards service nationally, it had a detrimental effect locally.

4.3.9 One of the authorities which was unable to invest in staff, training or technology highlighted that income (as a measure of increased/decreased activity) is the driver for justifying additional resources and, as the authority has been unable to meet KPO5 (fee income being 130% of verification staff costs) in recent years, it has been unable to justify additional resources. However, prior to 2016/17, there had been substantial investment in the service in both staff (staff numbers doubled between 2011/12 and 2016/17) and technology (to enable the service to become 100% digital).

4.3.10 One other authority noted “the service was considered supported by the Council and fee increases only reduced the financial support rather than lead to any additional investment”.

Consultations

4.3.11 The issue of re-investment in the service was discussed in detail during the consultations. Table 4.2 details the level of re-investment in the building standards service in the case study authorities and the effect of this investment on their performance.

Table 4.2: Reinvestment in Building Standards in Case Study Authorities

Authority 1 (Primarily Rural): In 2021/22 expenditure on verification exceeded building warrant fee income by £30,000. This was the first year since 2017/18 that income did not cover costs. The increase in building warrant fee income in 2018/19 due to the fees increase is estimated to be £200,000. The service does not receive any funds from GAE and building warrant fee income has to be used to fund all building standards activities, including enforcement, licensing, safety at sports grounds. The service receives income for work undertaken on housing grant applications and undertaking structural calculations for neighbouring authorities. Any income from copy plans/ letters of comfort is retained by property services. Building standards are not expected to fund the “lost“ GAE.

The building standards team did not receive any additional funding following the 2017 fees increase. There has also been restructuring of the team since the fees increase following eight staff retirals. This has led to some posts being reduced as part of a cost cutting exercise (e.g. some surveyor posts are now assistant surveyor posts). The authority is running with a number vacancies as recruitment remains a challenge and it is also using three agency staff (two of which are located in Shetland and unable to work on-site). Some future multi-plot housing sites are likely to require more inspection work, which will have to be addressed. Despite the fee increase, budget constraints are a real pressure on the service and funding is most likely for posts at the lower end of the scale. The service is also finding it difficult to compete with the private sector.

Although the service has struggled to meet KPO1.1, its performance has improved since 2017/18. KPO1.2 performance has also been better in the last two financial years. At the time of the fees increase, a number of staff (now retired) were slow to adopt the e-building standards such that the service was running both electronic and paper systems which was difficult to administer and resulted in poor performance. Lockdown enforced the need to move completely to electronic processing and performance has gradually improved. Throughout the period, the service has performed well on KPO4, possibly reflecting the accessibility of the service to the customer, Poor KPO1 performance is not affecting KPO4.

The service has not received additional funding following the fees increase and it continues to deal with budget pressures and recruitment challenges.

Authority 2 (Primarily Urban): This authority has consistently received more building warrant related fee income than it spends on verification and the estimated increase in income in 2018/19 due to the fees increase was £160,000. The service does not receive any GAE funds, but it has the benefit of being a council service. There is no repayment of “lost” GAE to the council, but the service is expected to fund verification and statutory services from its fee income. Building standards are involved in safety and sports grounds work for which the Council charges a fee but this is a corporate fee and building standards does not receive any income for their involvement.

In recent years there has been an increase in staff of five, mainly at entry level posts (graduates and admin). However, there is no correlation between the increase in fees and the investment in staff as staffing in the authority is always determined by need. An ambitious housebuilding programme in the area (including LA builds) has helped to fund these posts. The service looks to recruit at the lower end of the scale and “grow your own” team which is felt to be a good model for recruitment. There has also been ‘digital’ investment but this has been funded centrally as the Council moved to remote/flexible working with hubs pre-Covid.

The service was quite close to achieving KPO1.1 between 2017/18 and 2020/21 but performance has dipped considerably in 2021/22. KPO1.2 and KPO4 have also achieved the target in some years but performance has dipped in 2021/22. The recent dips in performance are attributed to a senior retirement and service restructuring, particularly the building standards support team which has reduced in sized and is now part of another service area. The reduction in performance on KPO4 was attributed to portal problems e.g. inefficient and difficult to use if information is not in the correct format.

While there has been investment in the service in recent years, this investment is driven by need and not related to the fee increase.

Authority 3 (Primarily Urban): This Authority has consistently received more building warrant fee income than it spends on verification and the estimated increase in income in 2018/19 due to the fees increase was £30,000. The service does not receive any funds from GAE and is expected to cover verification and statutory services from its fee income. Building standards can also have input into other service areas as a consultee for which no fees are received. The service is expected to make a contribution for the “lost” GAE, but a figure was not available.

Around the time of the fee increase, the performance of the service was in decline. By 2020 staff had reduced to 10 FTEs, but this has now increased to 13 FTEs. This includes 10 new starts, two of which have already left for general practice surveying in the private sector. The authority is struggling to recruit and retain staff. The investment in staff has not been a result of the fee increase, but a response to poor performance and a change in senior management. Building standards has also had a significant investment in IT with upgrades to their case and document management systems. This was a £200,000 investment which was shared with planning. There has also been investment in a system supervisor role to develop the case management system for the building standards service. This is a temporary position for 2 years at a cost of £70,000.

The service has failed to meet all the KPO1 and KPO4 targets in the last five years. The poor performance reflected understaffing and no ability to recover from short term absences. The increase in staff is beginning to impact on the KPOs but as recruitment has been at the lower end of the scale, there is a need for more checking of work which requires senior surveyor time. It takes time to gain appropriate experience, but it is hoped that performance will start to improve in the next 12 to 18 months.

There has been investment in the service since the fees increased, but the driver for investment was poor performance. Competition from the private sector is also a key issue in attracting and retaining staff.

Authority 4 (Mixed Urban/Rural): This service has consistently received more building warrant related fee income than it has spent on verification and the estimated increase in income in 2018/19 due to the fees increase was £270,000. Hence, the need for GAE funding has not been an issue. The BS service has been able to fund its activities (including dangerous buildings, licensing, S89s, enforcement and safety and sports grounds) from fee income. The authority has also used another authority to help with plan checking and external consultants for structural and fire engineering. The authority has been happy to reinvest in building standards, but the problem is workforce availability. Funding is available to increase the number of posts, but the service has been unable recruit suitably qualified staff. It is looking to recruit a technician and an enforcement officer. Funding (from fees) has also been made available for laptops, large screens and degree courses for two members of staff.

This authority has had relatively poor performance on KPO1 and KPO4 since 2017/18. For both KPO1.1 and KPO 1.2 there has been an improvement in last two years, but the failure to meet the target reflects an imbalance in the team in terms of experience and the need to not overload senior staff. There have also been administration related delays as a result of building standards admin staff now being part of general services and support being provided with less understanding/knowledge of building standards. This is one of the drivers for funding the technicians post. KPO4 has always been just below the target and the failure to meet the target is felt to be related to processing errors.

The authority is happy to support reinvestment of fee income in building standards, but the key issue is the wider availability of staff which is affecting the authority’s performance particularly on KPO1.

Authority 5 (Urban): This authority has consistently received more building warrant related fee income than it has spent on verification and the estimated increase in income in 2018/19 due to the fees increase was £150,000. The service does not receive any GAE from the authority and is expected to fund building standards statutory services from building warrant fee income. Building standards has been expected to repay the “lost” GAE to finance. The service is involved in licensing and the modest income (£15,000) building standards receives for this service covers their costs.

At the time of the fees increase, audit results were poor and the authority was on one year verification renewal. There was an Improvement Board in place, and as such expenditure was increased with around £300,000 spent on external consultants. This expenditure is no longer incurred. The authority was also paying other authorities for plan checking to help them meet their performance criteria. There was a restructuring of the building standards service and recruitment of 7 additional junior staff (2 assistant surveyors, 3 graduate surveyors and 2 technical support staff). These posts were funded from the money being spent with other local authorities for plan checking. There was also substantial investment (£200,000) in computer hardware around the time of the fees increase to address digital transformation for which extra funding was provided. Recent software and back-up hardware upgrades have had to be financed from verification fees income.

The authority allocates budgets based on a holistic view of income, expenditure and priorities and building standards must accept that some fee income will be used to support other service areas. The proportion of fee income reinvested is based on the demands of the planning and building standards service.

There has been relatively poor performance on KPO1 and KPO4 since 2017/18. The relatively junior new staff have placed additional demands on the more experienced members of the team, but there has been some improvement in performance on KPO1 in recent years.

While fees did increase the 2017 changes, the situation regarding performance was the main driver for change.

Authority 6 (Urban): This authority has consistently received more building warrant related fee income than it has spent on verification and the estimated increase in income in 2018/19 due to the fees increase was £870,000. GAE is not identified in the budget for building standards so building standards are not aware that they receive any and have not been expected to reimburse finance for any lost GAE. Building warrant fee income is used across the building standards service including several activities for which the service does not seek internal reimbursement e.g. liquor and public entertainment licenses, safety advisory group. It is also recognised that a surplus of fee income over expenditure will be used for balancing departmental and council budgets.

At the time of the fees increase, performance had dipped to the extent that the service was only being appointed as verifiers for one year. This poor performance reflected a restructuring in the service which began in 2010. Building standards has recruited 10 new staff (1 manager, 6 surveyors, 1 assistant surveyor, 1 assistant structural engineer and 1 building standards officer) in recent years, but the key driver for recruitment was performance. The recruitment would have happened regardless of the fee increase, although the additional fee income was beneficial. There has also been a major computer refresh (part of corporate wide expenditure) and an increase to the training budget of £2,000 per annum which has supported training in fire engineering.

The need for awareness of the wider authority position was highlighted and the service is examining other sources of funding which could support part of the salary costs of a graduate surveyor for a couple of years.

The authority has met KPO1.1 every year for the last five years, but not met KPO1.2 or KPO 4 in any of the last five years. KPO1.1 is a priority for the service as it is the first interaction with the customer, but the target was not met in Q1 of 2022/23. This is a reflection of retirement, illness and not being able to fill vacant posts. The service has struggled with KPO1.2, in part due to the nature of applications received e.g. larger applications take longer to process, it is more time consuming to check large plans on screens etc. Although KPO4 is still in red, the number of complaints has reduced and customer satisfaction has increased slightly.

While there has been substantial investment in staff since the fees increase, the driver for investment was the poor performance of the service and the investment would have happened regardless of the fees increase. The fees increase however, was beneficial.

Authority 7 (Rural): This authority has consistently received more building warrant related fee income than it has spent on verification and the estimated increase in income in 2018/19 due to the fees increase was £1.1 million. Building standards does not receive any GAE allocation and is expected to fund verification and all statutory services from its fee income. It is understood that a contribution is taken from fee income to compensate for the “lost” GAE but the amount was not confirmed.

Between 2016/17 and 2018/19 fee income increased by over £1million as a result of the change to fees and the service received some funding for two graduate apprentice posts (approx. £45,000). Some £800,000 was initially taken as service savings and a further £100,000 a few months later. The two additional posts were not maintained as when an experienced surveyor left, the post was taken as a saving. There has been a net increase in staff of one, but with very different levels of experience.

The service would like to invest in IT to support site work but this has not been possible to date. Any training has to be funded from fees, but they have approval for training to support the CAS.

While staff numbers are appropriate, the composition of the workforce can create difficulties. Approximately 30% of the workforce are at the graduate/trainee level which limits the range of work they can undertake, including site visits.

The service has not performed so well on KPO1 but better on KPO4. KPO1.1 is a priority for the service and they have introduced new ways of working to try and improve the first response. This has led to improvements in KPO1.1 but it can impact adversely on other parts of the service.

This authority has very healthy levels of fee income and has had some modest investment in staff following the fees increase. The majority of the additional income however, has been used to support council services.

Authority 8 (Rural): Expenditure on verification has consistently exceeded building warrant fee income. The estimated increase in income in 2018/19 due to the fees increase was £120,000. Given this situation, the department is reliant on funding from the Council. Verification expenditure exceeded fee income by approximately £190,000 in 2021/22. The 2021/22 GAE funding for building standards was £26,000. Hence, the actual funding required by the service is considerably more than the Council received for building standards from GAE.

As fee income from building standards is not sufficient to cover the costs of the department, the 2017 increase in fees was used to reduce the amount the authority has to fund building standards. It is difficult to get funding for posts and the service recently lost an experienced member of staff who was replaced with a modern apprentice, leaving the department with a slight mismatch in skills at the moment. It is Council policy to try to “grow your own” staff as recruitment can be difficult. Recruitment of another modern apprentice would help working towards replacing staff who will retire in the not too distant future - approximately half the team are aged over 50. Building standards are paying the salary costs of the modern apprentice with Skills Development Scotland paying for the training.

The authority has performed well on KPO1 and KPO4 since 2017/18, meeting the targets every year. Meeting the targets may become more difficult as experienced staff retire. The service would like to invest in more training but financial constraints provide very little scope.

Expenditure on verification exceeds income such that the 2017 fees increase reduced the amount of funding required by the service.

4.3.12 The main conclusions to be drawn from the consultations regarding reinvestment of increased fee income include:

• The importance of understanding the wider authority context before drawing conclusions on investment and performance.
• Three authorities were struggling with performance and the recent investment in building standards staff has been to address these issues rather than being a response to the increase in fees, although the increased income was beneficial.
• Cost savings were important issues for two authorities. In one authority funding was received for two junior posts, but the majority of the additional income was taken as service savings. In the other, no additional funds were received, and team restructuring led to a downgrading of some posts.
• Two authorities have not experienced any problems in accessing funding when needed, although recruitment of suitable staff is an issue.
• One authority does not generate sufficient income to cover its costs with the 2017 increase reducing the amount of funding required from the Council.

4.4 Certification

4.4.1 When fees were increased in 2017, there were also changes made to certification discounts to better reflect the reduced verification costs incurred by verifiers and recognise the additional benefits that certification brings to building owners. The changes included:

• Certificates of design: retained at 10% with discounts for up to £100,000 value of work increased by introducing minimum fixed amounts.
• Certificates of construction: discounts increased from 1% to 3% with discounts for up to £100.000 value of work increased by introducing minimum fixed amounts.

4.4.2 Table 4.3 provides a summary of the discounts for certificates of design and construction at various value of work bands. The change in discounts was to encourage greater use of certification and it was hoped to lead to an increase in the number of certificates submitted.

Table 4.3: Discounts for Certificates of Design and Construction by Value of Work Bands, £

Value of Work Bands	Certificates of Design		Certificates of Construction
	Structures	Energy	Drainage, Heating, Plumbing	Electrical
£0 - £5,000	30	30	15	15
£5,001 - £10,000	40	40	15	15
£10,001 - £20,000	65	65	25	25
£20,001 - £100,000	100	100	35	35
£100,001 and over	10% of fee	10% of fee	3% of fee	3% of fee

4.4.3 Figure 4.6 provides a summary of the number of certificates of design and construction by scheme between 2016/17 and 2021/22. The following points are of note:

• Design – Structures: this is the most frequently used certification scheme with almost 16,500 certificates in 2021/22. From a level of almost 15,900 certificates in 2016/17, the number of certificates decreased by over 8% to 14,600 in 2019/20. Numbers in 2020/21 are likely to have been affected by Covid, but there was a considerable rise in 2021/22 to just under 16,500 certificates.
• Design – Energy (Domestic): the two design schemes relating to energy both have relatively small numbers of certificates. After a slight drop in certificate numbers in 2017/18, the number of domestic energy certificates of design grew to a maximum of 820 in 2019/20 before falling substantially (-56%) in 2020/21. In 2021/22, the number of certificates was approximately half the number in 2019/20.
• Design – Energy (Non-Domestic): there have been very few non-domestic energy certificates in recent years with numbers fluctuating between 30 and 45 between 2016/17 and 2019/20 but they dropped significantly in 2020/21 to ten and increased to 16 in 2021/22.
• Construction – Drainage, Heating, Plumbing: between 2016/17 and 2017/18, the number of certificates doubled to almost 2,800 and substantial growth (with the exception of 2020/21) has continued to a level of almost 4,900 certificates in 2021/22.
• After a slight dip in 2017/18, there was a substantial increase (79%) to over 7,800 certificates in 2019/20, but numbers have fallen to below 2016/17 levels in recent years. Covid is likely to be one factor, but the other certification schemes have seen some “pickup” of numbers in 2021/22 which has not happened with the electrical installations scheme.

4.4.4 While the effects of Covid are clear in 2020/21, the effect of the change in discounts in 2017 has been mixed for the three certificate of design schemes, with take-up of both energy schemes lower than they were before the increase. The structural scheme has seen uptake increase in 2021/22 following four years of declining numbers of certificates.

4.4.5 The effect of the 2017 fees change has been more positive on the certificates of construction schemes with both schemes experiencing an increase in certificates in the years before Covid. While the drainage, heating and plumbing scheme has recovered well from Covid, the electrical installations scheme is now (2021/22) at a lower level than 2016/17.

4.4.6 The survey sought to establish whether the value of the certification discount forgone covers the verification cost of checking work if a certificate is not provided. The certificate of construction for electrical installations is the scheme where respondents (9 or 64%) felt that the discount forgone ‘always’ or ‘usually’ covers the cost of checking work. A smaller number of respondents felt that the discount forgone ‘always’ or ‘usually’ covers the cost of verification in the other schemes. The structural scheme is the scheme where the discount forgone is least likely to cover the verification costs. Details are shown in Figure 4.7.

4.4.7 In terms of whether the discounts offered are sufficient to encourage use of the certification schemes the majority of respondents (9 or 56% thought the discounts were not sufficient. Some 44% of respondents felt the discounts were sufficient, but one respondent qualified the answer by suggesting that the discount is sufficient “as long as the applicant/agent is clear that using a certifier scheme reduces the time for the verification process, especially for the SER and energy schemes”. While the discount might not cover the costs to a customer in obtaining a certificate of design, the overall time savings and efficiencies in obtaining a building warrant should offset the additional costs. It was suggested that the driver for customers to use design certificates was shorter processing times rather than the level of discount on the building warrant fee.

4.4.8 The survey identified that it is much cheaper for the customer to submit design calculations than a SER certificate and where third-party checks of the calculations are required, the cost can be more than the building warrant fee. This point was illustrated during the consultations with the following examples:

• Two self-build housing applications were received with warrant fees of £1,200 to £1,500. The customer submitted other forms of structural calculations – one using an overseas approach and the other using information from a DIY self-build website. In both cases the cost of the engineers to check the calculations was the same as the warrant fee. Given the nature of the calculations submitted, the engineers had to check all aspects of the work.
• A small project attracting a building warrant fee of £150 (value of work up to £5,000) was submitted with a set of calculations. The cost of the structural engineer to check the calculations was £450.

4.4.9 It was suggested that customers consider the cost of obtaining certificates and compare this with the value of the discount. Hence, the perceived cost of the certificate outweighs the discount on the warrant. This would suggest the wider benefits of certification are not readily understood by customers. These points are primarily related to certificates of design, particularly structures.

4.4.10 For construction certificates, the relatively low number of certificates received did not appear to be a major issue for authorities. The main burden of not receiving a certificate was identified as being convinced that the tradesmen are competent to undertake the work. More drainage, heating and plumbing certificates might save some time as tests do not have to be witnessed, but verifiers may be on site anyway and are combining the test with other work. A lack of electrical certificates was not felt to have a significant impact on workload.

4.4.11 Some of the consultations highlighted problems with refunds if the discount is given and the certificate is not provided. One authority stated that they very rarely get the money back and it is not worth the time and effort to chase payment while another would not issue the completion certificate until the additional fee had been paid.

4.4.12 Two authorities raised questions about the attractiveness of the schemes to members and questioned if too much information was having to be provided to issue a certificate (drainage, heating and plumbing) or if the cost of the scheme including certificate production and auditing is too much (SER).

4.4.13 Suggestions for encouraging the use of certification included:

• Improved publicity/communications of the scheme benefits to users e.g. time savings in processing building warrant, reassurance of compliance with the building regulations.
• Better awareness of the certification schemes, particularly construction schemes where there is a lack of take up in terms of being registered with the certification scheme. Anecdotal evidence suggested a low percentage of SELECT and NICEIC electricians were also certifiers of construction. More awareness of the difference is required to ensure agents understand that being a SELECT or NICEIC member does make the contractor a certifier of construction.
• Increased KPO target times for applications without a certificate.
• A surcharge for non-certified work, such as that for late building warrants, although it was recognised this may be complicated to administer.

4.4.14 A number of concerns were also raised about certification including:

• Concern that any increased discount leads to reduced fee income that does not cover processing and inspections.
• Concern that certification is being undertaken to achieve discounts and therefore removing possible checking by verifiers. Certification was considered beneficial if, as a mandatory requirement, it increases oversight by certifying bodies and hopefully increases compliance.

4.5 Summary

4.5.1 The majority of authorities responding to the survey did not receive their share of GAE for the provision of statutory building standards services. Where fee income exceeds the cost of the verification service, authorities are expected to fund statutory and other building standards activities from their fee income.

4.5.2 Across Scotland, an additional £8 million in income was delivered following the 2017 fees increase but the level of reinvestment in the service has been much lower than this. Approximately 60% of authorities responding to the survey reported that additional income has been available to invest in the building standards service. The investment of four authorities was primarily related to staffing and represents approximately 16% of the additional fee income of these authorities.

4.5.3 This suggests that the majority of additional fee income is not reinvested in the building standards service. It is difficult to draw conclusions across all authorities as the consultations identified specific local circumstances as the key drivers for investment in the service. Three authorities made considerable investment in the service, but this was to address issues of poor performance and the investment would have occurred without the fees increase. Cost savings were key issues in two authorities where the majority of additional income was used to support savings or services elsewhere in the council. Recruitment difficulties was the key issue for two authorities who had access to the funds and where fee income does not cover verification costs, it is very difficult to access additional funds.

4.5.4 The analysis of the number of certificates submitted using the certification schemes suggests that the objective of revising the discounts to encourage greater use of certification has not been achieved.