Grenfell Tower Inquiry phase 2 report: Scottish Government response

5: Government and restructuring

Background

The Inquiry set out the fragmentation of responsibility for regulating the construction industry which is currently mirrored in the range of UK Government departments responsible for matters affecting fire safety. It recommends the UK Government bring responsibility for the functions relating to fire safety currently exercised by MHCLG, Home Office and the Department for Business and Trade into a single body and for that body to report to a single Secretary of State answerable to Parliament.

The Inquiry recommended that a Chief Construction Adviser be appointed. This role would promote a cohesive and joined up approach to development and promulgation of construction policy and the provision of coherent advice and support to Ministers. The Inquiry made comment on the dispersed approach to construction which is spread across a range of sub-disciplines and policy areas distributed across a number of Director Generals (DGs) and Directorates. The Chief Construction Adviser should have sufficient budget and staff to provide advice on all matters affecting the construction industry, including monitoring all aspects of the department’s work relating to the building regulations and statutory guidance, providing advice to the Secretary of State on request, and bringing to the attention of the Secretary of State any matters affecting the building regulations and statutory guidance or matters affecting the construction industry more generally of which the government should be aware.

The UK Government announced on Wednesday 26 February that new powers under the Procurement Act 2023 would be used to investigate seven of the organisations criticised in the report. If certain grounds are met, their names will be added to a published debarment list which must be taken into account by contracting authorities when awarding new contracts.

Recommendation 3 (para 113.8)

The UK Government bring responsibility for the functions relating to fire safety currently exercised by MHCLG, the Home Office and the Department for Business and Trade into one department under a single Secretary of State.

Rationale

Aimed at improving the quality of government by providing an administrative environment in which information can be shared more quickly and more effectively between teams responsible for different aspects of the work. There is a need to facilitate communication between the regulator and the department to ensure the safety of the built environment and that policy is developed in a holistic and coherent way.

Scottish context

As a devolved matter, Scottish Ministers have responsibility for the allocation of responsibilities, including those related to construction and fire safety. At present while construction responsibility and fire safety are split across various policy areas within Scottish Government, they all sit under a single Permanent Secretary and within the responsibilities of DGs.

The Scottish Government set up the Ministerial Working Group on Building and Fire Safety (MWG-BFS) in the aftermath of the fire to oversee reviews of building and fire safety frameworks, regulations and guidance, and any other relevant matters, to help ensure that people are safe in Scotland's buildings. While the initial focus was on high-rise domestic buildings consideration was also given to other building safety matters and further buildings including housing, the NHS estate, and schools.

The MWG-BFS has overseen changes to building regulations and guidance, fire safety guidance and legislation on smoke / heat alarms. The Building Standards Futures Board was set up under the MWG-BFS and continues to take forward a programme of work to strengthen the building standards system. The Cladding Remediation programme has also been commenced under the direction of the MWG-BFS.

In addition, the Construction Leadership Forum (CLF) brings together key industry organisations and relevant Scottish Government officials. It has a wide brief to discuss and share information on issues that affect the industry, which include safety and other issues that are relevant to the Grenfell Inquiry.

Scottish Government response

The Scottish Government accepts this recommendation in principle. It is however recognised that the structure of the Scottish Government is different from that of the UK Government. Structural changes to Directorates are at present considered unnecessary.

It is important to ensure that building and fire safety work is coordinated appropriately and existing routes to coordination of building and fire safety issues across Government would be the preferred approach, including the continuation of the MWG-BFS. It is proposed that options for a reset role for the MWG-BFS that builds on its current role in coordinating and directing programmes of work will be developed.

Recommendation 4 (para 113.9)

That (UK Government) Secretary of State appoint a Chief Construction Adviser with sufficient budget and staff to provide advice on all matters affecting the construction industry, including:

a. monitoring all aspects of the department’s work relating to the building regulations and statutory guidance

b. providing advice to the Secretary of State on request, and

c. bringing to the attention of the Secretary of State any matters affecting the building regulations and statutory guidance or matters affecting the construction industry more generally of which the government should be aware.

Rationale

The Scottish Government’s role is primarily policy, legislation, funding for programmes and industry support. Its primary interests in construction are in relation to safety, economic impact and as a client on public sector infrastructure projects. It also plays a collaborative leadership role in ensuring that construction, primarily in the public sector, is carried out efficiently and delivers built assets that meet the needs of Scotland. The majority of public sector construction project delivery in Scotland is carried out on behalf of local authorities, health, education, Transport Scotland and the Scottish Prison Service by the private sector construction industry. Regulatory functions are primarily undertaken by local authorities, Scottish Fire and Rescue Services (SFRS) and other bodies.

The recommendation is about ensuring cohesive policy through joined up working by ensuring there is a common focal point at the heart of Government.

Scottish context

This recommendation covers both devolved and reserved matters. The recommendation is relevant to Scotland because of the significance of the construction industry in Scotland and its outputs which impact on all aspects of Scottish life and the economy.

In 2013 the Review of Scottish Public Sector Procurement in Construction recommended that a Chief Construction Adviser be appointed. The decision to appoint a Chief Construction Advisor was deferred to allow for implementation of the recommendations. The role, then, was to champion implementation of the report and to challenge industry to innovate as well as to encourage collaboration between the public sector and industry.

In 2014 the Construction Review Delivery Group (CRDG) was formed to support implementation, and it engaged closely with industry through the Construction Scotland Industry Leadership Group. When implementation was complete, CRDG was disbanded and the CLF was established to form a collaborative forum between Government, the Public Sector, and the construction industry.

The recommendation for a Chief Construction Advisor made by the Inquiry is different. Its role will be to cohere policy development within SG and across the wider public sector and to provide a focal point for all matters construction.

Scottish Government response

The Scottish Government accepts the recommendation. We have reviewed the recommendation against the specific context of construction in Scotland and administrative structures across the Scottish Government. This has indicated that further work will be required to fully understand the implications and options for Scotland. A full options appraisal will be undertaken to develop the full terms and remit of the role with a report being submitted, in due course, to Ministers for a decision on the next steps.

Issue 2 – Banning Companies

In a statement to the House of Commons, on 4 September 2024 following the publication of the Grenfell Phase 2 Report, the Prime Minister said, that “this government will write to all companies found by the Inquiry to have been part of these horrific failings...as the first step to stopping them being awarded government contracts.” Following that, the UK Government sent initial warning letters to 49 companies named in the report.

The UK Government announced on Wednesday 26 February that new powers under the Procurement Act 2023 would be used to investigate seven of the organisations criticised in the report. If certain grounds are met, their names will be added to a published debarment list which must be taken into account by contracting authorities when awarding new contracts.

Rationale

The Inquiry identified companies responsible for the design and refurbishment, installation of cladding, development of products, testing and certification of products as well as the oversight and approval of the processes of the work undertaken. These companies were found to be systemically dishonest and to have deliberately manipulated the construction process itself and the testing process and subsequent results for materials used.

Scottish context

The Procurement Act 2023 allows UK Ministers to debar specified companies from bidding for public contracts. It does not apply to the award of contracts by Scottish public bodies.

The law in Scotland is different, but it does allow public bodies to exclude bidders which have committed acts of grave professional misconduct from procurement processes. Importantly, though, in Scotland that is legally only a decision which can be taken by individual public bodies, on a case-by case basis, and only at the moment a company seeks to participate in a procurement process. Those individual public bodies would need to be prepared to set out their analysis of the evidence, including any evidence of remedial action presented by the companies concerned, in court if necessary.

Pre-emptive or blanket bans on specific companies competing for public contracts, which do not allow for consideration of evidence of remedial action, would not be permitted in current Scottish procurement legislation.

Scottish Government response

We will seek to continue to work with UK Government to understand its intentions in this regard, but whilst procurement law across all parts of the UK provides for bidders to be excluded from tenders if they have been guilty of grave professional misconduct, the processes which underpin such a decision differ. The Scottish Government will always expect its contractors to uphold the highest professional standards.