Inadequate Regulatory Impact Assessment for S.I.9- Look Back 2

by Bregs Blog admin team

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This is the second in a series “Look Back” Posts which examines older papers and opinion pieces that are still relevant  to the situation post-implementation of BC(A)R SI.9. Recent  readers may have missed some interesting posts in our 500+ post archive.

Today we look at the lack of a proper Regulatory Impact Assessment for SI.9 (previously SI.80).

A very brief 6 page regulatory impact assessment (RIA) for the new regulations was undertaken in 2012 on an early draft of SI.80. In contrast, the UK completed a very comprehensive study to examine how to improve their system of approved independent inspectors, looking at various options and costing these in terms of cost/benefit to consumer and industry. The UK report included the Irish system as a option: light-touch, low-cost (to local authorities), self-certification, but discounted this early on due to cost to the consumer and to the wider industry.

It is worth opening and comparing both pdf’s listed in this post. The UK version is a comprehensive 41 page document looking at various options and comparing costs/benefits; the Irish version has a very brief 6 page impact section (Section 4: pages 18-23) which has only one cost range mentioned:

“..industry sources suggest this requirement could add say between €1,000 to €3,000 per housing unit to the overall building costs

No methodology is given for this calculation and we still wonder who the ‘industry sources’ were who provided this estimate.

In a previous post The extraordinary cost of BC(A)R SI.9 of 2014 the cost of SI.9 to the consumer and industry (based on UK methodolgy) was estimated to be circa €500m per annum.

There was no revised RIA completed for later drafts of SI.80 (2013 version), or for SI.9, the current regulation which was introduced in March 2014.

The post below was first published on Breg blog on 6th December 2014.

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Audit-Checklist

Inadequate Regulatory Impact Assessment for S.I.9 (Pre.80)

To find out how one might effectively assess building control amendments we do not have to look far: the “Communities and Local Government: Proposed changes to the building control system – Consultation stage impact assessment” report was produced in the UK in 2012. You can read it here: Proposed Changes to the building control system – consultation impact assessment (UK). The report comprehensively examines several options to revise and change the UK building control system. Their existing system, unlike ours, already has comprehensive local authority independent inspections with 80% backed by warranty.

The UK report included the Irish system as a option: light-touch, low-cost (to local authorities), self-certification, but discounted this early on due to cost to the consumer and to the wider industry. Making the system of building control simpler, leaner and more cost effective for society in general is clearly a motivating factor.

The UK is our closest model in terms of building standards, legislative system and environment. We are a fraction of the size of the UK, however our demographics are similar. One must wonder after reading this document, how the Department of the Environment, Communities & Local Government (DECLG) opted to continue with the most expensive form of building control for the industry, when a simple system of self-funded local authority independent inspections would improve building standards and save the industry tens of millions per year, while delivering a better standard of building generally and giving the consumer redress in the event of latent (hidden) defects?

Despite over 500 stakeholder submissions on S.I.80 received by the DECLG, no such study was carried out here. It appears that at no point in the consultation process or formation of S.I.80 have the impacts on SMEs, the industry and the consumer been considered in detail. The National Consumer Agency (NCA) estimates the extra cost to the Irish house building industry alone would be in the region of €30m- €90m per year (based on a sustainable level of 30,000 new dwelling units per year). The financial impact of S.I.80 on the wider industry is likely to be a multiple of this. With no comprehensive independent system of local authority building inspections, the effect of S.I.80 on building standards will not give the return for this extra cost to the industry, nor to the consumer. In their 2012 submission the Competition Authority express concern about “whether the additional costs imposed by the proposed regulations are in proportion to any benefit they might bring”

Worryingly, it would appear that the Department did not carry out a Regulatory Impact Assessment (RIA) of the March 2013 wording of S.I.80. A very brief RIA was completed in 2012 and the lack of a follow-up would suggest some of the very significant changes introduced by the Minister in the March 2013 draft have not been comprehensively examined. The RIA produced by the department is included as part of the following document “Strengthening the Building Control System – A Document to inform public consultation on Draft Building Control (Amendment) Regulations 2012″. See document Strengthening the Building Control System: DECLG 2012.

The Impact section (section 4) of the RIA is only six pages long and does not appear to be backed up with any research. For example, under the Section 4.6(i) Impact on National Competitiveness, the report makes the simple claim “There will be no negative impact on Ireland’s competitiveness”. The only costs noted is a notional cost per dwelling. Remarkably, the more significant insurance costs are excluded. This is an extraordinarily light assessment of a very significant amendment.

We do not need to look to the UK for examples of good impact assessment. The RIA of our own Construction Contracts Act 2013 (available here) and recent Health & Safety Legislation (available here) provide far more comprehensive analysis. Why has S.I.80 only had the most cursory impact assessment done on the 2012 draft and nothing since? Already three Senior Counsel legal opinions completed on the March 2013 draft of S.I.80 identified serious legal and practical issues associated with implementation, and all concurred that S.I.80 is unworkable in its current form. Given the wide-ranging effects on the construction industry, SMEs and the wider economy, it is remarkable that essential stress-testing has not been completed by the department.

Other posts of interest:

World Bank Rankings, Ireland & SI.9 – Look Back 1

BREGS Blog Archive 4- FEBRUARY 2014

BREGS Blog Archive 3- JANUARY 2014

BREGS Blog Archive 2- DECEMBER 2013

BREGS Blog Archive 1- NOVEMBER 2013

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