 Dýd meisio cawr a chwynt하면 I will welcome to the 13th meeting on the Local Governates Committee in 2017. Can I remind everyone present on the sound of mobile phones? As meeting papers are provided in digital format tablets may be used by members in the meeting, I got a full house today, no apologies have been received and we will welcome John Scott MSP for Agenda item 1, which will move on shortly to a strong constituency interests in the events category. Thank you John for coming along, introduce that question." We will move on to agenda item 1, building regulations in Scotland. Cabinet will take evidence on building regulations in Scotland from I can welcome Nicola Barclash for executive homes for Scotland Malcom, and cloud director of the National Party, Stephen Kent present, Scottish Building Federation, Dave Aken, local authority building standards Scotland and Jim Gilmour, board member federation of master builders Scotland. Thank you all of you for coming along. Given the size of witnesses' panel this morning, Gweithio gweld i gwylliannol, ac rwy'n gweithio i gweithio nhw'n ddim yn fawr yn gyfnodol, ac rwy'n gweithio i gweithio i'r bwysig, Gwydiann Simpson. Felly, ddweud i'r cyfleu Cynyddiol, Acur Cymru yn gwyllgor i ddweud, a oes yn gweithio i'r ddweud i'r ddweud i'r ddweud i'r ddweud i'r cyffredinol. I wonder if we can just set the scene for the committee members and people watching if we can just describe the actual system as it exists. If I can read from a document which your organisation produced called verification during construction non-domestic buildings and I'm quoting direct, verification of the compliance of building works with Scottish building regulations is undertaken by the 32 Scottish local authorities in their role as verifiers and you've all been reissued with those licenses recently I believe. The work of verifiers has two main elements, checking that building plans comply with building regulations when an application is made for a building warrant and undertaking reasonable inquiries to verify that the building work complies with the approved plans, details and regulations and before I move on perhaps you can describe what reasonable inquiries means. OK, I can do that. I think it's important to stress the difference between labs also makes reference to the system in England and there's differences there. I think it's important to the committee are aware of that and the difference is very much in Scotland's preemptive system where plans are checked to ensure compliance with the building standards and then the builder can start the build. In terms of the reasonable inquiry that goes on on site, all local authorities issue a compliance plan or a CCNP as it's commonly known. This is a tailored inspection plan against the actual risk associated with that particular build so it's risk assessed and it allows local authorities to focus their attention on higher risk projects with the resources that they have available. In terms of reasonable inquiry within the CCNP, as I said, there's targeted inspections on higher risk elements of the build such as it'll go through drainage, it'll look at fire issues, it'll look at structure and it all depends on the associated risk with that building type so these plans are constructed in such a way. OK, on a large housing development, a council would be sitting down in an office and making some kind of judgment on which plots to have a look at. You wouldn't be looking at every plot. What would happen in a large volume house build site, verifiers would do, first of all they would laze with a developer at the time the building was approved because they would need to know importantly when the site is going to start and then that way they could get a feel of the phase, the way the build is going to be phased. At one time developers were building maybe 20 houses at one time, that's not the case now, the landscapes changed quite a bit so importantly local authority verifiers have to engage at an early stage with the developer just to get an idea of how the build programme, how it looks. That way then the verifier can produce a CCNP associated to that site and that will include random inspections so it could be a 1 in 4 ratio depending on the numbers and the size of the site so there will be random sampling done and again it's all risk based. The short answer was no, you don't look at every site. There will be an inspection done on every site, a completion inspection. Let me move on to the next quote from the same document. The inspection of building work in progress is an important part of the building standards verification procedure however it must be stressed that inspections are to protect the public interest in terms of compliance with building regulations not to ensure that all the work is constructed as the person paying for the work would want it. How do you explain that? I think that one of the documents referred to in our paper, the optimal economics report 2014 highlighted differences in the purpose of what classes warranty inspections carried out by a verifier. Warrant inspections are undertaken to ensure that construction conforms to guidance and standards primarily carried out on behalf of clients to protect their private interest and minimise the risk of claims whereas inspections carried out by verifiers focus on the public interest issues such as carbon and energy reduction. Right, so if we can cut through all that what basically happens is a council does a paper exercise, assesses risk then doesn't go out and inspect every stage of every property so when it comes to actually buying a new house the person buying the house can have no confidence that that house has been built to standard. Well, they would seek confidence from the legal system as it's set out just now. The responsibility lies clearly with the developer who signs off the completion certificate to say that all the build has been carried out in accordance with the building regulations that's an important part that's the way the current system set up in Scotland. So you're saying it's the responsibility of the developer, what's the point of your service? Well, as I said earlier, the important point to make is a preemptive system so we ensure compliance with the plans and the builder builds off the approved plans. Okay, but you're not actually insuring compliance with anything because you're not inspecting every stage so a house buyer cannot have that confidence. Now we've heard evidence earlier in private. I won't give the details because it was in private but we've heard evidence of cases across Scotland where people have bought homes that have ended up being defective because problems were not picked up. In one case, it was a lot of houses not picked up through the building control system. Don't you think there's something missing there, it's lax? Well, as I said, the main responsibility lies with the developer as they sign off the completion certificate to say that the build has been carried out in accordance with the approved plans which has been stamped by the local authority. And what's that completion certificate meant to prove? It's meant to prove that the developer has carried out the build as per the approved plans that were signed off by the local authority. And clearly what you've put forward, that's not happened. So the developer has falsely signed the declaration on the completion certificate. So it's the developer's fault and it's not down to you to check anything that the developer's telling you. No, we'd carry out reasonable inquiry him. Okay, can I quote you from the inquiry into the Edinburgh schools? You'll recall that. So two paragraphs, 10.6.3, the inquiry formed the view that there was a common misconception even among some council officers as to the extent of the reliance that can be placed on the quality of construction of a building that has gone through the statutory building standards process. That's pretty damning, isn't it? I think in terms of that report you referred to, I think local authority building standards came out actually quite well. I don't think they were dammed at all in fairness. I think what it did highlight the co-report is that there are weaknesses in the system, the entire system. I think when you look at building standards you have to look at building standards holistically. And every stakeholder involved in the construction process is a part to play in ensuring compliance with building standards. I'll read you another paragraph 10.6.10. From the above it is evident that the building standards system is not designed or intended to give the level of assurance that a client may require in relation to the more detailed aspects of the construction of a building. Anyone can jump in on this if you wish. I'll start to draw a distinction between the role of local authority verifiers and the wider construction process from private developers, so we will want to tease out some more of that. If anyone else wants to come in that would be good, but I'll point out that Elaine Smith and Jenny Gorff want to come in for some supplementaries on this as well. Does anyone want to come in on what they've heard so far, Mr McLeod? I think just to maybe record that the points that have been made by Mr Simpson have been well documented in the past and even as back in 2009 the Scottish Government published consultation entitled to improving compliance with building regulations. That recorded the fact that it was highly improbable that the work-on site would comply with what was being proposed in the design because of the lack of full-up inspection. So this isn't a new issue or a new problem and the school's report has certainly seemed to have followed the same line and reinforced the position that was stated back in 2009. Is that the problem with NHBC-covered properties as well, Mr McLeod? I wouldn't say so, no. I mean, our systems are significantly different to those employed by local government in Scotland. It's worth putting on the record that some of the information that we've received in private from constituents believe that developers at NHBC have let them down badly as well. I think that that's worth pointing out at this stage. Does anyone else want to come in? No takers in relation to that. Can you have any more on anything before I bring in some fellow members? I'll just make a final point because I know other questions will flow from this. We've heard evidence that many households have faced problems with buildings. Of course, it's not just houses. I've mentioned schools as well. It could be any buildings. My understanding, and perhaps Mr Aitken, you could confirm this, is that if there are defects established later on, there's actually no mechanism within the Building Scotland Act to rescind a completion certificate. That would be correct. That's right. There's no form of redress. There's problems with several matters between the purchaser and the builder. We might return to that at some point, Mr Aitken. Can I suspect Elaine Smith? Over the years you said that things have changed somewhat and that there might have been at one point 20 houses being built by a developer, but now, presumably, we're talking 200 more rather than 20. Has there been a reduction in building control officers employed by local authorities over that period? I don't have those figures available, I couldn't tell you. I know that within the building standards system just now, there's 500 employees roughly, and we have about 250 charter surveyors within that spread across the whole of Scotland, but I couldn't tell you the actual numbers by local authority. Would charter surveyors be different to building control officers? There are different levels. You could have a building inspector, a technician and a charter surveyor. Obviously, we would deal with higher risk issues. I suppose that the question would be that people perhaps assume that because there is building control certificates of completion issued, that gives confidence, but what you are saying is that the only redress and recourse is legally between the buyer and the buyer. The company that they are buying off is basically buyer-beware, as my colleague pointed out earlier. That would be correct. Thank you for that, Jenny Horace. Thank you, convener, and good morning to the panel. Mr Rakein, if I could just go back to you and drill down a wee bit on some of the issues that my colleague has highlighted. You say that the developer has the final sign-off, but the local authority has the right to reasonable inquiry. The local authority has a right to inspect the work in progress to check the warrant that is being complied with. I just want to know if there is consistency nationally in terms of how that is being applied. Do you have information on that? Do you have any data to say that it is being applied nationally in a consistent fashion, or is that information not available? What is actually happening on the ground? I do not have the actual stats, but in terms of driving consistency nationally, the verification during construction handbook, each verifier, each local authority will use that guidance as laid out. As I said before, every individual building warrant will receive its individual CCNP compliance plan, which will identify on a risk basis the types of inspections, the number of inspections that will be carried out. I suppose that my question is that, while the local authority has the right to inspect the work, there is nothing to compel them to do so? Reasonable inquiry compels them to do so, so they would have to carry out a formal reasonable inquiry. That is the legal term. How would we term reasonable inquiry? What would lead them to that if somebody comes to them with a complaint, or is that how it usually works? It is not done basically as a matter of course. It is when an issue arises that they would come in and carry out some sort of check. Is that right? No, no. The checks would be laid out within the CCNP. The inspections are laid out within that. But they do not have to do it? Yes, they do. That would be reasonable inquiry. Can I just follow up a little bit on reasonable inquiry? I assume that developers or MSPs get good by their indifferent ones, I suspect. Would part of that reasonable inquiry be looking to see the track record of different construction companies and developers over the years to see about the level of complaints? There has been post construction, for example. It would be quite helpful for the committee to get an idea of what reasonable inquiry would mean. Just before you answer that, I should point out that we are going to look at the checks that are in place for the warranty system for private developments. That is something that we want to explore as well. How would you get an evidence base around a risk assessment for the depth of inquiry for each development? Maybe a little bit more about that would be quite helpful. The document referred to the verification due reconstruction. Handbook identifies the quality of the builder, if you like, in past experiences. That will be factored in to the CCNP, the risk assessment. If there is a known builder that they have had problems with before, the CCNP would be cranked up, the risk would be cranked up. It might be helpful to hear from some of the representatives of the industry in relation to the checks and balances that they believe are in place in relation to that construction process itself. We have an overview from Mr Akin about what the role of the local authority verifiers are in that process. From what we are hearing, much of that is based on risk assessment, reasonable inquiry and a degree of trust with the developers that when they certify something has been completed appropriately, that joint sign-off or individual sign-off? No, the legal system is quite clear that it lies with the developer, so they are signing off the completion certificate. The local authority will either accept or reject that completion certificate. How can we have comfort that those completion certificates are worth the paper that they are written on? How can we make sure that they are valid? What checks and balances are they within the system currently? I am not always very good at catching my eye, but tell the graphic if you want to speak. Please, Mr Akin. Absolutely. In talking with the developer on personal experience, I have operated down here for a bulk builder and now run the family firm back home in the islands. There was a vast difference in the frequency of inspection and we are very fortunate up in Orkney where we have a relatively well resourced local authority, relatively low volume of work. We see our inspectors coming to site regularly, speaking to members from all over the country, where the frequency of inspection can vary substantially from local authority area to area, depending on the volume of work and the resourced levels in that area. That is helpful, because Mr Gilmour and Mr McLeod put their hands up, which is helpful to know that they want to speak. What we do down south at the moment is that FNB covers the whole of UK and we will get FNB Scotland etc. Down south, we signed a concordia about 19 months ago with Bill and Control regarding a partnership. Part of our partnership is that we do individual inspections at every contractor within every two to three years. It is an external company of charters of wearers who carry out the inspections of these people. What happens is that I am a developer and a construction man myself. The scenario being that there is an area of trust and you build up trust. The question that you were asking earlier was if someone got a track record of being very disappointing in previous contracts, then they upped the ante on that. That is the master plan down south that we were bringing back up here. We are only new in a partnership with Bill and Control up here in the last year and it is becoming a bit of a marriage that will probably take a couple of years before that really beds in. I think that the individual inspection that we brought in about four or five years ago has been the best thing for not playing yourself in court from the Federation side and representing the members and also for the clients at the other end. The other one is a lot of these sites that people talk about should have had a clock of works in my opinion because if you have a full ten clock of works, he is inspecting as the site goes along. The expense of that is not crazy on a development trust me and I will give you a tradesman's view. If you have got a decent clock of works on site, that clock of works will build up a relationship with the joiner, the altruist and the plumber. He sets the standard when he is on site. He turns around and goes sorry if you fit a window like that again I will be going to your employer and you won't be on this site. That process is all about the checks and balances that it is worth trying to get to. Can I just check for clarity? Who employs the clock of works? On a private site, it is up to the contractor to employ a clock of works, not up to the local authority. Is it specifically on this list? I won't mark on the cloud to win a second yet. Mr Gilmour on the clock of works may be my understanding a number of years ago that every major building company would have had clocks of works, not just one, maybe a team of them, because they are employing subcontractors. Are you actually saying now that a major building company could be building 400 houses and not have a clock of works? What they've got is a foreman or a supervisor who's been in the industry for quite a while and may be educated in it as well. His job is to get around and get that site built. You've got a contract manager normally on a scaled site, but the structure used to be contract managers, site agent, general foreman, foreman, charge hands each trades. Trust me, that's disappeared. I've got a personal view and I hope that I'm allowed to express it, but my personal view is about project management. There's no a great bond. They go out in my view to cost. Some people come in and I'm just going to use hypothetical sums. Some date £5 million, some date £4 million. They're going to look at the £4 million because it's all about profit. I'm sorry to say that. That is what the system always was, was a structure supervising all the way down and I think that's what's missing. That's a personal view. Mr McLeod, is there a less structure supervision on site now? What would NHBC's view be on that? Do you want me to talk about NHBC's processes or comment on what Mr Gilmour's? I think both are inextricably linked, so maybe reflect what Mr Gilmour has said and then see how NHBC can provide a degree of reassurance, hopefully, in relation to that. Mr Gilmour's comments are valid, but historically that used to be the case, but certainly that changed many years ago and it's now very unusual to have a clerk of works on any building site. You generally will have clerk of works where you have a housing association or a local authority project and they tend to be directly employed by either that housing association or local authority. In the private sector, it's exceptional and unusual to have someone fulfilling that role. In terms of quality control and checking the workmanship, it then tends to be devolved to various people within that particular organisation, be that the site manager on site who has many other tasks to do or another individual identified to carry out that function. There is a potential lack of supervision in terms of quality of construction, which is where NHBC can come in and assist. We do that by having a structured inspection process in terms of the quality of construction and looking at that from inception through to completion. If we go back even further, NHBC is an insurance company and we have a register of builders. We are not a trade organisation. Before you become registered with NHBC, we also have an assessment process that we go through. Any builder that is registered with NHBC has been checked and vetted in terms of their financial and technical competence. We also check whether or not they have had any bad history with us. If that is the case, we would not entertain them being on the register. Once we get through that process on site, we carry out a detailed structured inspection process on every single house that we cover. That will check the foundations when they are excavated. It will check the walls when they are being built. We check that at the middle level for lower-ice housing to make sure that we can check the wall ties and check that the wall construction is correct. We check that at head of build for all flats, for the same reason. We check the internal services, plumbing and electric, before they are covered up. Then we do a final inspection check once the house is complete. On top of that, we also set benchmark inspections in terms of roofing. For every site that we cover, we will check the first one to two roofs that are built, accept that as a benchmark and then spot check roof construction as it is proceeding throughout the site. Where flats are involved in multi-occupancy, we carry out checks for fire, so we will check things like the proper fire stops have been installed, the proper fire protection is being provided and we will do that as well. We recently introduced to the last year a number of initiatives to assist the industry and improve quality. We have a construction quality review that we have rolled out now over the last year to, at the moment, three or four major builders. We are working to extend that across the UK. That entails us visiting every single site across the UK that the builder is working on, visiting and inspecting all areas of work on each site. I am producing a very detailed specific report to that site, which we then accumulate into a larger report for that builder. We only do that with the buying of their board, so that we report that back to their board and identify where they can improve their construction processes. We are doing quite a lot of work at the moment in terms of trying to work with the industry and also to ensure that at the end of the day a quality product is produced. We might come back and follow up at some point when things go wrong, because we can assist in the world and things can still go wrong. We will come back to have a couple of my fellow committee members wanting to explore a couple of points in relation to this. I am going to Alexander Stewart first, then Elaine Smith and I have got you Andy, okay? Thank you, convener, and thank you for the explanation, Mr McLeod, of the processes that you go through. It is obviously quite apparent that there are still faults within the system and individuals who find themselves in that situation where there is a defect or there is a fault. I would like to ask a little bit about the build mark cover that comes within that process. If there is a defect found, what would normally be rectified under the cover to ensure that that defect did not progress to anything more difficult or dangerous from being a small defect? Initially, the build mark covers for 10 years from the date that the house is purchased. For the first two years after the date of purchase, the build mark cover will cover virtually everything in that home. If anything fails within the first two years, the homeowner can come back and make a valid claim against that policy. It is an insurance policy. The process that we have internally is that within that first two years we have to give the builder the opportunity to address that complaint or that defect. If they fail to do that, then NGPC will take over that process and we will then rectify that to the satisfaction of the homeowner. For claims within the first two years, we carry out an investigation of the build that does not attend, we find 75 per cent or thereabouts in favour of the homeowner. For the last eight years of the policy, it is not as defined. It does not cover everything in the house. It does not cover everything in the house, so it does not cover plumbing, electrical wiring, kitchen fitments and central heating systems. Basically, everything else is covered. If there is a defect within the last eight years, the homeowner comes to NGPC and works with us to try to resolve that. If it is a serious and major defect, we may ask the builder to become involved. Equally, we may not. We may just progress to try and resolve it. The policy for the last eight years is structured in a way that, for the defect to be found valid under the terms of insurance policy, it must be a defect that is a breach of our building standards. We have our own building standards and it must cost more than £1,500 to fix. It has been like that for a long, long time. If it meets that criteria, that is when we would accept it as a valid claim. The backup that the homeowner has is that if the homeowner disagrees with us at all, we are a regulated company. We are regulated by the Financial Conduct Authority and the Prudential Regulating Authority. They have the right and we advise more of this to refer the matter to the financial ombudsman and they will make a determination whether we have approached and managed the complaint properly or whether we haven't. The findings and outcomes of the financial ombudsman are mandatory and we have to respond to that. We don't challenge that at all. A defect or a complaint of the nature that you have gone through, how long would you expect that to run? Is it months or years? We have some that have been on very long, which is not satisfactory. Sometimes that is because of the complexity of the work or trying to find out a solution. It depends on what the problem is, whether you are trying to get this proper material, trying to identify the root cause of it, sometimes it can be difficult. The vast majority of them, about 90 per cent of them, are small claims that are handled and dealt with within weeks to months and resolved. There are about 10 per cent where there are very complicated, large claims that take a lot longer to resolve and can become protracted over time. In a development, what is your expectation of finding faults or having individuals come to you to look at the cover that they have got within the first two years? Is that a normal procedure? Does it happen regularly or is it infrequent? We have, on an annual basis, around about 78,000 complaints within that timeframe across the UK. That is the kind of volume that we tend to see. The ideal situation is that the building industry working with us delivers a home to a quality that is very good. One of the things that we carry out separately is a customer satisfaction survey. I know that, over the past few years, that has indicated that levels of satisfaction have been increasing. One of the questions that we ask them is about the quality of their home and how satisfied they are. We do get these complaints. They tend to be static, as they run about 78,000 a year. Last year, I think, we NGPC dealt with about 160,000 houses, so that is the kind of level of complaints within that two-year period compared to the overall volume of business that we are actually doing. Can I just check something, Mr McLeodon? This is inspired by some of the constituents who had a briefing with us in private earlier on. Would NGPC have a code of conduct or a duty to investigate anything that could be a systemic issue or structural issue in relation to property? The limited information that I will give from the example is that we heard that there were issues in relation to the foundations of a small number of properties where the owners were aware of that. Would NGPC consider that they would have a duty, because they would be involved in investigating that, a duty to go to the other 50, 60, 100, 200 households in that development to say that this could be a problem for everyone else as well? We better have a look at this. Or, would they have a duty to inform the local authority that, despite the fact that the verifier signed off on it and that trusting relationship got that signed off, would they then inform the local authority for them to take some action in relation to that? So, where would the NHPC sit in relation to go? Because you are not sure that there is pay-outs here, right? So, obviously, there is in theory conflicting tensions there with any insurance company. Insurance companies do not seek people out after a flood to say, do you want to make a claim? They seek to mitigate their liabilities. So, would you seek to mitigate the liabilities of NHPC, or would you seek other potential victims of where a systemic error has taken place? It is a difficult one to answer very clearly, but the initial billmark policy is a bespoke individual insurance policy. What we do is we respond to claims or complaints made against that policy by the individual policy holders. If, for example, that complaint relates to a communal building, a block of flats, we may very well extend that investigation because we are working in common areas such as roofs or foundations or drains or something of that nature. Where it is down to an individual property, we tend to look at that particular individual property and deal with that complaint because we do not know whether that complaint is systemic or not. It is surely the only way to find out if the system of Mr McCloud is to take action. Do you not think that there is a professional duty upon NHPC to go around the rest of the development after it has been signed off to see if this is systemic? Do you not think that there is a duty based on the risk assessment that local authorities have to carry out to inform the local authority that there has been issues there so that they can manage their inspection regime and verification regime differently for that potential developer next time? What I can say is that, over the past few years, engagement with labs in particular has been very difficult and they have not been willing to engage very much with NHPC, but putting that aside, it is not our duty to go to local authorities and particularly highlight and point to them where there could be problems. There could be problems because there might not be problems. Where there are problems, and we have to have examples of this, we do work with local authorities where, for example, we have an issue with a foundation and we maybe then have to go back to the control department and obtain a building warrant. We will make it clear the way that we are doing that and we will then work with them and potentially that may open up that picture in terms of whether there might be other complaints and other claims coming in. We have had instances where we do go out and there is a development down in the west coast where we have worked with the builder and insisted that the builder go round the houses and go round the development to fix a particular issue that we discovered. Now, the builder has done that. We have actually done that on a number of occasions. If the builder hadn't done it then, like you would have said, we would have probably stepped in and taken over that role. That sounds really good examples. However, surely there is a professional duty that if there is a 200 unit development and six property owners emerge with significant problems in the property, there is a duty on NHBC who have this really robust inspection regime as outlined at length earlier to go, those six got under the radar. What has happened here? Maybe there are 194 issues. Surely to goodness there is a duty or it is incumbent upon you professionally to look at that and to inform the local authority. Whether it is a statutory duty or not, do you not feel a degree of duty there? What we would do is refer the individual to the local authority if they feel that there is a complaint. We are not a statutory body, so if there is an issue that we feel that local authority building control should be involved in, we would refer to the individual or the group of individuals concerned and advise them to contact. In fact, we would even probably give them advice on what to do. In terms of responding to complaints, if it is an individual complaint, that is what we respond to. We cannot second guess if it is an issue across the development or not. What we tend to find out happens very quickly in these developments if there are a number of complaints that are of a similar nature. Word of mouth gets out very quickly. What tends to happen is that we are then inundated with complaints along that same vein. If we get a complaint in, we are duty bound to investigate it under the terms of insurance policy. If we get a complaint in, we will investigate it. Where there is a complaint on a building site or a housing development, as I said, Word of mouth tends to work very well. We are certainly inundated with a number of complaints from that particular development. I think that lots of my colleagues want to explore this a bit further. Apologies to some of my colleagues. A long list of you here will start, I think, with Elaine Smith, and then we will go to Graham Simpson. We will get all of you in. Can I go back a step, Mr McLeod? Who funds you? What is your funding body? We do not have a funding body. Our purpose, since we were established in 1936, is two core reasons for existing. One is to raise house building standards, which we do through our inspection process of building standards, working with the industry, the research that we do, and to protect the consumer interest of home buyers. Where do you get all the money to do that? Where do you get your funding from to deliver that? We get the money from the investments that are made by NHBC, but you can make investments if you do not get funding in in the first place. I suppose I will take this back a step. Do you get funding from builders? Builders pay insurance premium for the 10-year insurance. NHBC then invests that premium over time, and that premium has grown over time and has become a significant portfolio. Are the companies that are NHBC registered? Are they the companies that fund you? No, they pay a premium for each property. Are the companies that are not NHBC registered because they do not pay you a premium? That is an individual decision. I am not asking about their decision. Is that because they do not pay you a premium? No, they decide if they wish to become registered with NHBC or not, and then we will decide whether or not we wish to have them on the register. There are builders that we decline. There are builders that apply to become registered with NHBC that we will not accept because of... The builders that you inspect, that you have this inspection regime with, are the ones who pay you the premium, correct? The pay insurance premium, that is correct. Can I ask him any field officers you have in Scotland? Roughly in Scotland we have about 70 staff, roughly. Is that field officers that go out and do the inspections? We have three teams of inspectors across Scotland. In each team there are about 10 people led by an inspection manager. So we have about 33 people directly dealing with physical inspection of the construction. Those are the physical inspections? Yes. Then you said that particularly foundations, we go back to foundations, that is the kind of thing that you would be very clear about inspecting all foundations. That is correct. So if there was then later a problem with foundations, whose fault would that be? It could be the builders fault, it could be the designers fault. But not your fault for inspecting the foundations and not finding anything wrong? We could have missed it. I am not saying that is not the case. We could have missed it. In reality it is a very difficult area to investigate because you are looking at exposed ground and below that ground there could be something that nobody knows about. A lot of the foundation failures that we deal with tend to be related to subsidence because of things like peat, which are below the level of clay that looks all right when you are looking at it, but suddenly there is a bit of peat there that nobody knows about that causes subsidence. OK, so I suppose my final question on this is, do you see any conflict of interest at all with the fact that the members of NHBC, so the only houses and companies, the only houses that are getting an NHBC 10-year guarantee are actually the building companies that pay you a premium? Is there a conflict there? Well firstly we are not a membership organisation, we do not have any members. The builders apply to become registered with NHBC and we decide whether or not they will be registered with us. OK, let me rephrase that Mr McLeod. So is there a conflict of interest at all with the fact that the builders who are registered with NHBC, so they are the only ones who can get your inspections, who can get your 10-year guarantee, because the empty who is not registered with you cannot have that and do not have those inspections. So is there any conflict with the fact that the builders who are registered with you and therefore paying the premiums to you are the ones that you give your guarantees to? No, because we are not the only organisation that provides this sort of service. We are the leading warranty and insurance organisation in the UK for the new home building sector and our systems have been developed since 1936 and we think are very robust and are the best on offer but there are other organisations that provide similar but not the same type of service. The builders do not have to come to NHBC to obtain a warranty. It is a voluntary thing, the builders can apply to NHBC to become registered with us. Mr McLeod, I know that and we have established that but the only builders that you give your 10-year guarantee to are the ones that are registered with you. That is correct because we have vetted them, we have checked them and as part of the registration process they are contracted to carry out the building work in accordance with our building standards and facilitate inspections on site and are also bound by our claims process so we have contractually tied them down so if they are not registered with us we do not have that contractual agreement in place. It is worth noting that Mr McLeod does not personally go out and do the checks at NHBC. Do you do the checks personally? I do not do these personally but I am heavily involved in what we call a primary job competition which is there to encourage builders to improve standards. I spent all day yesterday going around building sites assessing construction for that purpose. There you go, Mr Simpson. I am aware that Mr Whiteman has been itching to get in so I am happy to give way to him and I will come back in later. He has been itching to get in as has Mr Scott, I have to say as well so we will take him in that order and take you back in. The evidence that we have been seeking has primarily been about who should do the verification and we have heard conflicting reports on that. I am just wondering what much of the evidence from Homes for Scotland that NHBC refers to delays in the process. Indeed the evidence of NHBC talks about in reality the current delays inherent in the system are encouraging builders to start work without the proper building control consens in place. In addition to this being illegal it raises questions how compliance can be demonstrated or checked. If the private sector or others were to take on the verification process is speed the only thing that you would be looking for? No, speed is certainly not the only thing. Where we do this in England, since the 1980s, it is about providing an efficient service but at the same time ensuring that service is correctly delivered. It is not about speed, it is about ensuring that a proper service is delivered and at the end of the day providing consumer redress if it is not properly delivered. In England and Wales where we deliver the service we provide a separate insurance protection so that if the building control element of that service is not delivered properly and there is a building control issue at the end of the day, the end user, the homeowner, can make a claim against that insurance separate from the warranty that covers the latent defects within the build. Paul, you finished Mr McLeod for Mr Catewood to add something in the club to your afterlap. No, I just thought you were looking at me there momentarily. I think that there is a big spectrum of federation membership across the country and all of them in their respective areas as I said do have different views but I do think that we would suggest that we would need to see, or there is a need to see an improvement in service generally and speed is a big factor and also having a resolution service there like the NHBC provides is a big assistance. Just on that building warranty that you provide, if the barclay wants to add something then we will take you back in the side. Just agreeing with what the gentleman said just then, speed is one of the main issues for us and the uncertainty of how long it will take you to get a building warrant. In some parts of the country, absolutely, orcney is not a problem. Edinburgh, we have a disaster at the moment. We've got developers waiting more than 42 weeks to get a building warrant. That's after they've had to go through the pain of getting a planning consent and they've still got to get a road construction consent as well. A real lack of certainty about how long it will take between doing a deal on a piece of land and actually getting on site. That isn't good for anybody's business plan and that's what we're looking for is certainty of delivery. I know that the gentlemen from labs couldn't give us numbers of building inspectors within local councils but the anecdotal feedback that I've had from our members is that they have been severely reduced over the last few years and it's really put a massive pressure on the service. We just do not have the resources to deal with the number of applications coming in at a time when the market is improving and there are more applications being submitted and there's a real drive for more houses to be built. We don't have the facilities within local authorities to deal with all the regulatory consents that need to be approved before you can start on site. You talked about your building warrant service in England and how you provide an insurance policy to owners separate from your warrant service. How long can home owners claim on that? It's ten years, it's the same governance as the Billmore. One of the issues here is that there are a number of people involved in this market. There are the speculative volume house building industry, building companies, local authorities are doing inspections and providing building warrants and checking completion certificates. At the end of the day, someone is paying a substantial sum of money to buy a house and that once defects are discovered it does not appear that in some critical instances proper redress is available. Minister Aitken said that basically that is a civil matter for the legal system. Should that be the case because you're talking about ten years after your warranty expires, is that correct? Is it not the case that if you buy a pair of shoes you'd expect them to wear out after two, three, four years, you don't expect a house to wear out after ten years? Should a warranty not last for the design life of the building? It can, but the problem with that will be cost. The longer you look for something to be in place the higher the cost will be. At the moment it's set at ten years, although I've said that there are other organisations that provide a similar service across the UK, NHPC is the only insurance company that directly underwrites that risk. All the other companies that provide that service are brokers so they offload the risk to insurance brokers and it's a third party. Some are based offshore who ensure that. We ensure it directly and that ensures that it's calculated and has to satisfy the criteria set down by the financial regulator in terms of assessing the risk and in terms of ensuring that there's sufficient reserves put aside to address that risk. If you've got something for ten years and you want to extend it for say sixty years then mathematically it's going to cost more. You're going to have to set aside more reserves. The risk will increase so the cost of the policy and the premium will increase. At the moment the average cost over ten years is roughly about £500 which is relatively good value for a ten year cover. I couldn't tell you what the cost would be if it was increased to sixty years but it would be significant. It could possibly be uncompetitive. You mentioned earlier evidence that one of your objectives is to drive up standards in the building industry. I'm going to look at your latest annual report where the bonuses for your executives are calculated on the basis of a number of criteria. Forty per cent is calculated on financial criteria. Twenty per cent is homeowner and builder customer satisfaction. Of that twenty per cent, how much is homeowner satisfaction and how much is homeowner and builder customer the same? No, they're both different. I'll start by saying I don't know what percentage is applied in terms of homeowner and builder. I would imagine it would be fifty per cent each way but I don't know for the record. The homeowner and builder satisfaction are two different surveys that we carry out. We carry out a customer satisfaction survey on behalf of the Home Builders Federation in England and Wales. That survey also extends into Scotland and is an independent service when the building industry is such and directly communicates and receives information from homeowners. That survey has been carried out since 2004, and that is one of the surveys that is referred to in terms of customer satisfaction that is homeowners. The other survey is another independent survey that we carry out with the building industry and house builders to find out what they think about NGPC and the service that they get from us. In that building control, or in warranty and inspection, the whole range of services that we offer. There are the two different services. The other part of the bonus that refers to money is operational costs. If we are not making an operational profit, which is different from the insurance side of the business, then the bonus is null and void, but if operationally the organisation is in profit then there will be a bonus. The leadership from the top in terms of their bonuses and they are very attractive. It is public information. We do not hide that. To confirm that 10 per cent of the criteria is homeowner satisfaction, it appears. Finally, before I am aware of times pressing, we have heard that NHPC and some of its clients who take insurance with it use gagging orders to stop homeowners talking about defects that have been found in settlements that have been reached. Is that common practice? No. I think that that is probably incorrect term. I think that what happens, and I am not party to it, but I believe that the case that was referred to was a kind of settlement, i.e. that there was an agreement met between the homeowner and the NGPC in relation to a sum of money to satisfy them in terms of their loss, and as part of that agreement written into it as a standard clause was that it would be kept confidential. Just for clarity, because we are in public session, that was the expression that was used when we got that information, rather than the expression that you used. I understand why you would phrase it that way, Mr Scott. I am here to represent my constituents in air with the case that Mr McLeod will be very familiar with, and with their permission to discuss the problems facing Dalblair Court in air. Dalblair Court is the home of 69 properties, and there have been faults with that property for all the time that I have been elected to represent this constituency, which has been drawn to my attention. There has been a great deal of correspondence between yourself and me in this regard. That property is now being entirely re-roofed at the cost to the residents, depending on the size of their property at some £4,000 to £7,000 per property. To replace a roof that has, as it is now being taken to bits, to be repaired, is allegedly utterly defective in many respects. That was signed off by South Ayrshire Council as a local authority concerned. There is the situation where local authorities say that it was built to the specification at the time required, and NHABC have also said that. The bottom line is that my constituents are left with this problem. To be frank, Mr McLeod, you have washed your hands of it. I am not certain what value your organisation has been in this process at all, because I understood that it did. They were covered by the billmark policy, and the roof is not yet 15 years old, yet it is having to be replaced, because it was not built to specification. There is apparently escaped you and South Ayrshire Council, too, and I am extraordinarily annoyed on behalf of my constituents who are now facing this bill. Given that those defects are being uncovered as they deconstruct the roof to rebuild it to the specification that was originally expected, will your policy now cover the cost of the bill? We were hoping that, and I know that it is frustrating for some of the constituents who will be keen to hear their stories reflected in a public session of this committee, but what we cannot do as a committee and we had spoken about it previously is to rehearse individual cases, because there may be some issues in relation to that potential litigation in various other matters. I am not referring to the case that you raised, Mr Scott, but there might be a slight restriction in what Mr McLeod or others could say. However, there is a wider point in Mr Scott's question about when something apparently has just not been built to specification and there are consequences from that where the recourse sits for the homeowners. I am not trying to be helpful to you, Mr McLeod. I am trying to couch the rules of engagement when you seek to reply to that. With that in mind, any response you could give would be helpful, but the wider issue, of course, is something that is signed off saying that it should be built a certain way. It is just not done. That becomes self-evident and no one seems to be taking responsibility. From what we can gather, not just Mr Scott's constituency case, but in a variety of cases we have heard, that seems to be how it is for a lot of people. Not just Mr McLeod, but others might want to come in if they have any reflections on that, Mr McLeod? First, I say to Mr Scott that I do not have the details with me, but I am very happy to meet the committee hearing and discuss the particular issue to see if we can assist in any way. I will follow up on that matter. I would be grateful for that. In terms of the wider question, I cannot agree that there is no protection, because the NHPC has warranties for 10 years. In certain circumstances, with the housing associations, that can be extended to 12 years. The majority of serious defects that we find tend to occur within years 7 to 8 of the build. That is when we tend to get the majority. I am not saying that others do not happen with that timeframe. However, it suggests in terms of our research and information that the 10-year life of the insurance cover is about right. I would also say that other organisations in the marketplace that offer a similar service have the exact same time constraints in terms of their cover and their policy. Where we get involved, I can only reiterate what we do in terms of assessing any complaint that we receive against the policy. We will investigate if it meets the terms of that policy. We will address it with the builder if that is possible. If not, we will take on that responsibility. There is a right of recourse through the financial ombudsman if it is felt that we have not managed that process properly. Can we expand this? Mr Akin might have a view in relation to this. I am not trying to curtail you, but I think that it is reasonable at this point to make the obvious assertion that if you are a homeowner and something has not been built based on what the planning permission said it would be, but it has been through all the processes that the NHPC outlined and it has been verified and signed off and you get something different. You almost certainly will not have a recourse in many circumstances under the policy of the NHPC. Does the local authority have any powers to go back to the developer and go, well, we gave you permission to build X but you built Y or Z and that is not on. What can local authorities do in those circumstances? Currently, I mentioned previously, it is the builder that should be building as per the approved plans. I am not familiar with the case, but what has potentially happened is that the builder has not built in accordance with the approved plans. A lot of the elements of the time building standards that carry out their inspections may be covered up and they do not get sight of particular elements that are exposed at the time. They are going on the trust of the builder to sign off the completion of the developer that everything has been built in accordance with the approved plans. Mr Gilmour, I will take a little second, but if something has not been built to approve plans, will there be financial consequences to the developer and a legal recourse separate from what insurance policy says for the homeowner? That will be a civil matter then, as far as the building in Scotland is concerned. That is his thing stand just now, Mr Bacon, but perhaps things may have to change. I understood that if it was a latent defect in Scots law, you are liable for that for life. I put it back to a gas explosion in Edinburgh where someone had fitted a valve wrong and went through the whole judicial process. My view would be that I think that you should check that information that I am giving you is correct, but a latent defect is the manufacturer's printer instruction for a lap of a tile, say 75 millimetres, and the idea is to cover the nail holes of the previous tile. What you get is what we call a shortened cover. If it is a shortened cover, a lot of the leaks come from the nails because you have a bit of a capillary attraction. That is why it is as big as three inches and all money is 75 mill. I do not know the case, but I have always been under impression. We built houses, we did a whole lot, we do a small to medium enterprise as well, and I have always been of the opinion that a latent defect is for life. That is very helpful. Do you want to follow up? Mr Scott, my apologies for cutting you off on your flow there. Do you want to follow up with some of that and then I will take Mr Simpson? No, and we welcome a meeting with Mr McLeod in this regard, and I note what Mr Akin has said. If there is no insurance in those particular circumstances, which I apologise to the committee for taking up their time with, but notwithstanding, if there is no NHBC cover, notwithstanding, the alleged obvious defects, then the only recourse for my constituents would be in law. I welcome your contribution there, Mr Gilmour, for saying that a latent defect should be liable for life. I think that that would be very helpful, but I would have also thought that that would have encouraged, particularly in those circumstances, NHBC, to become the person carrying that liability. Or the builder to return. Indeed, indeed. He would recover from the builder. Thank you. Okay, Mr Simpson. Thanks, convener. So we've heard about perceived flaws in the building regulation system. We've heard that the whole development industry appears to run its own scheme, does run its own scheme of warranties. Where is the statutory redress for home buyers if things go wrong? Any of you? Mr Gilmour, you feel me out there. That'll buy the worst time to think about that. Thank you, chair. Under the FMB's compliance, we now have a system where we have a contract with the clients, rather than just in the small to medium enterprise world, where there's a lot of user word cowboys floating about in that industry. They've not got a proper insurance, and even if they have a proper insurance, they're not kind of a proper job. What would happen is an arbitration system, and that's it, and it's totally independent. When someone's got a complaint, it goes through a complaints process and totally fully investigated, and both parties are not satisfied, we then are given the opportunity to sign up to arbitration. That gives them the form of redress, because when they sign that document, they have to accept the arbiter's outcome. I think that's something that could be knocked on at the back end. We've only started this in the last three and a half years, and it's actually working very well. We're getting less complaints because it's getting resolved at source. Is that your company, Mr Gilmour? No, no, it's fed the race of the master builders for the UK. That's rolled out everywhere, and they sign a contract prior to starting the process. It's also plain English speaking on the contract, so it's no section 327 in the small print. Any other comments that I hope Nicola Barclay, then Malcolm Clout? For the larger and volume builders and anybody who is registered with NHBC or two of the other main warranty providers across the country, we'll have to sign up to the Consumer Code for Homebuilders, which is a similar service that provides consumers with all the necessary information that they would require right the way through the buying process, and then once they've moved into their home, they know exactly who they need to contact. Once they've moved in, if they have any issues, they also have a dispute resolution service, and so if people don't feel as though they've had the answer they want from either the builder or the warranty provider, they can go to an independent adjudicator. I actually sit on the board of the Consumer Code and we go through the adjudication decisions and have a look very carefully, and we scrutinise them to see whether they're systemic failures or whether they're one-off issues which couldn't have been foreseen, and we'll go back to the builder and work with them to make sure that they improve their practices in the future. I was really going to refer to the Consumer Code as well, convener, in addition to outlining that there is a 10-year warranty there from NHBC, so we can't speak for statutory control or regulation, but as an insurance product it does provide comprehensive protection. I would just add the Federation agrees that there is protection there in the form of NHBC, et cetera, right now, and maybe going a step back, the key perhaps is looking at the inspection process. I know from experience the NHBC inspector or other warranty providers when they're on site so regularly. There is perhaps a school of thought that if they were positioned to carry out the verification in those inspections as well, then it would become much more robust, rather than in some cases where there's a very irregular visit from building standards also. Okay, thank you. Mr Simpson, do you have any thoughts on that? Yeah, so both these things, Mr Gilmour, your system and Nicola Barclay, your code, they all come from you. There is actually no statutory system of redress for anyone rethinking that the house is probably the biggest thing you'll ever buy, the most amount of money most of us will ever spend, and yet we appear to have fewer consumer rights than we would if we bought a washing machine. That seems to me to be a completely ridiculous situation. One idea that I've heard of and it merges from the old parliamentary group for excellence in the built environment in Westminster was that we should have a new homes ombudsman, and that could be a way of providing redress for people when things go wrong. I accept that when things go wrong is rare, but we've heard a snapshot today of some very, very serious cases. My guess is that that'll be the tip of the iceberg. What do you think to that sort of idea? There's a suggestion. Mr MacLeod? I mean, I've got no real comments to make either good or bad for it, because as always, we need the detail to see what it really looks like in reality. But we are already governed, the NHPC, certainly because we're an insurance company, is governed by an ombudsman. So we have the financial ombudsman sitting overlooking us and that is the right of redress that the policy holders certainly have if they feel that we are not responding to their demands. Or meeting their concerns. So we are already interact with and work with the ombudsman where we have to. So that was open minded, Mr MacLeod, in relation to Mr Simpson's situation? I mean the detail. I would be confused about how two ombudsmen have worked together. We are already governed under the financial regulations by an independent ombudsman service. Specific to your policy? Well, specific to any insurance company or bank, we are governed by the financial regulations. Of course, we're not inquiring about insurance policies here today. We're inquiring about building standards and new build properties in that construction process. Your policy can change based on what you want to negotiate with the companies who pay insurance premiums to yourself. I think Mr Simpson's suggestion was something far more cross cutting. They would say a little bit more about that Mr Simpson before they bring in other witnesses. Yeah, it's completely different. You're talking about financial regulation. I'm talking about something that would deal with disputes that arise from people buying new homes. It's not financial thing. It's when things go wrong with that new home. At the moment, people don't have anywhere to turn. It sounds similar. The dispute that we have is whether or not we've handled their complaint properly in terms of whatever defect they've brought to their attention. I'm not specifically talking about NHBC. It's in general. That's helpful. I thought that issue was quite helpful so we were clear about Mr Simpson's suggestion, Nicola Barclay. On the APBG that Graham Simpson referred to just then, we should make it quite clear that the Consumer Code Board was not approached by the parliamentary group to give evidence on that, although they requested to a number of times. So there are some findings in that report that we have been going back and forward with Westminster on to try to seek clarity and have laid down some further information in the library at Westminster if you care to look at that. Before the evidence session, I specifically asked the chair of the Consumer Code for a bit more clarification for my own mind. I'm fairly new to sitting on the board. What happens to a consumer if they're not happy with the redress from the house builder? If they're not happy with the outcome from the warranty provider, they've gone through the dispute resolution process within the code and have gone to adjudication. I've been found, you know, maybe not happy with the result of that, what the next steps would be. I was advised that it's the financial ombudsman service, is the next course of redress, and also consumer protection. They're covered by the Property Misdescription Act, which is enforced through trading standards, and then beyond that it's civil code. So that is the route that people can go down. Any other comments to that? Mr Akin, did you want to come in? Just labs refers to that option that's available within our paper about the ombudsman, the report from down south. Okay, thank you. Anyone else want to add in relation to that? I'll take you back in a second, Mr Scott, but I was just going to make the observation and replies to that. We had the consumer code. We've heard very helpful, Mr Gilmore, about the Federation of Master Builders across the UK and what they do, the financial ombudsman, NHBC's policies, other warranty insurance companies' policies, trading standards and the civil courts. It does seem quite fragmented in bits a little bit. Whether you would support it or not, could you see merit and a consolidation of all these various threads together in relation to what Mr Simpson's suggesting? I'm just wondering if that would be helpful that all the recourse sits in the one place rather than property owners having to scurry about to find out where they have to go to get a redress and perhaps not getting it. Any thoughts on that? No thoughts on that? Okay. Mr Scott, of course. Could I ask Mr Akin who will keep me right in this regard? I have the feeling that trading standards are unable to, certainly in South Ayrshire, take up a complaint such as the one that I mentioned at Dahlblair Court because they would have a conflict of interest in as much as they are employed by the local authority. To do and therefore they wouldn't be able to investigate a complaint made against them. I don't think that I'm in a position to speak for trading standards. I'm here representing LABS, local authority building standards, so it's different organisations. In which case can I just say that I think that when I have raised this with my local trading standards office to escape the case, I specifically signed that they were unable because of a perceived conflict of interest. I believe to take up the case because it was with another part of the same local authority. That is now in the public record, Elaine Smith. Mr Akin, could I just explore an issue with yourself, please? I was quite interested in this whole issue about clerk of works and building companies, perhaps not employing them the way they used to in the past, so that was something that I found rather unusual. If we look at NHBC and the role that they are carrying out, what they are doing is carrying out an inspection role for the companies that buy into their policy. The advantage to the companies of doing that is that they can then put up signs saying NHBC 10-year guarantee, which I think gives some comfort to the people purchasing the houses, who might also have an idea that national house building somehow means a more formal Government-type assurance, so that might be a perception. We've got that going on. What I want to ask is, do you think that we actually need more building control officers to carry out an inspection regime that is impartial, rather than partial? Should we be looking, as a committee, at things like the statute that is involved, to look at more recourse for the customer and statute, and that all adds in to the possibility of increased fees? I look at the Federation of Master Builders saying that, if the fees increase, service should increase as well, but should that not just be for the builders who obviously want a quicker system to get building, but also for the customers who should be able, surely, to rely on a much more impartial inspection regime? Mr Akin, just before you answered that, I'm conscious that you mentioned fees, so we can talk about another hour probably now that you've mentioned the prospect of fees, but Mr McLeod, I think, is the more reasonable one to Mr Akin answer that, if you want to come back in relation to the impartiality of the inspection process, because that was mentioned by the deputy convener. Mr Akin? I'll just pick up on a few of the issues there. We need to keep me right, because there were quite a number of things that you wanted answered there. In terms of the inspections, obviously any additional inspections would be welcomed by industry, but I think I mentioned previously that we've got to look at building standards. My view in labs is that we've got to look at building standards holistically. It has to be looked at holistically. Building standards services in Scotland are just a small but vital piece of the jigsaw, and it has to be opened out to the wider industry. We need to look at procurement. We do have to look at the current statutory legal system the way it's set up. If industry can come together collectively, then I'm sure we can reduce a lot of the issues that are being discussed today in terms of defects. But would it be beneficial to the purchasers, for example, to have more building control inspectors actually going out and looking more closely? If the way NHBC say that Mr McLeod has said that NHBC do for the properties and the builders that involve with them, Mr McLeod said earlier that they go out and they have the field officers and they do actual inspections, would it be beneficial for people in Scotland who are making the biggest purchase perhaps in their lives, as Graham Simpson said, to have some kind of confidence that an impartial service such as building control would be doing far more inspections than currently they do? I mean, like I said, any additional inspections would be welcome, but you would have to change the current legal system the way it's set up just now to allow that to happen. I suppose that's what I'm asking. Should we be looking at the statute? Should we be looking at the building regulations? Should we be looking at the legal system to see whether or not it needs changed? In my view, and I think that in the lab's view, we would have to look at it holistically, yes. Okay, thank you. Mr Llywydd, I don't feel obliged to come back in, but I thought we have wanted to come back in. Yeah, we just want to stress that NHBC is an independent organisation and the inspections that we carried out are impartial. Last year we carried out about 800,000 inspections across the UK. I think that we identified, potentially, about half a million defects arising from those inspections. We then give the building companies the opportunity to rectify them if they don't. Again, we will take control of that situation. Can I just ask on that? Your impartiality only applies to the building companies that buy your insurance, not the building companies that don't. You don't inspect them. We don't inspect them because we have no contractual relationship with them. The ones that we inspect are contractually tied to NHBC, so their inspectors find something wrong on site. They have to sort that out, otherwise we have the authority to sort it out on their behalf. We don't have that relationship with builders who are not registered with us. We have no contractual agreement with them. Perhaps just one final question, because there's one aspect that we haven't really explored very much today. We heard it in our private session previously, and that's where you, effectively, maybe end up with a neighbourhood dispute where someone wants to build an extension to the property. I won't get into the details of the case, and it becomes self-evident that local authority very highers would appear to have signed off on the extension that isn't actually the same as the outline plan said. That was approved and doesn't meet the spec, so the same is what we've heard earlier on in relation to large-scale developments. When that's drawn to the attention of local authorities, it's all anecdotal evidence, of course, Mr Heakin, that the local authority in this case said that it's not really a material difference, even though it's making a significant detrimental impact on the neighbouring property. The person that we heard from made the point that the self-evident situation is that you were given planning approval for one thing, you've built something else, it's been verified, we've identified that they've built something else, it's impacting our quality of life and a local authority doesn't act, and they don't feel they've got any recourse either. So I think it's reasonable to outline that because we heard that this morning also. So any reflections on that mystery can be welcome. You mentioned planning at the same time, the different consents there, so I'd like to know a bit more about the actual dispute. Is it a planning matter or is it a building warrant matter? Well, I think we'd have to say, is it not? Actually, can I answer that with a question, which would be when a local authority verifier signs off on a property, as the extension would complete, for example, and that property owner self-verifying, yes, we've done that accordingly, and there's a complete mismatch in relation to that, and a neighbour to their detriment discovers that, and they go back to the local authority if everyone's still following here. Whose job is it to give that individual recourse whose property has been impacted by this, and there was never planning approval for it, and surely a local authority verifier, at the very least, should make sure that when they verify something, it actually is in accordance with what the plans were in the first place? I don't know the specific case, but typically what would happen is that a verifier would go in sight, carry out the checks, and an amendment to warrant would be required for any deviations from the initial approvals. I think that that's helpful if that's the process as it is. If there's any additional comments, we're all out of questions here. If there's any additional comments that any of our witnesses want to make now would be an opportunity, Mr Kemp? I'm glad that we're moving on to the issue of inspection, rather than concentrating on redress, because at the end of the day the inspection is what's failed, and that's what results and defects are, where they go unnoticed. I can speak from both, I've worked in Edinburgh building houses, I'm working in Orkney building houses, and where you've got a well-staffed or well-resourced building standards department who do generally come out regularly, they build up a working relationship with the site manager, they see the building at various stages, that does have a very positive effect. I was amazed to see some of the statistics where there's a very rare inspection, where a builder can build X number of houses and barely expect to be inspected more and once or twice, it amazed me. Certainly when I worked down here, the rarity of seeing the building standards inspector was a new thing for me, coming from Orkney, and we were wholly reliant on the NHPC inspection regime there. I suppose to say as well that builders, especially site managers, work very hard to rectify and remedy RIs on the building site, but we're coming back to the builders who aren't registered often and where there is no remedy for the householder. I think that we could cut down instances of defect an awful lot by seeing better resource building standard inspections. I want to make one final comment that we shouldn't forget that this is all relating back to the lack of skills and resources within the entire construction industry. Not only do we have a lack of building control officers, it's also making sure that we've got people coming through the system who are being well trained by our colleges, apprenticeship programmes, there's a much wider issue than just building standards. Thank you for putting that on the record, Mr McLeods. To conclude, I want to make the point that NHPC is not structured by non-profit distributing. We have no shareholders, we don't pay any dividends. Our core purpose, as I've already said, is to raise householding standards and to protect the end users, the consumers. We believe that by providing a building control service, as we have done in England, we can enhance that core purpose, because by checking plans, by becoming more involved on site and getting more inspections on site, we can improve that construction process and deliver better quality homes at the end of the day. Does Mr Dacolon, Mr Gilmawr, want to add anything before we close? I think that it would be Lab's view on the impartiality issue that was asked in the paper. Local authority building standards are well placed, they are impartial and accountable to the local electorate. I think that NHPC would struggle, given what Malcolm McLeod has already explained in terms of the organisation, the way it is set up and the impartiality that would struggle there, given their connection with the builder. You have already put on the record your views on impartiality. If you feel the need to repeat it, Mr McLeod will let you repeat it, but you have put it on the record already. I would like to reiterate that view, and I would also like to refer to the Scottish Government's research supporting the appointment of verifiers, which was published in 2010, which refers to the private sector building control improving the efficiency of the service and leading to more innovation in that service. It is recognised in Scottish Government publications that we can help. You have now put that on the record, Mr Gilmawr. I go back to supervision. That is where it all starts. If a site is not being supervised properly, doing visits is all you can do. You cannot have a full-time NHPC person sitting on a site all day. What happens in a very simple process is that when you get a site, which is called a field, you have to shape it. Basically, you are scraping it and setting it out. You then cut the ffounds. You can cut the ffounds and pour the ffounds, but there is a stage where NHPC will come in and check those ffounds before they are backfilled. Exactly the same with drainage. As a step process, they do not have to be there every day watching the joiner cutting wood, but they do come in a step. The skills gap is really hitting everybody at the moment. I was on the board for CITB for quite a while and we have seen quite a dip in the proper training, not just the training. Down in London, there was to cut apprenticeships to two years. My question to them in London was, if you had a £20,000 kitchen, would you let a young two-year apprentice lose all your marble workshops and all your kitchen units? The answer is 100 per cent, no. We should not let the kids down by reducing the term that they have to serve on an apprenticeship. It may suit the big boys, I do not think Scotland, but it may suit the big boys for a brickie to lay a line, a brick, that is what it is called. Can you say that I might do a Nazi? Can you say that I might do off a decent drawing? The boy would be lost. If he came to your company, I would be surprised if he was with us after two weeks. We would have had him removed because he would not get the ability. Thank you very much for that. We are taking on board all the points, whether that was our line of question or not. We are taking on board the points that you raised. We will have to decide to the committee how we want to follow up on that. I think that it is also reasonable to say that, as a committee, as all MSPs know, we only really ever hear about things when they go wrong. That is the nature of the jobs that we do. We have no idea the extent of problems and issues that exist, but we do not want our job to respond to them when we hear about them. The solution is that everyone around the table is working in partnership, whether the system changes or not, but we are keen to continue with the line of scrutiny to see whether the system has to change and if more safeguards cannot put into the system. I thank everyone here this afternoon for what has been a lengthy evidence session, but I also put on record my thanks to the constituents who were in private session with us earlier on to give what they perceived to have been their significant problems with the way the system is currently designed. Thank you, everyone, and we will stay in contact with you over the progress of our scrutiny in this area. I will suspend briefly before we move to the next agenda item. Welcome back. I will now move to agenda item 2, which is supporting legislation. The committee will consider negative instrument SSI 2017 forward slash 102, which is listed on the agenda. The instrument is laid under the negative procedure, which means that its provisions will come to force unless the Parliament votes on a motion to annul the instrument conform members that no motion to annul has been laid. I invite members if they have any particular comments to make on the instrument. I therefore invite the committee to agree that it does not wish to make any recommendations in relation to the instrument. I thank members for that. I move the session into private session and ask for members of the public gallery to leave the committee room.