Construction, energy and engineering companies have lagged others in taking steps to protect themselves from the growing number of cyber-attacks, and failing to take preventive measures can lead to expensive litigation.
Limitations on the use of red diesel for the construction and engineering sectors UK.
Glasgow and COP26 resulted in various commitments from global economies to work towards targets in the reduction of greenhouse gas emissions. The UK is to target the reduction of greenhouse emissions to net zero by 2050.
However, even prior to COP26 there were already legislative changes afoot to have cleaner air. The Finance Bill 2021, and the associated secondary legislation, as part of the government’s plans to reduce carbon emissions, has the effect of restricting the usage of red diesel after April 2022.
What is red diesel? In short it is regular (white) diesel that is dyed to make it identifiable. Why? It is taxed at a much lower rate, making it almost 50 pence a litre cheaper than white diesel. That discount will end for those industry sectors that have used it, but are now restricted from its usage post April 2022.
Construction and manufacturing industries cannot use red diesel after April 2022. These are sectors that use the rebated red diesel. In the construction industry, site electricity generators along with heavy plant, machinery and heavy vehicles will all now be forced to run on white diesel to a much higher cost.
There is pressure on all industry sectors to adopt green measures. This is now increasingly becoming the norm, and is affecting virtually all businesses and sectors. By way of illustration, Lloyds Bank has announced that in relation to green homes, when looking at affordability there will less stringent stress testing.
The governments stated aim is to encourage businesses affected by the red diesel restrictions to use less fuel, or eventually to adopt greener alternatives. However, few in the construction industry would use more fuel than absolutely necessary, so in order to avoid cost inflation, there needs to be alternative options that the construction and engineering sectors must have.
So have we got the alternative technology to give viable options? For example, electric powered plant or cleaner fuels such as hydro treated vegetable oil. Is there scope for future use of Hydrogen power? As we have previously discussed in this blog, significant strides have been made in this area to date and there are a number of construction vehicle suppliers now providing a broad range of electrically-powered construction machinery. However, despite this, diesel power is still dominant in the sector and in some areas there are few, if any, alternatives available.
For the construction, engineering and energy sectors, the following points arise for consideration and debate:
- Super inflation in the construction, engineering and energy sectors is a massive issue in the UK, and indeed in other parts of the world. Rising supply costs and increased energy prices have dogged the industry in 2021. This loss of rebate is likely to result in yet further increases to site and project costs. In turn this is likely to increase the pressure on the bottom lines of many companies in the sector, and is in turn likely to mean more expensive houses, hospitals, schools, road projects and so on. This is a pertinent issue in the UK in particular, given the shortage of affordable housing and the current issues surrounding the state of disrepair of some of the housing stock in inner cities.
- Against this, the government is not forecasting significant macroeconomic benefits in terms of increased tax revenue – meaning that a government already short of cash thanks to the Covid-19 pandemic will likely have to pay more for its construction projects, with no substantive additional money coming in against which to offset that cost.
- Concrete processing plants will be affected by steep cost rises. To state the obvious, concrete is a key ingredient on any construction project, and is the most widely used material in the world!
- It is being reported that in Northern Ireland the cost to construction businesses could be as much as £25M per year.
- Plant and machinery that is no longer eligible to use red diesel must be drained, flushed and cleaned. Furthermore, any usage outside the permitted circumstances may result in confiscation of plant and machinery. In practice this may create a significant administrative burden on companies in the short term.
- Whilst the industry accepts the need to embrace green practices to strive towards net zero carbon emissions by 2050, some argue that the changes being implemented are possibly too soon, and before alternative fuels and/or technologies are in place.
- Have we actually got readily available alternative green options? At present, is the only viable option arguably to switch to white diesel only, and if so, does that really reduce the carbon emissions from the usage of red diesel? In reality the answer is no, unless a cleaner source of fuel is available. This in turn leads to a need for potential machinery modifications to accommodate such fuels. Additionally, problems may grow for plant hirers when machinery is hired consecutively by unaffected and then effected industries. Plant and machinery in the construction industry, often represent considerable assets of a business. If the idea is that these will become obsolete, this will present further problems for the sector.
- The government’s thought process, on the other hand, appears to be that necessity is the mother of invention, and increasing fuel costs will drive down emissions created by the construction industry.
- Those in the industry cannot be expected to absorb these costs, and the inevitable effect will be that these additional costs of running plant machinery, concrete manufacture and quarry operations, to name a few, will need to be passed onto the end users.
- As with all cost increases there will inevitably be considerable impacts on current projects. For contractors bound into contracts that prohibit price changes or increases for these matters, this change alongside the current price hyperinflation dogging the industry could prove fatal.
- Equally, increased fuel costs and price hyperinflation will increase the uncertainty around tendering for work. Prospective contractors will need to consider carefully the risks posed by these cost increases and how they are likely to be affected in the long term.
 Rail transport, agricultural, fishing and water freight, amateur sports clubs, golf courses, non-commercial power generation, traveling funfairs and circus.
 The Sunday Telegraph, 23 January 2022. This on basis that green homes are more efficient to run, and there will be lower outgoings.
 BBC News 24/01/2022-Red Diesel loss ‘could cost businesses millions’
By Vijay Bange and Tanya Chadha
The global pandemic continues to challenge us, with various measures ranging from further lockdowns to restrictions on in-person meetings. The judicial machinery, including that in the arbitration world, has continued to function throughout the pandemic notwithstanding the difficulties of embracing innovative processes and new technology.
In January 2021, Vijay Bange wrote an article examining the challenges of using technology in formal dispute resolution proceedings. Whilst technology has of course been used in international arbitration and high court litigation (particularly in the Technology & Construction Court) for quite some time, that use has been somewhat limited with parties, their legal counsel, and the tribunal often preferring in-person hearings and hard copy papers. 2021 however saw a dramatic rise in the use of technology in dispute resolution proceedings. This was almost certainly borne out of necessity as a result of the COVID-19 pandemic, rather than necessarily by choice or organic progression. If disputes were to continue to be resolved, parties had no option but to get to grips with remote hearings, electronic bundles and virtual breakout rooms. Whilst some inevitably faced technological and logistical stumbling blocks, the move to virtual hearings and electronic working proved largely successful with many disputes being resolved expeditiously along the way. In fact, the move towards technology was so successful that many people are now opting to use technology out of choice and not simply out of necessity. Continue reading “Using Technology in Arbitration: Necessity or Choice?”
It’s probably too early to deliberate whether COP26 was a success, and if progress has been made since Paris. Glasgow will be remembered for the passionate speech from the Maldives representative, which reminded us (if ever we needed reminding) of the Armageddon-esque effects of climate change to the planet as a whole, and to small island nations in particular. The target remains to aim for net-zero carbon emissions by 2050, and to keep global warming close to 1.5 degrees. Continue reading “De-carbonisation of the UK Construction Sector: Are We Ready for the Net-zero Age?”
By Vijay Bange and Tanya Chadha
Globally, notable incidents of freak weather events giving rise to destruction and death have dominated the news. The increasing frequency of these erratic climate events has undoubtedly raised awareness of global warming and, on a political level, the need for states to move quicker towards green energy and the reduction of carbon emissions. Global warming is an inescapable issue that affects us all and which has forced governments to elevate this to the top of the agenda, filtering down to economic policies that will touch upon most industry sectors.
On 31 October 2021, representatives from over 200 countries are set to descend on the Scottish city of Glasgow for the United Nations climate change conference; the 26th Conference of the Parties (COP26). During this global climate summit, world leaders are expected to talk all things climate change. Commitments have already been made to aggressively tackle global warming and the reduction of carbon emissions. Energy is therefore likely to be high on the agenda. Continue reading “Earth, Wind and Fire- Energy and the Green Agenda. The New Industrial Revolution?”
Mr Justice Fraser’s decision in Multiplex Construction Europe Ltd v Bathgate Realisation Civil Engineering Ltd and Others is one of the more curious decisions you will ever read.
Not that I would particularly encourage anyone to read it. The case necessitated some pretty comprehensive and in-depth legal analysis that means the judgment runs to some 206, fairly dense, paragraphs, and an Appendix; I would challenge even the most avid consumer of legal treatises to read the whole thing in one sitting without their eyes glazing over at some point. Helpfully, my colleague Vijay Bange has already produced a very useful summary of the decision and its legal implications here.
However, the density and depth of the judgment does not mean it is without interest; far from it. In fact I suspect this case will prove to be one of the more fascinating legal tangles the Courts will be asked to unravel this year. This article looks at some of the more curious aspects of this dispute, away from the key aspects of the case. Continue reading “Multiplex v Bathgate: Legal Riddles and Unsolvable Problems”
I am an unashamedly massive fan of the Back to the Future film franchise. Yes, even the sequels.
One of my favourite lines from the franchise is spoken at the end of the first film and the beginning of the second. Doc, Marty and Jennifer are about to travel to the distant future (2015, to be precise). When Marty points out there might not be enough road to get up to 88 mph, Doc flips down his brushed aluminium shades and intones: “Roads? Where we’re going we don’t need roads.” And the DeLorean flies off to the future thanks to an early 21st century hover conversion.
Brings a smile to my face every time
They say that the house always wins, but as the recent case of Andrew Green -v- Petfre (Gibraltar) Limited t/a Betfred illustrates, even the house can get caught out sometimes.
When lucky punter Andrew Green won over £1.7m following a 5 ½ hour stint on Betfred’s ‘Frankie Dettori’s Magic Seven Blackjack’ game in January 2018, he was dismayed to find out a few days later that the company was refusing to pay out, claiming that there was a glitch in the game, and that the house rules stated that, in those circumstances, Betfred were not required to pay. Mr Green sued, and the matter eventually ended up in Court. Following a hearing on 15 October 2020, Mrs Justice Foster DBE granted Mr Green summary judgment and awarded him his winnings.
The Guardian on Tuesday 30th March had an interesting article entitled “UK criticised for ignoring Paris climate goals in infrastructure decisions”. In summary, various luminaries, scientists, legal and environmental experts, have written a letter and to come out to say that:
- The case concerning the expansion of Heathrow Airport, and the decision by the Supreme Court last year, has set a dangerous precedent, in effect allowing national infrastructure projects to go ahead at the expense of the agreed targets set in the Paris Agreement. In particular to hold global heating to well below 2C above pre-industrial levels.
- The UK Government and the Supreme Court has obligations under the Human Rights Act 1998 (to safeguard the right to life).
- Courts should be forcing Governments of signatory states to adhere to the commitments of the Paris Agreement.
- The Cop26 is in the UK this year, and the UK should be championing the Paris Agreement.
- The plans for new coal mine, new licences being issued for oil and gas exploration in the North Sea, scrappage of the Governments main green recovery measure, and the green homes grants for insulation and low carbon heating are concerning developments.
Adjudication can be a frustrating experience, particularly for those who have been faced with a decision of the adjudicator that is quite obviously (to you) wrong, but nonetheless enforceable.
This situation arises because it has long been accepted that, in adjudication, “the need to have the “right” answer has been subordinated to the need to have an answer quickly…” per Chadwick LJ in Carillion v Devonport Royal Dockyard  EWCA 1358.
The Court’s stance on this issue is born from the original intent of the statutory scheme, which was to provide a means for contractors and subcontractors to address cash-flow problems caused by illegitimate delays or refusals to pay. In order to achieve that, adjudication decisions have to bear the weight of authority, otherwise every adjudication decision would immediately be challenged by the losing party.
The Courts also take into account the fact that the adjudicator is tasked with deciding often very complex and detailed disputes in a very short period of time. Errors in decision-making from time to time are therefore inevitable, but the Courts have determined that that shouldn’t be allowed to undermine the process.