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Lord Howie of Troon: I am grateful to the Minister for that reply. Like him, I am all in favour of binding the Crown wherever possible. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 101 agreed to.

Clause 102 [Meaning of "construction operations"]:

Lord Williams of Elvel moved Amendment No. 128:


Page 58, line 47, at beginning insert ("off-shore").

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The noble Lord said: In moving this amendment, it may be for the convenience of the Committee if I speak also to Amendments Nos. 130, 131, 132, 133, 134 and 135. We now embark on this rather difficult clause, which is an attempt to define the meaning of "construction operations"--what are and what are not construction operations.

As I said at Second Reading, we have a number of doubts about the definition. We do not believe that the Bill as drafted covers more than about 50 per cent. of what could properly be called the construction industry. Our figure is based on the Department of the Environment's research.

Amendment No. 128 deals with off-shore drilling for, or extraction of, oil or natural gas. I am advised that on-shore drilling should not be excluded from the ambit of the Bill but off-shore drilling should be excluded. Off-shore drilling is a very specialised business. Construction companies undertake certain activities with the construction of platforms or drilling rigs, but, I believe, not nearly so much as in on-shore drilling. There is also a certain amount in off-shore drilling. I am sure that my noble friend Lord Howie will correct me if I am wrong, but it seems to me that as a minimal inclusion in the Bill, off-shore drilling should be considered as a construction operation.

Amendment No. 130 deals with subsection (2)(c), which starts with the word "construction". I find it very odd that the word "construction" should be put into a subsection which defines something which is not construction. I should have thought that for clarity--indeed, possibly also for substantive purposes--the word "construction" in that line should be removed.

I move on to Amendment No. 131. I am advised that it is extremely difficult to define the meaning of "primary" activity. I simply offer the alternative "sole" activity in this probing amendment. I am trying to find out from the Minister what exactly "primary activity" is intended to mean in the Bill.

With Amendment No. 132 it is quite clear that water and effluent treatment are major activities of the construction industry. The view has been expressed to me that there is no reason whatever why water or effluent treatment should be excluded from the ambit of the Bill. After all, those are activities in which construction companies, in the ordinary meaning of the word, engage on a daily basis. It seems to me and my advisers that it would be proper for water and effluent treatment to come within the ambit of the Bill.

Amendment No. 133 is related to Amendment No. 134 which no doubt will be spoken to by the noble Earl when he comes to reply. As I said at Second Reading, I have great difficulty understanding why construction activities in warehousing--construction activities in the storage particularly of food and drink--should not be included within the ambit of the Bill. That is a matter that I raised at Second Reading and I do not wish to go through the arguments again. I am sure that the Committee understands my arguments.

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With regard to Amendment No. 135, I simply cannot understand why construction activity inside a warehouse of food and drink should not be treated as a construction activity for the purposes of this Bill.

No doubt the noble Earl will wish to speak to his Amendment No. 134. I reserve my comments on that. In the meantime, I beg to move.

Viscount Ullswater: I support my noble friend's amendment, Amendment No. 134, in this group. I believe that it helps to clarify the position of Clause 102(2)(c). So far as I can see, in that subsection the important words are "on a site"--this argument will assist the noble Lord, Lord Williams--which identify a process engineering site as opposed to a building site or civil engineering site.

The definition of "construction operations" which appears in the Bill is drawn from the Income and Corporation Taxes Act 1988. The Latham Review Working Group 10 produced a very different draft definition of "construction operations". When that was presented to the Construction Industry Board it was accepted without comment. Amendment No. 139, tabled by the noble Lord, Lord Howie, is much closer to that definition.

However, I believe that the definition in this Bill recognises the divergent views of the process industry and the building and civil engineering industries and their history as regards dispute resolutions. I was impressed by the case put to me by the Process Industry Latham Group. Its industries do not suffer from the litigations and claims-oriented attitude which beset the building and civil engineering industries. It claims that the difference occurs for two good reasons. First, that the process plants are not speculative developments but facilities where products are made. Secondly, the number of clients and contractors are small and it is therefore important that good relations should continue for future business success.

In supporting that evidence, PILG--I notice the noble Lord, Lord Williams of Elvel, grimacing at my use of "PILG" and I understand that--can point to the number of arbitrators, for instance, between 200 and 300 appointed by the RIBA, RICS and the ICE per annum compared with two to three per annum appointed by the Institution of Chemical Engineers.

I would go along with some of the amendments put forward by the noble Lord, Lord Williams, in particular Nos. 128 and 130 because I believe that they add to the clarity of the exclusions. However, as I have indicated, I cannot go along with some of his other amendments, in particular to Clause 102(2)(c), because I believe that the whole point of "on a site" identifies a process engineering site as opposed to a building or civil engineering site. Those are the key words that I put forward for my noble friend's consideration.

Lord Williams of Elvel: The noble Viscount has been kind enough to go along with some of my

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amendments. Does he go along with my arguments about water or effluent treatment? It is an important matter.

Viscount Ullswater: I do not feel so strongly about those matters. Perhaps I may refer to the Government's amendment to the latter part of the subsection. We are talking about the bulk storage of food, probably in steel vats, in the process industry and for that reason I would allow that subsection to remain. I feel less strongly about whether water or effluent treatment is something to do with the process industry. I suspect that it is, however, and therefore I would see the provision left in as part of "on a site".

4.15 p.m.

Lord Howie of Troon: I am reassured by Amendment No. 134 tabled by the noble Earl, Lord Ferrers. It shows that the Government have accepted the fact that the definition of "construction operations" in the Bill is defective. It is much more defective than is admitted in Amendment No. 134 but I do not wish to go into that at the moment. I shall deal with it in my Amendment No. 139.

I intervene as a result of a remark made by the noble Viscount, Lord Ullswater, relating to the process engineering industry. There was much good sense in what he said. I too have had the benefit of meeting members of the Institution of Chemical Engineers to discuss their attitude towards the Bill. My amendment does not exclude the process engineering industry because I want the Minister to explain on the record why it should be excluded.

I can readily understand that certain elements of process engineering are different from the ordinary construction industry. Let us consider, for example, an oil refinery which has a catalytic cracker or something of that nature. The plant itself will be powerfully integrated into the structure and they could be considered as one item. Sometimes they are, sometimes they are not, but I see my noble friend Lord Berkeley shaking his head from side to side in a way which indicates a certain amount of disapproval. I am being as open-minded on the subject as possible.

I can understand that there would be some argument in that respect but perhaps we might consider the following. I have in mind Grangemouth oil refinery, which was specifically mentioned to me by the members of the Institution of Chemical Engineers when I met them recently. It is founded on a large cellular concrete foundation which is wholly and entirely a piece of civil engineering construction. It has nothing whatever to do with process engineering, or processes of any kind. It has a straightforward, ordinary foundation but it is a big piece of civil engineering work. I cannot see how it should be dealt with in a way different from any other civil engineering construction. So long as the foundation is in the right place and the holding-down bolts are in the right place so that the process engineers can put their plant in the right place all will be well. There is no reason at all why the foundation as a contract--it might well be a separate contract and would certainly be a sub-contract--should not be included under construction operations.

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Furthermore, I remember that 30 years ago or more I was involved with civil engineering colleagues in designing the Llandarcy gas works. It was an excellent work and won an RIBA gold medal for its architect, Alex Gordon--the prize went to the architect, not to the engineer. Obviously, that gas works was a piece of process but the building which we built was a shed. It was a lovely, prize-winning shed but it was a shed nevertheless. As a shed it was the same in the construction context as any other kind of shed. The fact that it had a gas works inside made it no different; there might have been something else inside. The fact that it has since been demolished may remove many of my arguments, but the point I am making is that the structure was a civil engineering structure and should therefore be included as a construction operation under the terms of the Bill. I can see no reason why it should be excluded as part of a process plant.


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