Street works inspection fees legislation - Regulatory Impact Assessment

Purpose and Intended Effect
Options
Benefits
Compliance costs for Business, Charities and Voluntary Organisations
Consultation with small business
Results of consultations
Enforcement, Sanctions, Monitoring and Review
Summary and recommendations
Contact point and date

Purpose and Intended Effect

(i) Identify the Issue and Objective

The New Roads and Street Works Act 1991 (NRSWA) provides a legislative framework for street works activities, and is supported by regulations and codes of practice. Section 75 of NRSWA sets out certain rules covering the inspecting by highway authorities of individual street works which undertakers (eg gas, water, electricity or telecommunications companies) carry out in the street (for instance to install new apparatus or to maintain apparatus which is already in place) so as to ensure that they meet the relevant national standards. It also provides that, subject to any conditions laid down in regulations made by Ministers, undertakers shall pay a fee to highway authorities for each inspection carried out. Section 75 also provides that the Secretary of State may make regulations that set out what proportion or number of inspections can be charged for and what the levels of fee shall be.

Regulations activating the powers in section 75 and setting the fee level were first made in 1992 and been amended several times since. The most recent version - the Street Works (Inspection Fees) (Amendment) (England) Regulations 2001 set the fee at £15.50 per inspection and provided that authorities would be able to charge undertakers for inspecting a representative sample of 30% of the works they carry out. Any additional inspections would be carried out at authorities' own expense.

The Street Works (Inspection Fees) (England) Regulations 2002 would raise the existing fee of £15.50 per inspection to £20.

A (non-statutory) Code of Practice for Inspections was issued by the Secretaries of State for Transport, Wales and Scotland in July 1992. This has now been revised and the revised code is due to replace the existing one in England as of 1 October 2002. The revised code introduces a number of changes, one of which - to reduce from five to three the number of chargeable stages involved in inspecting a works - needs to be reflected in regulations in order to come into effect.

(ii) Risk Assessment

The risk of not making new regulations is:

(a)that the fee level for inspections will fall further behind the actual cost of carrying out inspections, thus discouraging authorities from inspecting works;

(b)that it will not be possible in future to base the fee level on three stages rather than the existing five.

Options

(i) Options identified

INSPECTION STAGES

A consultation was held in 2000 on a draft revised code of practice on the carrying out of inspections and on draft regulations. The existing Code was issued in 1992. Although the code is a non-statutory one, one particular element in the new code will need to be reflected in regulations. Under the existing regime the 30% figure for works which can be inspected at undertakers' expense is made up of inspections at five different stages of work (for instance when the highway is being excavated, or when the road surface is being reinstated, or up to one month after the works are carried out). The five stages are defined in existing regulations. Under the new regime, although the overall percentage of chargeable inspections stays at 30%, the number of stages is reduced to three. The two main options identified were:

(a) move from five stages of inspection to three;

(b)leave the number of stages at five.

Moving to three stages involves merging some of the existing stages. Under the previous arrangements there were occasions where highway inspectors visited sites where they had been informed that work was to be carried out, only to discover that it was not possible to carry out the inspection, for instance because work had not yet started. Such abortive visits impose unnecessary costs on authorities, as further visits to inspect work would then need to be made. The change to three stages gives authorities more flexibility in the timing of carrying out inspections, is administratively simpler, and should reduce the risk of abortive visits. The general view of both undertakers and highway authorities was that this change should be reflected in regulations. As the existing five stages are set out in regulations, the revision to three stages also needs to be made by regulation.

FEE LEVELS

Turning to the question of fee levels, the 1992 Regulations set these at £12.50 per inspection. Since 1992 the inspection fee has been raised several times but has increasingly fallen behind the rate of inflation and behind the actual cost of carrying out the inspections. It currently stands at £15.50. Given that, as part of the revised legislative regime which these new regulations impose, the National Joint Utilities Group (NJUG - on behalf of undertakers) and the Local Government Association (LGA - on behalf of local authorities) have held discussions as to what level the fee should be raised to. Whilst discussions continue as to what the long term fee level should be, both NJUG and the LGA (who work together through the Highways Authorities and Utilities Committee - HAUC) have recommended to the Government that the revised Regulations should raise the level to £20.00 per inspection.

The main options identified were:

(a)simply raise the fees in line with inflation;

(b)leave the fees at the existing level until final agreement is reached on what the new level should be;

(c)raise the fees to the agreed level of £20 now, with the final fee being set in further regulations following the completion of negotiations.

Simply increasing the fees in line with inflation would not address the fact that the fee level has increasingly fallen behind the true cost of carrying out inspections since the £12.50 fee was introduced in 1992. Delaying any increase until a final agreement is reached reduces the ability of highway authorities to fund a substantial programme of inspections now and so increases the risk that poor quality work will not be detected. Increasing the fee to £20 now, which has been agreed with both NJUG and the LGA, will enable authorities to carry out a more comprehensive programme of inspections.

(ii) Issues of equity and fairness

Most of the organisations affected by the regulations are substantial bodies, eg utility companies.

Benefits

(i) Identify the Benefits

Street works inevitably cause some disruption to road users where the carriageway is reduced or the footway taken over by the works. This can lead to congestion and delay or longer journeys for traffic, a greater risk of traffic accidents, additional pollution where congestion is made worse and inconvenience to pedestrians. The aim of these regulations is to ensure that works are carried out to a high standard by making it easier for works to be inspected and thus for poor quality work to be detected. If work is not carried out to the required standard then it may need to be re-done, so leading to further disruption. In addition, the surface of the road could deteriorate more quickly than it would otherwise have done, thus obliging the highway authority to carry out maintenance work and incur potentially significant extra expenditure. Poor quality work can also put the safety of road users and pedestrians at risk.

The proposed increase in the level of fees should make it easier for highway authorities to carry out inspections and thus detect substandard work. Those benefiting will include highway authorities, businesses, private motorists, public transport operators and passengers and pedestrians.

(ii) Quantifying and valuing the benefits

These are not fully quantifiable at this stage. However, it is clear that thorough inspecting of work should lead to work being carried out to a higher standard as set out in (i) above. Given that, the changes proposed should make it both administratively simpler for authorities to carry out their programmes of inspections and for them to be able to fund them.

Compliance costs for Business, Charities and Voluntary Organisations

(i) Business sectors affected

Statutory undertakers, such as water, gas, electricity and telecommunications companies. There will be no impact on charities or voluntary organisations, except in the infrequent cases where they are also undertakers.

(ii) Compliance costs for a "typical" business

The additional costs are not quantifiable at the current time, as they will depend upon the number of works carried out by undertakers in the future and thus the number of chargeable inspections which are carried out. However, undertakers already have to meet the cost of 30% of sample inspections under the current regulatory regime.

The only significant change that these revised regulations introduce is that the fee for individual inspections will rise from £15.50 to £20.

As regards the move from five stages of inspection to three, this change should result in a reduction in the number of abortive visits by highway authority staff carrying out inspections and so is likely, if anything, to lead to a reduction in costs.

(iii) Total Compliance Costs

See (i) and (ii) above.

Consultation with small business

Consultation on the draft code of practice and earlier draft regulations was held with interested parties such as highway authorities and individual undertakers, between January and April 2000. Further discussions have been held since then with NJUG and the LGA. The Cabinet Office's Small Business Service has also been consulted on the proposed changes.

Results of consultations

Following the consultation a working party comprising undertakers, local authorities and (what is now) the Department for Transport (DfT) considered the responses and made a number of changes to the proposed legislative regime. In the meantime, further regulations came into force in April 2001 which simply raised the inspection fee broadly in line with inflation, pending more comprehensive regulations. The revised code of practice and the draft regulations have been approved by HAUC.

Enforcement, Sanctions, Monitoring and Review

It has been agreed with HAUC that an independent review should be carried out over the coming months of what level the inspection fee should be set at in future. Following that review, revised regulations are likely to be brought forward. In addition, a more wide-ranging review of the new inspections regime (and regulations) should be carried out by HAUC and DfT in approximately two years time.

Summary and recommendations

That the regulations (having been amended following the consultation) should be laid before Parliament.

Contact point and date

For further information, please contact Tim Barrow, Traffic Management Division, Department for Transport, Zone 3/17, Great Minster House, 76 Marsham Street, London SW1P 4DR; e-mail - tim.barrow@dft.gsi.gov.uk.

15 July 2002

DECLARATION

I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.

SIGNED BY RESPONSIBLE MINISTER

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Date

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Department

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