Introduction to the HGCRA 1996

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Introduction to the HGCRA 1996
  • The need for legislation in the construction industry
  • The HGCRA 1996
  • LDEDCA 2009
  • Which contracts are covered by the HGCRA 1996?
  • The Scheme for Construction Contracts
  • Adjudication
  • Payment

Introduction to the HGCRA 1996

The need for legislation in the construction industry

Throughout the 1980s and the early 1990s, the construction industry was characterised by inefficiencies, disputes and high levels of insolvency, particularly among contractors and sub-contractors.

In 1994, Sir Michael Latham was commissioned to undertake a report on the issues affecting the construction industry. In his report, entitled ‘Constructing the Team’, Latham identified two areas which were pivotal to the issues affecting the industry:

  1. disputes

  2. payment

Latham found that the industry needed a specific mechanism of dispute resolution which was accessible, quick and inexpensive to reduce the disputes culture within the industry. Latham also thought that ensuring cash flow to all levels of the industry would reduce contractor and sub-contractor insolvency, and create stability of employment.

The HGCRA 1996

The legislative response to Latham's report was contained in Part II of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), which was enacted in 1996 and came into force in May 1998. The HGCRA 1996 sets out requirements relating to adjudication and payment that construction contracts must include.

Some of the key points to note, as discussed in more detail below, are:

  1. the HGCRA 1996 was amended by Part 8 of LDEDCA 2009. The changes introduced by LDEDCA 2009 are not retrospective, so only apply to construction contracts entered into after it came into force in 2011—see below

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