The Grenfell Phase 2 Report: what changes lie ahead for the construction industry?

The Grenfell Tower Inquiry’s Phase 2 report (available here) was published on 4 September 2024 (the Report).

The Report found the system of regulating the construction and refurbishment of high-rise residential buildings that existed at the time of the Grenfell Tower fire was seriously defective and highlights critical areas for reform within its 58 recommendations. Sir Martin Moore-Bick, a retired High Court judge and main author of the Report, described the tenant management organisation’s (the TMO) conduct as “disturbing” in its approach to the refurbishment of Grenfell. He went on to say that the TMO manipulated the tender process to appoint an architect with no experience in cladding a high-rise building, persistently failed to attach sufficient importance to fire safety, particularly the safety of vulnerable people that would require help to escape should a fire occur.

It was found that no one was prepared to accept responsibility for having chosen the materials used, and when questioned, everyone who was asked said that someone else was responsible for ensuring suitable materials were used.

Summary

The Report acknowledges that the government has made a positive change by implementing the Building Safety Act 2022 (BSA) following the tragedy, but the recurring theme within the Report is that the BSA alone is not enough. As a result, the Report largely focusses on recommendations that seek to prevent a similar kind of disaster whilst also changing the attitude of the construction industry, treating building safety with paramount importance.

What are the key recommendations?

An urgent review of the definition of higher-risk buildings (HRB) 

The Report recommends an urgent review of the current definition of an HRB. Under the BSA, a HRB is defined as a building at least 18 metres in height, or has at least seven storeys, and contains at least two residential units. The need for urgent review suggests that defining a building as a HRB by reference to its height is an arbitrary measure and it prefers a more relevant, multi-factorial, approach considering the nature and use of the building and the likely presence of vulnerable people.

Buildings that satisfy the criteria and fall into the definition of HRB are subject to more enhanced regulation contained within the BSA. A change in definition, to incorporate a wider range of buildings by focussing on a building’s nature and use would introduce a subjective element into the definition, increasing uncertainty for clients and developers in the planning process of new buildings. It is vital for those who are involved in the design and construction of a building be aware as to whether it will fall into the HRB category, given the repercussions if it does. 

A single construction regulator 

A key conclusion from the Report’s findings was that many of the errors were as a result of poor cultural behaviour along with complacency in the industry; previously characterised as a race to the bottom with little regard for residents’ safety. The Report recommends the establishment of a single independent body, headed by one person who reports to a single Secretary of State, responsible for building control and for overseeing standards of competence. 

Such a regulator would have a key role in driving the much-needed change across the industry in relation to the failings that led to Grenfell and would be responsible for the regulation and issuing of certificates of compliance for construction products, licensing of HRB contractors as well as maintaining a publicly available library of test data and publications, amongst other things.

Dutyholder regime

The BSA has already implemented some reforms. One of which is the creation of the dutyholder and competence regime (the Regime), set out in new Part 2A of the Building Regulations (the Regulations). The Regime focuses on dutyholders' responsibilities for ensuring that building works comply with Regulations, as opposed to health and safety on site per the Construction (Design and Management) Regulations 2015 (the CDM 2015). 

The new roles reflect those in the CDM 2015 (Client, Designer, Contractor, Principal Designer and Principal Contractor) but impose specified duties and new competency requirements on the dutyholders, ensuring those involved in the lifecycle of all applicable projects are responsible and accountable for compliance with the Regulations.

In addition to role-specific duties, the Regime outlines general duties which apply to all of the abovementioned roles. All parties carrying out building or design work must ensure that all work carried out by them (or those under their control) is planned, managed and monitored so as to be in compliance with the Regulations and cooperate with all other parties involved to the extent necessary to achieve the same.

The dutyholders also hold new competency requirements, including obligations to take reasonable steps to satisfy themselves that all their appointees on a given project have the necessary competence to perform such work.

The Gateway system

The BSA introduced a three-tier “Gateway” system (made up of three Gateways) that HRBs must pass throughout the design and construction phases of such a project:

Gateway One - Planning (came into force on 1 August 2021): requires developers, when applying for planning permission, to submit a comprehensive fire statement detailing the specific fire safety considerations pertinent to their development, and designated Health and Safety Executive.

Gateway Two - Building control approval for HRBs, which occurs prior to construction work beginning: developers must demonstrate how their proposals comply with building regulations requirements. This includes submitting information about how the new dutyholders' competence, golden thread (the comprehensive and continuous record of information about a building, available throughout the building’s lifecycle) and reporting requirements will be met.

Gateway Three - Following completion of the construction phase, but prior to occupation: the safety of future occupants is given the highest priority. The BSR must be given the required information (signed by the client, the principal designer and principal contractor) before issuing the completion certificate. A HRB cannot be registered or occupied until the Gateway Three process has been completed.

The Report made numerous suggestions, (particularly in relation to the building control application at Gateway Two), which seek to strengthen the Gateways, recommending the following documents be submitted with the Gateway Two application over and above the current requirements:

• A fire safety strategy for the building to be produced by a registered fire engineer and take account of vulnerable people. The intention is for this to be re-submitted as part of the Gateway Three process following the Gateway Two review. 
• An application for building control approval (in relation to the construction or refurbishment of an HRB) be supported by a statement from a senior manager of the principal designer under the BSA that all reasonable steps have been taken to ensure that on completion the building as designed will be as safe as is required by the building regulations.
• A personal undertaking from a director or senior manager of the principal contractor confirming they have taken all reasonable care to ensure that on completion and handover the building is as safe as is required by the building regulations. 

Building control reform 

The Report acknowledges that prior to Grenfell, many of those involved in major construction projects treated building control as a source of advice and assistance, which was a serious misunderstanding; it was found that the cause of this was the introduction of commercial interests, where approved inspectors had a “commercial interest in acquiring and retaining customers that conflicted with the performance of their role as guardians of the public interest”, concluding that the industry must change.

The Report does accept that the government has already taken steps to improve the regulation of building control and the competence of those who consider applications for approval and the Report expects this to continue and foster a new culture of building control being viewed as regulatory in nature. 

Other recommendations from the Report include:

• The government should appoint an independent panel that would decide whether it is in the public interest for building control functions to be performed by those who have a commercial interest in the process.
• All building control functions should be exercised nationally in the interest of professionalism and consistency of service. The Report therefore recommends that the same panel should consider whether all building control functions should be performed by a national authority.

What impact might this have on the construction industry?

The Report is directed at the entire construction industry, emphasising the systemic failures that contributed to the Grenfell tragedy. It is yet to be determined how and when the government will implement the proposed recommendations. However, the government has committed to responding to all 58 recommendations contained within the Inquiry over the next six months (read Sir Keir Starmer's speech here), indicating that far-reaching reforms, along with new legislation, are required. 

It also remains to be seen how the changes will affect the insurance industry and its approach to coverage for construction projects. The requirements for increased responsibility laid out by the BSA and Regulations are still in their relative infancy, with larger projects without the benefit of the transition period still underway and yet to pass through all three Gateways, creating apprehension in the market. The insurance market will need to find sensible and workable solutions to enable projects to continue and for the construction industry to grow in a challenging UK market which has already seen many tier-1 contractors fall into administration.