§ 4.45 p.m.
§ Baroness Ramsay of Cartvale rose to move, That the draft regulations laid before the House on 30th June be approved [40th Report from the Joint Committee].
§ The noble Baroness said: My Lords, I beg to move. Under the Roads (Scotland) Act 1984 a local authority may adopt a private road on to its list of public roads provided that it meets a specified standard. When an authority adopts such a road, it then has a duty to maintain it. Where roads are required to serve new housing developments, Section 17 of the 1984 Act enables the Secretary of State to make regulations requiring the developer to lodge a security, known as a "road bond", with the local roads authority to cover the costs of constructing these roads or, where there are existing roads, to bring them up to the authority's standard.
§ Such regulations were introduced in 1985 by the previous administration. The Security of Private Road Works (Scotland) Regulations 1985, as they are known, were designed to protect the rights of the individual house purchaser. They ensure that where a housing developer fails to construct a road to serve his housing development, for example, because of bankruptcy, sufficient funds will be available, through the road bond, to enable the local roads authority to complete the road's construction.
§ Although the regulations were well intended, it soon became apparent that they were not working as well as they might. For example, difficulties were experienced by some roads authorities where developers began work without lodging appropriate security, leaving the authority potentially exposed to the cost of completing the works. Also, some developers considered that roads authorities did not release their bond security as soon as they might, thereby incurring an unnecessary burden on 1301 the company. Following discussion and consultation with those concerned with the practical application of the regulations, the Government have brought forward some amendments to them. We believe these amendments not only strengthen the spirit of the 1985 regulations but also make them more effective. I am sure that noble Lords on all sides of this House will welcome these measures as an improvement to the existing legislation.
§ Although roads authorities considered that they should not have to complete roads where a developer defaults, the amendment regulations make absolutely clear that this is the case. We do not consider it appropriate for the house purchaser, who has already paid towards the cost of construction in the price of his house, to pay for it again. We also consider that shouldering this responsibility encourages roads authorities to make as much effort as possible to ensure that developers do not start work without lodging the appropriate security. By requiring housing developers to provide local roads authorities with at least two weeks advance notice of their intention to commence developments, the amendment regulations provide authorities with more time to ensure that a bond is lodged. The amendment regulations also aim to discourage developers from not lodging a road bond by increasing the penalty for non-compliance of the 1985 regulations from £2,000 to the statutory maximum, level 5, fine of £5,000.
§ In addition, the new amendments now stipulate the circumstances when a roads authority should return the bond in whole or in part, as appropriate, to a developer. These are when the proposed development has been abandoned, when the authority considers that the security is no longer required or when the bond amount exceeds the cost of the proposed development.
§ Under the existing regulations, a roads authority does not have to release any of the road bond until it is satisfied that the road has been completed to a suitable standard. Unfortunately, this does not reflect the actual process of building roads. Roads are constructed in defined stages and provided each stage is constructed to the authority's standard, there is no reason why the entire bond should be retained until the road is fully complete. Also, as there can be quite a time lag between the completion of one stage of a road and the next, retaining the full bond can place an unreasonable financial burden on the developer. Our proposed amendments now require the authority to release parts of the bond when specified stages of the road's construction have been reached, provided, of course, that each stage has been completed to the authority's required standard.
§ Under the existing arrangements authorities are permitted, on completion of the road, to retain 20 per cent. of the bond until either the maintenance period for the road has expired or it has been adopted as a public road. However, we believe that in practice this is a little excessive and our amendments will reduced the maximum an authority can retain during the maintenance period to 10 per cent. of the bond.1302
§ The Government are committed to ensuring that individual house purchasers are not held to ransom by developers who default on their commitments or by authorities which have failed to ensure that appropriate security is lodged to cover the costs of roads for new developments in their areas. These amendments reinforce that commitment, clarify the responsibilities and roles of both parties and ensure that while the local authorities have the security needed to complete roads, developers also benefit from release of the road bond security as soon as possible. I commend the regulations to the House.
§ Moved, That the draft regulations laid before the House on 30th June be approved [40th Report from the Joint Committee].—(Baroness Ramsay of Cartvale.)
§ Lord Mackie of Benshie
My Lords, the noble Baroness referred to a bond. Can she confirm that the developer actually deposits the cash with the authority?
§ Lord Mackay of Ardbrecknish
My Lords, I welcome the regulations. The original provision was brought forward in 1985 by the then Secretary of State for Scotland, now my noble friend Lord Younger of Leckie. These are sensible measures. When new roads are constructed, it is important that the householders who contribute to them should have some certainty that they will be properly maintained and eventually, when they are of the correct standard, taken over by the roads authority to which the householders will pay council tax.
Historically, private roads always cause difficulties, as I remember from my old constituency. That is why it is important that these matters are properly attended to where a new private road is developed for new private housing. That would ensure that some of the problems that have arisen with roads prior to provisions such as these will not recur.
In the spirit of consensus politics, and so on and so forth, for the second time this afternoon, I warmly welcome a measure from Her Majesty's Government and congratulate the noble Baroness on bringing it forward—although I do not intend all these warm welcomes to become habit-forming.
§ Baroness Ramsay of Cartvale
My Lords, perhaps I may first answer the question from the noble Lord, Lord Mackie of Benshie. As I understand it, that is indeed the case. That is what the bond means. If, by any chance, that is not correct, I shall write to the noble Lord. However, I am absolutely sure that it means exactly that.
Secondly, I very much welcome the warm words from the noble Lord, Lord Mackay of Ardbrecknish. I take on board his health warning that such welcomes will not necessarily become a habit. Nevertheless, I welcome what he said about the regulations.
§ On Question, Motion agreed to.