Under regulation 16(1) of the Electronic Communications Code (Conditions and Restrictions) Regulations 2003, an Electronic Communications Code Operator is required to provide Ofcom on 1st April every year a certificate confirming how it is achieving its funds for meeting liabilities (“funds for liabilities”) obligations.
Non-compliance with the annual certification requirement can result in Ofcom issuing a direction against the the Code Operator.
This previous article provides a link to the Ofcom issued guidance on funds for liabilities.
Do note the point in our previous article that the level of funds for liabilities provision that may have been appropriate for a start up with no cable or apparatus in the ground may be significiantly different 3 or 4 years down the line when there may be significant amounts of cable and apparatus deployed in the public highway.
Contact us if you need any asistance with reviewing your funds for liabilities provision or preparing your annual certification.
At the outset we make no apologies for the length of this article. In it we seek to consider and address some issues that appear fundamental to how road and street works operate in England and Wales.
Over the years we have advised statutory undertakers in respect of criminal prosecutions by authorities for alleged offences under the New Roads and Street Works Act 1991 (NRSWA), a common theme for authority prosecutors to take in Court has been that signing, lighting and guarding offences under s.65 of NRSWA are so serious that they should be viewed by the Court as akin to Health and Safety breaches and very significant fines should be imposed. This has led on various occasions to unsuccessful attempts by prosecutors to persuade Courts to apply the Sentencing Council’s guidelines on sentencing Health and Safety Offences, Corporate Manslaughter and Food Safety and Hygiene Offences. In addition to those attempts being fundamentally flawed in a number of different regards, they also highlight a very significant cognitive disconnect. That cognitive disconnect relates to road works undertaken by authorities.
NRSWA and related legislation create any number of different criminal offences that a statutory undertaker might commit in connection with its works in the public highway. Whilst we might personally question why it was necessary to criminalise various of these matters, we accept that Parliament did criminalise them and that breaches do occur. The same authorities that Parliament empowered to prosecute statutory undertakers under NRSWA themselves undertake road works in the public highway with identical potential impact. We also accept that Parliament has criminalised some activities by authorities under the Highways Acts and other legislation.
What we want to focus on within this article is the very significant disparity between how road and street works are treated from a legal perspective. We will do this by considering some of the criminal and civil sanctions that exist in respect of street works.
Both authority and statutory undertaker undertake activities in the public highway with substantially identical potential impact and risks to the public and those who undertake the works. If one is seeking to remedy the perceived ‘ills’ associated with road and street works, we suggest that one must treat both the same in terms of the breaches that might be committed and the sanctions that can be applied. It is only as between authority and statutory undertaker that any distinction between road and street works exists. For the general public, whom both authority and statutory undertaker serve, “stuff” being done in the public highway is generally perceived as just being “road works” and an inconvenience. It is also the case that highways authorities historically have undertaken considerably larger numbers of road works than statutory undertakers do street works, which in part may explain that public perception.
Much of the legislation for both road and street works is what might politely be referenced as being “rather long in the tooth”. NRSWA itself stemmed from the privatisations of the 1980s and 1990s. Whilst we accept that privatisation was always going to throw up a few anomalies, that was a long time ago and the anomalies became apparent some time back. That those anomalies exist cannot really be questioned.
Back in 2003 when NRSWA was still in its relative infancy the Master of the Rolls, Lord Phillips, said of it:
“The statutory provisions are long and complex. At times I have been inclined to wonder whether they are the product of a demented computer”
In the years since Lord Phillips considered the statutory provisions, they have only grown longer and more convoluted. We continue to wonder whether Lord Phillips’ demented computer is still at work.
We commenced this article with reference to s.65 of NRSWA because that provision is the most visible example of the disparity highlighted above. It is also one that attracts significant comment from both sides, albeit for different reasons. On the authority side, such comment might be along the line of s.65 non-compliances showing a disregard for the safety of workers and the general public. Such a position might garner some support. A statutory undertaker might agree or disagree with such an authority stance but also simultaneously ask why the same authority’s own sites are not held and sanctioned to the same standard.
Within the context of significant five and six figure sum fines having been imposed by Courts on statutory undertakers for some s.65 breaches in recent years, one might say that the Courts would not have imposed such fines if the circumstances had not merited it. Such a position might have some credibility. Against that, those on the undertaker side might point out that the site in respect of which such a large fine was incurred was a few hundred yards from a road works site belonging to the prosecuting authority that evidenced the same or greater non-compliances in terms of signing, lighting and guarding than the site in respect of which the fine was incurred. Over the years we have been provided with any number of photos of non-compliant authority sites. We have also directly observed any number of such authority sites as well. Obviously, non-compliance by the authority with signing, lighting and guarding requirements provides no excuse to a statutory undertaker for not complying with its obligations. Additionally, s.65 of NRSWA does not apply to road works by an authority.
So, are complaints by statutory undertakers about authority sites just “sour grapes” by a statutory undertaker caught in the act? Whilst there are some who may consider that to be so, we consider that there is a fundamental inequity in the sense of an unfairness or lack of balance. This is in terms of s.65 of NRSWA and many other provisions.
Within the context of s.65 of NRSWA, street works by a statutory undertaker are required to comply with the statutory Safety at Street Works and Road Works Code of Practice (the Safety Code). Authorities are also subject to the Safety Code pursuant to s.174 of the Highways Act 1980.
On the basis of both parties being subject to the Safety Code, some might say “So what are you complaining about? Authorities are required to comply with the Safety Code too and, if they aren’t, something can be done about it.” Whilst nominally that might appear correct, the reality is that nothing does ever get done about it and even if something was done about it, it certainly does not have the same consequences. The reasons for this are various.
In the first instance, one must compare the sentencing powers open to the Courts under the respective legislation. A breach by a statutory undertaker of s.65 of NRSWA is punishable by a now unlimited level 5 fine. Under s.174 of the Highways Act 1980 an identical breach of the Safety Code by a highway authority is subject to a maximum fine of £10.00 per day. One might therefore have an authority and statutory undertaker site adjacent to each other evidencing identical Safety Code non-compliances. If prosecuted for the breach, the Court might only impose a £10 fine for one and, say, a £15,000 fine for the other. That position makes no logical sense. If an act or omission is considered so serious as to merit a criminal conviction and an unlimited fine if committed by one party, it must logically follow that the same act or omission committed by another party merits the same criminal consequences and unlimited sanction, particularly where the potential risks to the general public and those working at such sites are identical.
Attempting to justify the difference in available sentences by reference to one entity being a public sector one and the other a private enterprise falls flat on its face. Highway authorities, like statutory undertakers, are subject to health and safety, environmental and other regulatory requirements. In those other areas they face identical maximum fines to those faced by statutory undertakers. Over the years we have heard eloquent attempts to justify the peculiar distinction that exists in respect of street and road works. None have however really managed to square this particular circle and all have substantially boiled down to “well that’s the way it is”. We know that’s the way it is. However, the point is that the way it is makes no logical sense and is inequitable.
One might say “Well this isn’t really a problem because there haven’t been any prosecutions of street authorities under s.174 of the Highways Act. If there had been, Parliament could have done something about it, if they thought it necessary. So, again, it’s just sour grapes by statutory undertakers.” We would agree that there haven’t been many such prosecutions of highways authorities. In actual fact, we aren’t aware of any such prosecutions. Let us explore the reasons for that.
In the first instance, how likely is it that authorities will prosecute themselves for their own alleged s.174 offences? The phrase “turkeys voting for Christmas” immediately springs to mind in respect of that question. On a less flippant note, one might legitimately suggest that the absence of significant criminal sanction applicable to non-compliance by an authority’s own sites would diminish any rationale for undertaking any inspection of such sites in the first instance. With a maximum £10 per day fine, there can be no impetus to regard any non-compliance as being serious. As for the Police, they quite correctly are not going to regard inspecting a highways authority work site as something they would routinely be interested in, even if they had the time and resource for it. There is another party that would have the knowledge necessary to determine whether an authority road works site was compliant with the Safety Code. That party is a statutory undertaker. The legislation itself envisages a statutory undertaker as a party that may commence a prosecution against an authority in respect of a breach of s.174 Highways Act 1980.
In light of the above paragraph, an observer might ask “if this is a real issue for statutory undertakers, surely they would have started prosecuting highway authorities?” That is a fair question. We have advised various parties about the possibility of commencing criminal prosecutions against authorities for non-compliance with s.174 of the Highways Act. The main reason we have been given against commencing such prosecutions is grave concern about the retribution that they would face from the same authority if they were to take that step. Statutory undertakers have works to complete for commercial and regulatory purposes and any degree of retribution by an authority could potentially have significant financial and regulatory impact. As a result, it is generally considered safer to let things lie and not trigger “tit for tat” prosecutions. There might be some who would question whether an authority would ever look for retribution against a statutory undertaker that commenced a prosecution against it. We do not suggest that all authorities would act in such fashion. We do however suggest that some may – a few permits refused here, some particularly onerous conditions attached there, early starts refused, extensions refused, a higher rate of inspections etc. To say such things do not already occur would be naïve, even if not all authorities would countenance such behaviour.
It is also the case that statutory undertakers do not see their role as being the regulatory enforcement body for authorities for their road works. Within the wider regulatory crime landscape, street and road works appear somewhat unique in there being the possibility of the regulated acting as the regulator against the very party that regulates them for the same thing. There is however an imbalance of power, which we have identified above, that deters statutory undertakers from taking up the regulatory function that s.174 of the Highways Act 1980 appears to have envisaged them assuming.
Another example of disparity is the range of fixed penalty notices (FPNs) that a street authority might impose on a statutory undertaker. Each of these FPNs is a means to discharge liability to criminal prosecution for distinct criminal offences that a statutory undertaker might be prosecuted for. No equivalent criminal offences or associated FPNs apply to roads works undertaken by the authority itself for similar failings that we are aware of. Some authorities commendably seek some degree of parity by imposing a financial contractual penalty equivalent to a FPN upon their contractors for equivalent non-compliances. Whilst such attempts by authorities are commendable, no one can credibly claim that a contractual financial penalty is equivalent to or on par with a day out at the Magistrates’ Court resulting in a criminal conviction, fine and associated reputational damage that can result if a statutory undertaker is prosecuted for the substantive offence.
We accept that some FPNs carrying criminal offences are unique to statutory undertakers in respect of their administrative and other obligations. As such, there may not be an equivalent for all those specific matters that a statutory undertaker might receive a prosecution or FPN for. Where there is however complete equivalence in terms of obligation, but none in respect of criminal or other sanction, is in respect of works under permit schemes. Both authority and statutory undertaker are required to obtain a permit to undertake works subject to the permit scheme and such permits can be subject to conditions. A statutory undertaker can be prosecuted for an offence of working without a permit or working in breach of a condition attaching to a permit. The level of criminal penalty that might be imposed is an unlimited level 5 fine for working without a permit or a £2500 maximum fine for working in breach of a permit condition. Liability to prosecution for both offences can be discharged by means of payment of a FPN (where such is offered by the authority). No criminal sanction or penalty applies to an authority’s own highway works where they have proceeded without a permit or in breach of condition. Again, some authorities impose contractual fixed penalties upon their contractors in a step towards parity for non-compliance. But again, and for the reasons already stated above, that is not equivalent or on par with criminal sanction.
That authority road works do proceed without permits or in breach of any conditions attaching to them is not open to question. We are not suggesting that all authority road works proceed without permits or in breach of condition, just as no authority would suggest all statutory undertaker works proceed in breach. What however is not clear is what volume of authority works proceed in breach of their own permit schemes. That data is not in the public domain. As no sanction applies to such breaches by an authority there is also no impetus to gather such data, albeit some authorities may seek to gather comparator data.
A couple of years ago at an industry event, the writer was chatting with an authority street manager who said that his main reason for introducing a permit scheme was not works by statutory undertakers but instead to try to find out where his own highways teams were working. He also added that it hadn’t worked though because he still didn’t know where they were. Whilst partly said in jest, the point is one that statutory undertakers’ works teams will be familiar with. They may attend site with a permit to undertake works only to find the location already occupied by the permit granting authority’s own highways team undertaking works without a permit.
The issue of FPNs raises another factor that has to be addressed. Authorities are allowed to retain the funds received from FPNs. This differs from the position if the substantive offence (in respect of which a FPN might be given) is prosecuted and a conviction secured. Any fine ordered by the Court is, effectively, payable to the government. Back when FPNs were first in contemplation for street works related offences, the writer recollects reading an authoritative document that anticipated that the number of FPNs that would be issued would only ever be minimal. Which document that was is long forgotten by the writer. However, it was incorrect – although its rationale may not have been.
The number of FPNs issued since their introduction to street works has been significant, as has been the volume of funds generated for authorities by them. One might say that this is the fault of statutory undertakers for placing themselves in a position in which they are exposed to potential criminal liability. Whilst such a position might garner support in some quarters, it also fails to take account of the sheer volume of administrative and other activities that are required to undertake street works across multiple authority territories to operate, maintain and renew complex infrastructure critical to all our daily needs. Whilst 100% compliance might be the aim, it is not one that anyone seriously expects to be achieved all of the time.
This issue of FPNs also introduces a somewhat unpalatable one that needs to be addressed. That is the issue of the ‘income stream’ that authorities receive from FPNs and how that fits with their regulatory function. It raises questions as to whether an authority receiving a FPN derived ‘income stream’ is effectively regulating the party from whom the income stream is being received. Whether IT systems with capacity to ‘crawl’ or ‘sweep’ through data to identify and issue FPNs were fully anticipated by those introducing FPNs might possibly be in question. The writer does however recollect reading promotional material from various IT providers at about the same time as that long forgotten document promising that their systems would be able to do just that.
If an authority has become in any respect financially dependent or reliant upon an income stream derived from another party’s theoretically criminal acts, that authority would seem in some way to have a financial interest in continued theoretically criminal acts by that party. We have said theoretically criminal within this context for a very specific reason. That is because we personally question whether many of the substantive acts and omissions that might lead to a FPN should have been criminalised in the first instance. If they were considered of such gravity as to merit criminal sanction, their merely becoming a FPN income stream for an authority would seem to undermine any element of criminality. One might seek to argue that there is no difference between a FPN in this situation and that of a speed camera derived fixed penalty notice. Whilst both are FPNs they are not analogous. The speed camera issued FPN is issued as a deterrent against an activity that could have real and terrible consequences. The street works related one is issued for administrative oversights, where any deterrent value or intent is questionable – particularly if the enforcing authority is or has become partly financially dependent upon the income stream it produces. Where it becomes something from which an essential income stream for the authority is derived, it would seem to become merely a tax on doing business, particularly where 100% compliance is neither possible nor expected.
In saying what we have above, we are not saying that FPNs should just be depenalised and allowed to continue as some form of statutory charge. To do so would diminish them even further and confirm them as being merely a “tax on doing business”. We are also not proposing that authorities should prosecute all alleged offences. Instead, what we propose is that the entire system should be reviewed to determine whether it is serving any appropriate purpose. If they do serve any purpose, FPNs should be applied equally to both authority and statutory undertaker in respect of their identical activities. When some authorities are reputed to make enquiries of statutory undertakers about when their FPN “invoice” is going to be paid one might question exactly what their understanding of the legislative structure and purpose of FPNs actually is.
Taking the issue of parity (or its absence) out of the criminal context and placing it in the civil one, some additional peculiarities with street and road works arise. By way of example, prolonged occupation charges under s.74 of NRSWA can give rise to a statutory undertaker being charged up to £10,000 per day where its works overrun. Over the years we have advised statutory undertakers, some of the prolonged occupation charges we have challenged might be described by the less charitably inclined as revenue generation without any basis in law or reality. That is not to say that all s.74 charges are unjustified. We are however aware that there has sometimes been a tendency to settle s.74 charges rather than challenge them so as not to ‘rock the boat’. Needless to say, authorities’ own works are not subject to an equivalent civil sanction. The very same perceived shortcomings on a statutory undertaker’s site that an authority might seek to use to justify s.74 charges against that statutory undertaker may be present on the authority’s own highway works site just down the road but no charges can be imposed. If the “evil” that s.74 charges are intended to counter is so grave, there can be no rationale for not applying them to an authority’s own identical shortcomings with its road works. If some overlooked and abandoned cones and barriers left behind by a statutory undertaker merit imposition of s.74 charges by an authority, why should the authority’s own abandoned cones and barriers not be subject to identical charges?
There are any number of other examples of disparity that one might consider, but the examples considered above are significant enough and do raise questions. As lawyers have the reputation for liking Latin, you must indulge us for a moment as we reference Juvenal’s Satires and ask “Quis custodiet ipsos custodes?” or “Who guards the guards?” Within the context of street works, the authority regulating the activities of statutory undertakers and able to levy financial charges upon them or criminally prosecute them for non-compliances is not subject to the same penalties itself for its own works with identical potential impact. We submit that this is neither sustainable nor credible nor equitable. If road and street works are such the bind and nuisance as is frequently suggested, there is no rational explanation for imposing criminal and financial sanction on one of the parties involved but not on the other.
Perhaps the time has come for the regulatory function of NRSWA to be transferred to an independent entity charged with enforcing a system containing identical criminal sanction and financial penalties in respect of both road and street works upon both statutory undertaker and authority. Without parity the current system is left looking as though it is as much, if not more, concerned with providing a source of indirect taxation to authorities than it is to actually remedying any underlying issues that apply to both road and street works. With authorities undertaking activities with identical potential impact but no criminal or other sanction for them, the absence of parity and the longer it is allowed to continue the greater the strength to arguments that the current system is just a form of indirect taxation.
Be under no misapprehension. We are not impugning the character or motive of authorities and we accept that statutory undertakers may not achieve 100% compliance levels. We also accept that the legislation is as it is and are not seeking to say it should not be complied with (albeit some of it really leaves us scratching our heads).
There are those who might say “if you can’t do the time, don’t do the crime”. That however is missing the point. This article is not a plea for de-penalising street works related criminal offences (albeit we consider some should never have been criminalised in the first place). Instead, it seeks to make the point that acts and omissions with identical potential impact should carry the same sanctions, whether committed by authority or statutory undertaker. To argue otherwise would lack both logic and justice. Before anyone suggests that it would be unfair for the public sector to be subject to the same range of sanctions as multi-million pound turnover companies, in most, if not all, other regulatory areas shared in common with commercial enterprises they already are. The Courts are more than capable of distinguishing between different types and sizes of entities when it comes to determining the appropriate fine to be imposed.
As to whether parity of sanction is required, do not take our word for it. Instead, go back to the start of this article and take the word of those authority prosecuting lawyers who have stated that non-compliances with the Safety Code are incredibly serious requiring and meriting the heaviest possible sentences. They know that a £10 fine for their own non-compliant highways works as opposed to a £15,000 fine for a statutory undertaker’s works with identical non-compliances with the Safety Code is illogical. It is either a £10 fine for both or an unlimited level 5 fine for both or justice is not served. Instead, it is mocked.
If you want to know more about our work in this area and whether we maybe able to assist you contact us.
Authority and other works necessitating diversion, removal or protection of utility apparatus have long been a feature of the utility sector, along with the questions of who does what and who is to pay for it.
For purposes of this article, the phrase “diversionary works” includes protective works to apparatus and removal of apparatus and not just diversionary works as they might generally be understood in the context of the New Roads and Street Works Act 1991 (“NRSWA”).
With HS2 Phase One now starting to cut a swathe across England and HS2 Phases 2A and 2B likely to do the same in time, the issue of diversionary works is likely to be a factor impacting on many statutory undertakers. Some of those undertakers may not previously have had infrastructure projects of such scale impacting upon their apparatus. Those undertakers who have been involved with HS2 or had other major infrastructure projects impact on their apparatus may be all too familiar with the potential complexities of this area. Whilst small scale diversions of apparatus within the public highway can be relatively straightforward, when multiple items of apparatus both in the public highway and private land need to be diverted, potentially over a large area, the complexities can significantly increase.
One common misapprehension with diversionary works is that NRSWA cost sharing discount applies across the board. Whilst such a discount might sometimes apply, it will not always apply. Understanding which piece of legislation may provide the grounds for diversion of which items of apparatus is key to understanding the basis of diversionary works and the costs recovery that may apply. A variety of different legislation may trigger diversionary works and includes:
- The New Roads and Street Works Act;
- The High Speed Rail Act 2017;
- Development Consent Orders under the Planning Act 2008;
- The Water Resources Act;
- Orders under the Transport and Works Act 1992; and
- Certain utility enabling legislation.
Legislation other than those listed above may also contain relevant provisions so the above list is not exhaustive.
An important point to note is that different parts of what might be considered the overall diversionary works project may be subject to different enabling legislation, particularly where the apparatus concerned is located within private land and the public highway over a large area. This can give rise to situations in which different parts of the overall diversionary works project may be subject to different cost recovery schemes. By way of example, one section of the diversionary works might be subject to NRSWA diversionary works whilst another is subject to another legislative basis. Diversionary works required by HS2 are a situation in which this possible hybrid cost recovery basis might arise. Such hybrids can also arise elsewhere.
Another critical factor is to ensure that any costs recovery is determined on the correct basis. By way of practical example, if one proceeded on the basis of NRSWA cost sharing applying across an entire diversionary works project, an undertaker might bear 18% of the costs associated with their diversionary works. If, however NRSWA only correctly applied to a small fraction of the overall diversionary works, the undertaker might only have been obliged to apply NRSWA cost sharing to only that part and could have made a full recovery of all its reasonable costs for the other aspects of the project. It is even possible within hybrid schemes that different parties might be liable to contribute towards the costs of different aspects of the overall diversionary works.
In any sizeable diversionary works project, incorrectly applying NRSWA cost sharing could unnecessarily cost the statutory undertaker significant sums of money. Even within diversionary works subject to NRSWA, it is not the case that cost sharing applies in all situations. There are some circumstances where works might be required under NRSWA to an undertaker’s apparatus where no cost sharing would be required and an undertaker would be entitled to full recovery of its associated costs.
Another situation in which problems can arise is where a statutory undertaker discovers works have been undertaken by an authority in the vicinity of it apparatus without any prior consultation having been engaged in. In some circumstances this may not be an issue. However, in others the undertaker may identify that diversionary works will have to be undertaken in consequence of those authority works. This may give rise to claims against the authority who failed to undertake advance consultation for the costs of the diversionary works subsequently required.
There are a number of other factors to be considered with any diversionary works that we will not address here. We may address the issues of betterment and deferment of time for renewal allowances that may accompany diversionary works in a subsequent article.
The importance of ensuring that any diversionary works project is carefully analysed to ensure that the correct parties are identified (and appropriate agreements entered) at the outset cannot be overstated. Without careful analysis, one could potentially prejudice the prospects of successful costs recovery.
- Advise statutory undertakers in respect of diversionary works projects;
- Recently concluded on favourable terms for a client a multimillion pound arbitration where the claim arose from significant and large scale diversionary works; and
- Are advising various clients in respect of ongoing claims arising from diversionary works.
If you want to know more about our work in this area and whether we maybe able to assist you contact us.