News

The listening client

2 December 2011

The extra cash for construction in the Autumn Statement shows the government is listening to the sector’s needs, says Simon Matthews director of consultant HLG Associates.

As one expects in the middle of a downturn, there have been a lot of questions asked as to how the Government can enhance the value attained by the public-sector when purchasing whilst delivering support to an industry in the process. The past 6 months have seen the Government starting to provide some answers.

Most recently, the Chancellor has delivered his much-anticipated Autumn Statement. The headlines were dominated by revisions to growth and public-sector borrowing forecasts and the £40bn of investment in capital committed to some 500 projects over the next 4 years. Whilst some £5bn of these are ‘new’ projects (£1.2bn in education alone), the detail revealed that over two thirds of these projects won’t be coming on line until 2013 or 2014. With overall investment in capital by the Government down from £62bn in 2011 to £45bn in 2014, it is fair to say that the measures announced will merely soften the hammer blow the industry has received rather than be a golden bullet for recovery. But it is still mightily welcome.

Similarly the steps taken to boost housing will provide a much needed lifeline – even if the fiscal measures announced don’t go anywhere near matching what was effectively a £4bn cut to the HCA budget at the last CSR.

The Housing Strategy and the Autumn Statement, however, show evidence that this Government is seeking to deliver its agenda through close collaboration with industry, with emphasis on the involvement of the private sector throughout.

The Government Construction Strategy also places a strong emphasis on public-private partnership, with its plan to ‘stop failing to exploit the potential for public procurement of construction and infrastructure projects to drive growth’. The commitments within (most notably the use of BIM on all public-sector projects by 2016, three-year rolling pipelines for future construction spend,  and reducing the time to procure public-sector contracts) are well-supported with an Action Plan, arising from the Government Construction Board (‘GCB’) involving the industry in its consultation.

The GCB do have something of an energy about them, a buzz if you like. This will really be needed over the next 18 months, especially in light of the updated forecasts for growth, and the updated intentions for public-sector pay and pensions, which are announced within in the Autumn Statement.

The GCB has already had an impact on relations with the industry by encouraging Departments to take their infrastructure challenges TO and engage with the industry in sourcing solutions, an approach readily seen in the Cabinet Office’s ‘Open Public Services’ White Paper for more effective purchase through the Public Contracts Regulations. The Paper opens the way for civil servants and private sector organisations to engage closer when identifying their buying requirements, and also continues the themes of localism, support for SME’s & BAME’s, and social enterprise firmly established earlier in the present parliament.

The industry will welcome the chance to engage closer with Government (visibility of future work and knowing your client is always good for business), and can help simplify application of the Regulations. However, a change of approach, with less emphasis on complex procedures for letting small and medium-sized opportunities, is required if real savings are to be realised through smarter purchasing.

The Government remains the single most important client to the industry with spend in 2014 still likely to comprise more than 40% of the industry turnover. Despite the positives within the announcements, overall things aren’t likely to get any easier for the industry over the coming 12 to 18 months. Hope does exist, however, in that this client is intimating a willingness to listen to ideas on delivering opportunities, a theme neatly summarised by Francis Maude, when launching the White Paper: “If you have innovative ideas, no matter how radical, to run a service in a cheaper way then let us know – we need to know.”

Let us hope that, for the sake of client and supply-chain, they really mean it.

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