The Property Services Agency did more good than harm, despite what its detractors - and the state of public sector procurement - may suggest. What we need now, says Steve Hale, is a new, streamlined version

Something’s bothering me and it’s not the parlous state of our national finances, although that’s enough to send shivers up the spine.

No, it’s the fact that our coalition government doesn’t seem to be able to see the blindingly obvious: give private sector consultants an open cheque book and they’ll keep adding noughts as if they were soap bubbles being blown by an excitable four-year-old.

OK, so that’s the provocative bit. I don’t blame consultants for doing this. If you’re offered a government contract worth millions of pounds you’ll take it. The system is all wrong and it started with Maggie Thatcher winding down the Property Services Agency - a big mistake in my view.

In our obsession with the present and amnesia about the past, we forget about the contribution the PSA made to the public estate

Yes, I’ve read all about the problems with fraud and corruption that seemed to be a feature of the PSA’s later years, but the real issue is that the Tory government threw the good out with the bad.

I read a fascinating article in The Guardian recently by Simon Schama, the historian and government adviser, stressing the importance of teaching history in schools. He made an important point: “Our future absorbs our past, not as dead weight, but inspiration”.

The point is that in our obsession with the present and amnesia about the past, we forget about the contribution the PSA made to the public estate. There was a whole raft of government civil servants who understood public sector procurement and, when it was disbanded, a generation of property and construction professionals disappeared.

That was always going to be a problem because unless we privatise everything, there is always going to be a public estate - whether schools or hospitals - that needs maintenance and renewal.

In 1997, New Labour came into power and created a massive public sector building programme through PFI hospitals and Partnerships for Schools.

The problem was that there were no civil servants protecting the public purse to procure it; within weeks of John Prescott taking over at the Department of Trade and Industry, the 20-year-old construction team was dissolved and New Labour, surprisingly, hitched its wagon to the Tory government ideology and outsourced the job to private sector consultants. 

A cursory look at some of the reports that the government commissioned show how dependent it was on the private sector:

  • 2001 - A report commissioned by the National Audit Office “Modernising Construction” with a large part done by Davis Langdon & Everest
  • 2002 - A review of large public procurement in the UK, produced by Mott MacDonald
  • 2004 - “Getting Value for Money from Construction Projects through Design: How auditors can help,” which was prepared and written by Davis Langdon & Everest.

This is not from a standpoint of envy; my company has also benefited from the consultancy free-for-all. After all, at Crofton we’ve supported other consultants in a technical adviser role. But when it comes to public sector procurement it seems daft to me to front-load projects with a 30% increase in costs before a brick is laid.

Furthermore, it has contributed to a completely dysfunctional procurement system that has contributed to the truly awful national debt.

My solution to this is a streamlined Property Services Agency. There should be reinvestment in quality skills within the civil service.

In the short-term there would be an increase in cost to the government but in the longer-term there would be a significant reduction in costs incurred from fees to third party consultants and a reduction of total out-turn costs.

The consultancy free-for-all benefits the few at the expense of the majority and I am sure that was not what New Labour intended.

Steve Hale is managing director of Crofton Design