Lots of government policy announcements this week – how will they affect you?
What a fantastic week to bag up a load of tricky policy announcements and release them onto the construction public.
PFI is officially back. The long-awaited pipeline of public sector construction work is out. The James Review is being reviewed once again. And Procure 21+ has all but been shelved. Of course, the government had promised to make these declarations before it went off for its summer recess, but then MPs’ last days in parliament became dominated by one issue - the phone-hacking scandal. As the eyes of the world have been fixed firmly on the public humbling of the Murdoch empire, education secretary Michael Gove has been busy describing to the House of Commons how some of the education projects he scrapped last year would come back on the radar using a mixture of PFI and strict standardisation.
It’s a neat soft relaunch for the PFI concept, which during the Tory electoral campaign was deemed as toxic as a News International phone bill. But it’s not just in education where you will see the PFI spread - it’s also to be used in health procurement and is likely to be rolled out across departments - after all, why re-invent the wheel? PFI simply needs a lick of paint, right? You’ll have read the criticism of the reforms to (some say part-privatisation of) the NHS, as well as the furore over any future role of GPs and nurses in the commissioning of projects. But the verdict is simple: in health, big is back. So expect more bundling of contracts across the board - in education as well as health - and large firms emerging as the winners.
All this will be more than a little galling for the SMEs that have heard the rhetoric about business-friendly government, but are now facing a very different reality in which they feel squeezed out. The impact on Leeds-based contractor, Oddy says a lot - it is looking to form a consortium of small firms, just to overcome the red tape of public sector procurement and become a player in the game. The government’s promise to award 25% of public sector contracts to SMEs may be a little ambitious should you consider that a handful of firms are going out of business every day and that the cost of compliance is mounting with the compulsory introduction of BIM and green compliance measures.
For the top 150 contractors these policy decisions bring with them certainty and will be welcomed, as will the government’s announcement that a new, transparent pipeline of work will be put in the public domain. But what our league tables really reveal is that the positive trading statements being released by the large contractors do not reflect the industry’s true state of health. It looks like we are about 18 months away at best from turning self-confidence and wishful thinking into real, positive, commercial results.
Tom Broughton is brand director at Building