See no evil, hear no evil, speak no evil

MPs were in uproar last week after discovering that the UK Contractors Group (UKCG) has done little or nothing about blacklisting for the four years that have elapsed since the uncovering of the notorious blacklist firm employed by 11 of its members, the Consulting Association.

Following the Scottish Affairs Committee interrogation of the organisation’s director Stephen Ratcliffe last Wednesday, chairman Ian Davidson told Ratcliffe the session had “reflected very badly on you, on your organisation and indeed on the industry”.

The news follows a string of developments which have turned the blacklisting scandal into a genuine threat to the public sector order books of the tier one contractors involved.

Last week the Scottish government detailed plans to withhold public sector contracts from construction firms involved in blacklisting that remain unrepentant, while dozens of councils all over the UK are planning similar action.

On the legal front, Sir Robert McAlpine is facing a High Court claim by 79 alleged victims of blacklisting while a separate High Court claim has been made against McAlpine, Carillion and Balfour Beatty on behalf of 70 members of the GMB union.

Despite the severity of the threat, critics say the industry’s reaction to blacklisting is like the Three Wise Monkeys of Japanese folklore - dealing with impropriety by turning a blind eye. Davidson claims the industry has given a “textbook example of how not to respond to a crisis”.

“Being in denial is not an acceptable position for the industry,” the MP says. “Until the firms involved individually and collectively want to make amends for blacklisting, they will not be taken seriously.”

So given the damage that blacklisting is so clearly causing to the image of construction and the damage it could well cause to firms’ bottom lines, what practical steps should the sector take to respond?

Cracking the code

The main idea under discussion is to draw up a code of conduct which firms could sign up to in order to show that blacklisting is firmly in the past. A similar code - in relation to competition rules - was introduced in the midst of the Office of Fair Trading investigation into cover pricing. This competition code, launched in 2009 by the UKCG and the National Federation of Builders, involved member companies of the two bodies signing a 12 point list of explicit obligations.

Leading industry figures now believe a similar code for blacklisting is required to demonstrate how contractors have changed their cultures and HR processes.

The UKCG has recently discussed such a code for its members after being approached by the membership organisation for human resources professionals, the Chartered Institute of Personnel and Development. However, earlier proposals for a UKCG code went nowhere due to a lack of support from its membership. UKCG chairman James Wates claims the body is now on the “front foot” with plans, saying: “We are looking at how we can take this forward - a statement of how we operate as a representative group in the industry.

“It needs to be fit for purpose and say ‘this is the way we believe we should operate as primary contractors and this is what we expect of UKCG members’.”

Time to apologise

Wates believes a code of conduct could later be applied to the entire industry and he is not the only industry grandee advocating a sector-wide code. Although blacklisting sits firmly on the contractor side of the industry, those representing consultants are involved in discussions for a pan-industry ethical code.

Jack Pringle, Construction Industry Council (CIC) chairman, who describes the industry’s reaction so far as “inadequate”, argues that such a code should be unveiled following a more fulsome apology from those involved with the Consulting Association.

“This is something that the industry needs to do a ‘mea culpa’ on and then set out a very clear statement on how it has changed and what measures are and have been put in place,” he says. “What has been going on is despicable and corrosive and we need to find a mechanism to sort it out.”

Pringle, who says discussions with CIC member bodies including RICS are at an early stage, adds that the code could help British firms win work abroad by underlining their reputation for being fair and trustworthy.

But what use is a code unless it is underpinned by some form of disciplinary function to enforce it? The RICS and RIBA boast disciplinary bodies but they are not seen in trade associations, let alone straddling a whole industry like construction.

As construction barrister and arbitrator Tony Bingham says: “It’s rather like talking about the press having a code of conduct - who is going to introduce a test if the code fails?”

This explains why James Wates is cautious when asked about the suggestion made by Scottish Affairs Committee member Lindsay Roy MP that the UKCG should be monitoring its members to ensure they are not involved in blacklisting. “That’s not the role of the UKCG as currently constituted,” he says, before adding that the UKCG could re-examine this if its members wanted.
The NFB’s chief executive Julia Evans is sceptical that a code of conduct is the right way to proceed on blacklisting.

“I’m in two minds,” she says. “The code introduced post cover pricing was quite a valuable thing but the reason I hesitate is that codes of conduct don’t, in themselves, deliver what we are after.”
While a robust code of conduct would probably help to deal with the reputational fall-out from the blacklisting scandal, it will take time to develop and the individual firms at risk of losing major public sector contracts can ill-afford to wait.

The first priority for them must be to convince their clients that the recruitment processes they now have in place provide a robust guarantee against blacklisting.

As construction lawyer Rupert Choat of CMS Cameron McKenna, says: “The question is what have these firms done in a discretionary sense? A limited number have admitted doing this but a ‘mea culpa’ needs to come with a strategy attached.”