Hudson Contract Managing Director Ian Anfield is campaigning for local authorities to take a common-sense approach to building work and repairs – by hiring small and medium-sized local firms to get the work done.
In an article for the Yorkshire Post, one of the UK’s leading regional newspapers, he says long-term framework agreements are no longer working properly, and that a lose-lose situation has been created for local people and local businesses alike.
“I know of an owner of a small building firm who approached his local authority offering to repair every pothole in his town at cost price. The work would keep twenty local men in jobs, and without it, the builder was going to have to fold his business.
“The local authority understood his predicament, knew the immediate and lasting impact it would have on twenty households in the community, but was powerless to act because it had signed an ongoing framework agreement with a large outsourcing group whose closest office was eighty miles away for all maintenance work.”
Ian also gave the example of a family-owned roofing firm in the North-East that had maintained social housing stock for three generations, supporting local suppliers and providing apprenticeships. Their work was bundled into a ten-year framework agreement and awarded to a construction giant. On winning the contract, the group offered to sub-contract the work to the local firm, but minus the PLC’s cut, the price was not commercially viable and the roofing firm went bust.
The original arguments for packaging as many contracts as possible into framework agreements revolved around efficiency, consistent service levels and taxpayer value, Ian explained. While from the point of view of the large contractors who stood to benefit, the agreements were viewed as low-risk multi-million pound revenue streams flowing years into the future.
In fact, as the collapse of Carillion and the ongoing struggles of its surviving peers demonstrate, the opposite is true. Framework agreements can cause enormous financial problems for the provider, with tiny margins, negative cashflow (workers typically need paying weekly while contractors only invoice monthly) and economies of scale that fail to add up as the cost of delivering public services at a national level becomes apparent.
Meanwhile, for local authority customers – and the communities they represent – outsourcing reduces accountability, doubles up on profiteering, erodes standards and ties in contractors with poor levels of performance. As for competition delivering value, it turns out almost a quarter of public sector contracts were awarded to sole bidders last year.
Bluntly, the concept doesn’t work.
Ian calls in his interview for a back-to basics policy that empowers local authorities to hire local firms to repair potholes, build walls and put up lampposts. “It would be better for the local economy, the local community and the local environment, as well as boosting productivity, employment and accountability,” he says.
“Just look at what has been achieved in Preston, which was named the most improved city in Britain following the council’s efforts to encourage local employers to buy local goods and services wherever possible. Unemployment has been cut by more than 50%, while also delivering the city above-average improvements in work-life balance, health, transport and skills. Preston’s leaders call it Community Wealth Building. I call it common sense. I bet the city has fewer potholes than most of its neighbours, into the bargain.”
Managing Director, Hudson ContractMore from this expert
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