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Looking for cash down the back of the sofa
Over the last decade, as a Director of the Civil Engineering Contractors’ Association (CECA), I have seen at first-hand the interface between contractors and local government.
The relationship is at its best when its symbiotic nature is understood by both parties: the essential services upon which we depend are delivered by contractors who are paid to do so while, in part at least, local governments are elected to ensure the quality of life we demand is adequately maintained. The theme of effective public-private partnership is an undercurrent throughout the IED's well-founded Grow Local, Grow National manifesto, but policies on localism will struggle to succeed without some caveats, as I shall endeavour to set out.
A drive to greater powers for local government is a worthy aim. Yet, what should be a mutually beneficial arrangement is not always the case, and is exacerbated by the lack of consistency and differing priorities across local authorities.
Procurement is at the root of one of the difficulties. A consistent approach to procurement across local authorities would reduce tender costs if contractors were not faced with having to start from scratch when tendering for works in different areas. Addressing that would be one means of reducing the cost of delivering vital local infrastructure.
At the same time, contracts are all too often larded with too many costly demands for the contractor to fulfil beyond the scope of the contract, for example, being required to guarantee apprenticeships for a project only lasting a few months, or a requirement to use hydrogen-powered plant when its availability still remains limited.
Equally, appointing a large tier one contractor for a modest project that a locally-based SME could handle, and that the tier one would almost certainly subcontract, is both wasteful by adding an unnecessary additional layer of management costs, and detrimental to the local economic base and employment opportunities in the area.
With regard to skills, without a detailed breakdown of each sector’s needs over the next five to ten years, by locality, it is all but impossible for colleges and training providers to run courses that meet employers’ needs, or for individuals to make informed career choices.
A consequence of that is the waste of talent and resources among school and college leavers who end up without the specific skills employers need, and face protracted periods of unemployment and dependent upon Universal Credit that puts a further strain on the public purse.
In the construction sector, for example, the Construction Industry Training Board prepares annual forecasts, but even they fall short of setting out exactly which skills are needed and where. Some of the LEPs made efforts to tackle with the need for accurate forecasting, but their hard borders made it difficult to develop a comprehensive picture. A further obstacle is the fact that unlike some areas, Cumbria, for example, is not yet willing for the LEP’s responsibilities to be transferred to the new local authorities that were only formed a year ago.
A train journey from Liverpool to Manchester takes less than an hour, but goes through three administrations: two city regions and a unitary authority, making a single oyster card for the trip difficult if not impossible. An employer in Todmorden may employ more people from Lancashire or Greater Manchester, even though it is in West Yorkshire, so how can the services across all three areas be integrated to address that? Such are the unavoidable and necessary consequences of borders. Yet, if local and combined authorities are to function effectively with resources used efficiently and not wasted, there is a clear need for greater consistency and a more joined-up approach to delivery of services.
Duplication also hinders opportunities to make cost savings that can improve efficiency without negatively impacting upon the delivery of essential services for the public good. I was astonished to find two medium-sized hospitals just over ten miles apart that both have marketing departments. While the need for a hospital to market its services is baffling in itself, having marketing undertaken separately by two neighbouring hospitals is surely a waste of limited resources. In the same way, the same argument can be made for how neighbouring local authorities with similar demographics provide services to their communities that use the facilities provided on both sides of the border.
It is right that there should be greater visibility of the funding pipeline, yet salami-slicing funds to ensure everyone gets a little bit, rather than using it for more substantive priorities seems to make more political than economic sense. One might ask whether investment in Northern Powerhouse Rail is more of a priority and will create greater overall economic benefits than a host of small, local projects. Furthermore, when local authorities are under greater financial pressure than ever, it seems inconceivable that over £3 billion of unspent Section 106 funds sit unused in reserves. Surely finding a means of unlocking that should be explored?
In short, there is wastefulness and there are funds to be accessed. Addressing both can only assist local authorities in meeting the demands of the electorate for the creation and maintenance of vital infrastructure. Yet, any move to greater devolution and increased statutory powers for local government must come in parallel with greater consistency, collaboration and sharing of both best and worst practice.
Guy Lawson is Principal at Business Critical, a former director of CECA North West (until July 2021), and a fellow and member of the IED.