Conservative Party Conference 2004

Construction Umbrella Bodies Fringe Meeting – Investing in Better Public Services

Speech by Stuart Henderson, Chairman of CIC.

Chairman, Ladies and Gentlemen

I am pleased to have this opportunity to address you about investing in better public services.

I am sure that we here want better public services. Current opinion polls confirm that research shows that most people in the country want better public services. Many policies for achieving that will no doubt be debated and polished in the months to come as an election looms.

Whatever the details of adopted policies, it is pretty certain, that in many ways, implementation of those better services will as a precondition rely upon delivery by the wider construction industry.

Improved public infrastructure in the form of:

• Schools
• Hospitals
• Social Housing
• Transport

Provides the base for delivering netter services and benefits everyone, people of all ages, from every walk of life.

The Construction industry’s relationship with the Government of the day, our industry’s biggest single client and sponsor, is vital; and this opportunity to discuss how we should work closely together to deliver better value for money in those programmes that in their turn deliver better services for the nation is crucially important

This is recognised by all sections of our industry - employers, unions professionals and product suppliers.

It’s vital not only to those 2½ million men and women who work every day in our industry, but society as a whole.

The industry has a track record of delivering. We have responded to the demands of the current major programmes to address infrastructure renewal.

We have invested in:-

• Recruitment
• Training and upskilling
• Plant and material developments
• We co-ordinated design teams
• We adopted modern procurement processes using longer term relationships and developed supply chains
• We resourced and financed
• We researched and developed

It’s a shame then, that despite all the talk it just isn’t happening

• Almost in every area spend is fading.
• Targets are being missed.
• Others are at risk of being missed.

The Construction Product Association’s superb report ‘Achievable Targets’ highlights where the Government is already behind and getting further and further behind.

For example:

• The integrated ten year transport plan is in disarray, effectively cancelled, with road and rail, capital and maintenance spend nowhere near planned necessary levels
• Procurement 21, the hospital building plan has spend levels not yet half that planned.
• Prime contracting, to modernise defence estates infrastructure, is way behind implementation.
• Scottish Water’s programme for upgrading water and sewage north of the border has failed to materialise. Spend again half of that proposed, though now panicking
• New school building and maintenance behind spend needs. Building Schools for the Future is running late.
• Housing – becoming increasingly bogged in ever growing and stifling regulations and planning issues – substantially raising costs

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One point I would like to nail right at the onset is the suggestion that there are capacity problems in the industry.

This is nonsense –

A complete red herring.

Our industry always delivers its projects and programmes

It has a clearly demonstrated ability to respond to steady and sustained growth.

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The industry has its eyes open and is however looking to the future. We recognise that there are issues.

• We need to recruit - part to expand -part to replace those retiring
• We need to upskill our people
• We need to retain people our works our
• We need to make the industry safer

For the past few years, CITB has run advertising campaigns targeted at young people during the summer just as the GCSE exam results come out.

This year it was a TV campaign, on channels you and I don’t usually watch, with the by line Make something of yourself.

70,000 people responded.

Post campaign research shows that the image of the industry has risen significantly from dirty to worth joining with good pay.

The industry has developed the CSCS card scheme to demonstrate competence and a sound practical knowledge of health and safety.

The card says I am a professional. I am a safe worker.

CSCS was initially founded in the site-based needs - in the trades working on site and site management. This scheme has now been extended through the efforts of CIC to include a route for those not based on site but who are members of the construction team such as engineers and surveyors. They still have to do an H and S test too.

We are building the more responsive, capable industry that is required to deliver the needs of the country.

But we also know that UK college courses are full.

Potential students are being turned away from colleges as they are short of lecturers.

We need a joined up approach so that the loop is closed; for example, on the supply side through timely and adequate LSC funding of college courses.

The past few years have seen a fragmentation of the interfaces between the industry and Government. There are many departments involved. There was even a period when there was no Minister for Construction or one for whom Construction was another portfolio in a rather long list of portfolios. The Construction Directorate at DTI is not what it was and we feel we have slid down the food chain.

As if all of that wasn’t enough, recent changes to the funding of construction research and development by the DTI have put at risk construction research programmes. Funding for construction research has virtually dried up.

So it is vital that DTI recognise the funding needs of construction bodies like:

• BRE
• CIRIA
• CRISP

And that ways are found to support their research and development programmes for the future.

We feel this matters. If we are to play our part in facilitating better public services then the parts of all the players should be recognised. Let’s find a way of getting round the table.

In the early days of Private Finance Initiative, you set up the PFPE- recruited from the industry to facilitate encourage and cajole the use of PFI. In short to make PFI work - and it worked. The team identified the key solution to the hurdles and blockages, based on hands on experience and industry knowledge. The message here is hands on understanding and application make things happen. Press releases do not of themselves deliver.

AS an industry we also know smooth consistent work flow delivers best value for money.

The message is simple: Our industry works best with long term planning.

We therefore plead that you adopt a strategic approach to better services, with consideration given to the details of implementation, to the input required from us and careful attention to the processes of delivery.

• F ocus on the overall strategic programme, rather than on individual projects or programs
• Address the public sector’s lack of procurement expertise.
• Sort out the processes; recognise that there will be obstacles and resource to clear them

Private sector clients manage their building programmes efficiently and effectively by repeating and learning.

They don’t insist on new terms and new processes for each part of their programme.

Their learnt experience delivers even better and better value as the programme goes on.

This is an example the public sector should follow

It’s surely not unreasonable to expect a greater degree of uniformity across individual Government departments and agencies’ procurement practices

We need a more centralised approach to the best value procurement process.

And while we are on procurement -

Public sector employees need to be guided and encouraged to make decisions using best value evaluations.

Lowest price provides an easy but usually wrong yardstick to use for project award and best value for money

Part of the industry response to Build for the Task was to look at what mechanisms would deliver best value for the nation’s money.

We found them in two major in-depth industry reports.

Latham and Egan both came to the same solid conclusions encompassing the best experience we could find.

World leading conclusions accepted by all sides of industry – Government included.

Best value not cheapest price

Principles always found in

• Togetherness
• Partnering
• Supply chains
• Co-operation not confrontation

We all know this is the best way to work, but

• Local Authorities are really reluctant
• Government departments and agencies – still reluctant – are each doing their own thing
• Network Rail – God bless it, is returning to the days of competitive tendering for almost everything

We ask you to change this.

We really need a Government that is a best practice client

to implement

to lead others through a cultural change;

to adopt what we all know to be best practice

Let’s stop talking about it – let’s do it.

Also, understand that in Government you will, as the major client, have significant procurement muscle. Don’t be frightened to use it to increase and improve procurement standards.

Only put on your select lists those suppliers:-

• Who have improved health and safety
• Who look after their workforce
• Who train and upskill them
• Who are improving quality
• Who are giving better value

Finally a word about affordable housing. This includes both rented and shared ownership homes. The delivery of better public services also relies upon public sector workers and others for whom affordable housing is a primary need. It is therefore we suggest a priority.

To conclude

• Help us with regulations, don’t hinder us
• Help us with long term steady state, not stop/start, programmes
• Help us with the town planning processes
• Help us with R&D funding
• Help us with better procurement processes
• Help us to deliver better value