Judy Terry is a marketing professional and a former local councillor in Suffolk.
It is comforting to know that, in their cross-party Parliamentary Select Committees, our MPs are forensic and courageous when investigating wrongdoing, especially when it impacts on the public purse, and people’s lives. In the case of Carillion, their coruscating, recently published, report sums up an outrageous incompetence and sheer greed putting major projects, including much-needed new hospitals under construction, in limbo, with delays and budget over-runs inevitable.
Reading the report’s conclusion makes your blood boil. The company “lacked a coherent strategy” and was “increasingly reckless… with scant regard for long-term stability or the impact on employees, pensioners (funding pensions was regarded as a waste of money) and suppliers, who were treated with contempt.”
MPs noted that non-executive directors “are there to scrutinise executive management, challenging risk management and strategy… yet the Board was either negligently ignorant of the rotten culture or complicit….” Whilst the Chairman was described as “delusional” only one board member’s reputation remains intact.
Unfortunately, it is highly unlikely that anyone will be held to account by the justice system, allowing Carillion’s bosses to continue enjoying their luxurious lifestyles and pensions (doubtless only to be recycled into top jobs elsewhere).
In the meantime, use of that well-known phrase, “lessons will be learnt”, will be in overdrive, but how likely is it that lessons will ever actually be learnt?
Even George Osborne questioned why Westminster officials, who are supposed to advise Government, appeared to repeatedly ignore published warnings of Carillion’s potential insolvency, to award major contracts. I’m also at a loss to understand how the complex EU tender rules were interpreted to allow a financially challenged company to keep securing new business when there must have been strong competition from elsewhere. A former Parliamentary official put it down to “laziness”.
And why weren’t these decisions challenged by Ministers, who must surely read the financial pages, or at least be briefed on their content by their teams?
I think I have the answer to the last question. In my ten years as a councillor, with Cabinet responsibilities, I was unable to “interfere” when projects under a certain value were put out to tender because they were officers’ responsibility. Without fail, officers chose the present incumbent when a contract was up for renewal, without a detailed examination of other bids. This was usually because, despite repeated reminders (often from the contractors themselves) and deadlines minuted at regular meetings, they hadn’t bothered to plan ahead for the six-month EU tendering process (leading to some contracts having to be extended for six months or a year).
New contracts suffered a similar fate, won by a familiar name and, wherever possible, a council owned subsidiary, which didn’t always offer best value. Making the right choice doesn’t necessarily mean the lowest price.
Councillors are effectively trustees, with Cabinet members equivalent to non-executive directors, having significant responsibility to, as the MPs state, scrutinise. Delivering the best services, whilst overseeing complex budgets, means a duty to question, but this can be resented by officials, so it is easier to accept their recommendations instead of encouraging other options to be explored.
In a bid to challenge this, when officers were belatedly reviewing a three-year contract within their budgetary remit, on one occasion I assembled a panel of councillors from across the county, with a representative from the Local Enterprise Partnership. We attended presentations by shortlisted businesses (chosen by officers), and voted for our preferred choice. Unsurprisingly, officers used their ‘powers’ to ignore the recommendation and granted renewal to the existing supplier, yet the alternative favoured by councillors was far more ambitious and creative.
The same name-recognition was evidently a reason Carillion kept winning contracts. But it was largely acting as an intermediary, commissioning sub-contractors across a broad spectrum of projects, when it would surely have made more sense to enable those sub-contractors to apply for, and win, some contracts directly? Of course, this approach would have involved more paperwork. However, the Government would have met its commitment to allocate at least one-third of public sector contracts to Small and Medium-Sized businesses (SMEs), whilst also honouring its ambition for SMEs to be paid within one month of submitting invoices, rather than waiting a commonplace three months or longer – and in Carillion’s case now, never.
As things stand at present, it looks as if as many as 30,000 SMEs are suffering the consequences of Carillion’s demise, losing millions, with some forced to make staff redundant and potentially suffering insolvency themselves. That simply isn’t fair, and it will also have a huge impact on local communities and their economies. Outstanding contracts need to be revisited urgently, and experienced Project Managers appointed, allowing these SMEs to complete the work they started, and receive payment.
Sadly, the company’s collapse is not the only recent example of poor public sector procurement and risk management.
As the Grenfell inquiry gets underway, it is likely that key financial decisions were factors in the disaster. Panorama’s revelations should alert the construction industry and Building Control officers to be extra-rigorous when specifying materials and checking their safety; we can’t afford to wait for the outcomes of police investigations and the public inquiry to condemn certain materials. Needless to say, the debate on installing sprinklers for both new build and refurbishments needs to be revived, and action taken.
However, the cause of the fire was allegedly an electrical appliance; for years, the Fire Service have warned that some appliances are unsafe. Figures from 2015 confirm 12,000 fires caused by faulty appliances, including nearly 2,000 by washing machines. This is surely something for the appropriate Parliamentary Select Committee to investigate as a matter of urgency, to prevent more unnecessary deaths – and not just in tower blocks.
Local authorities also need to work with their local Fire Service to communicate the dangers to their residents and advise on basic fire safety, including safe use of BBQs.