Sore loser

Can you remember the OFT’s rhetoric when it first imposed astronomical cover pricing fines on the construction sector? It’s fair to say that it wasn’t exactly measured. Next week it has to decide whether to appeal the decisions made by the Competition Appeal Tribunal to reduce the fines imposed upon recruitment agencies following reductions of up to 90% of the original penalties. Whatever its decision, the OFT’s response will provide a clear signal as to its intention to appeal the bulk of the reductions recently obtained by contractors.

While industry representatives acknowledge that there were, at worst, pockets of severe malpractice in some areas and, at best, optimum standards not being reached, this whole mess is an embarrassment for the regulator. The reputation of the construction sector was certainly not enhanced by being dragged through the judicial process in the first place. Only later were the fines proven to be wholly disproportionate and, in one case so far, even the question of liability has been challenged with partial success.

So, what next? Well first consider the broad objectives of the regulator as opposed to the letter of the law it is tasked with enforcing. Its ultimate goal is to stop or prevent poor working practices, and the fines it imposes are simply meant to be a means to an end. Whatever the OFT’s ham-fisted approach to this process, it has succeeded in putting the issue of cover pricing squarely on the radar of this industry and now some transparency should ensue. However, it’s not the OFT’s job to run good businesses out of town or prolong their misery with yet more court appearances, which would be an inevitable consequence if it does decide to appeal those firms’ appeals. The short answer, of course, is that the OFT needs now to swallow its pride and accept the appeal verdict. Only then can everyone move on.

Salary sacrifice

When work is scarce, investing in the people best placed to win the scraps that are up for grabs makes sense - on the surface. But when you start delving into what this means for the industry in the long term, a whole new set of problems arises. This year’s consultants’ salary guide has revealed that across the UK’s engineering, architectural and surveying firms senior staff, or the work winners, are seeing pay increases, especially in the capital, at the expense of graduate and entry level staff salaries. The bosses of these firms argue that sacrificing starting salaries to get work on the books is an unfortunate but vital by-product of keeping their heads above water. But there is a growing concern in the sector that this could result in losing a whole generation to the financial services and management consulting sectors, which are now on the hunt for bright young things. Does employing fewer, more expensive, heads work in this current climate? To find out just how severe the threat of a lost generation of consultants is, read our article for the full analysis.

Tom Broughton is brand director of Building