Industry and state

Whitehall, it seemed, had turned into the Mad Hatter’s party, in which departments poured cup after cup of tea for an industry that really wasn’t feeling thirsty anymore. So it was a huge relief when, at the end of the year, the government finally accepted that the regs were a mess and would have to be dealt with in a less surreal way.

In the second half of the decade regulation of another kind hit the headlines as a complaint at a Nottingham hospital project began the Office of Fair Trading biggest ever investigation. More on this in our 2009 review (page 36).

Sir John Egan’s Rethinking Construction report, published in 1998 became received wisdom in the early part of the noughties. Whitehall, Sainsbury’s and Boots were among the blue-chips that cheerfully adopted partnering frameworks and integrated supply chains. But by 2002, Egan stepped down as head of the Strategic Forum after complaining about the slow take-up of his recommendations. The government, he declared, was “totally wedded to tendering”. Seven years later, he was vindicated by Andrew Wolstenhome’s “Never Waste a Good Crisis” report, which found that despite the lip service paid to greater efficiencies, there had been little progress since Egan’s initial review. This may go some way towards explaining why the myriad targets introduced under the Labour government have not been met.

One of the greatest inefficiencies in the relationship between public and private sector, especially according to the tabloid press and Private Eye, was the PFI. Labour fell in love with this Tory innovation because it allowed it to achieve building programmes of historic importance, such as the £55bn Building Schools for the Future initiative. But as the decade draws to a close the value for money offered by PFI, both in terms of procurement and operating costs. is still a moot point. And although some contractors have made huge profits by selling, or refinancing, their equity stakes once the risky construction phase is completed, other firms complain about the overly complex procurement procedure: some firms have lost bids after paying out £6m in costs.

Finally, we are now facing the consequences of the bank bailout. It is clear that we are approaching the end of investors’ appetite for government gilts, and there has been talk about the UK losing its AAA credit rating. As the table below shows, the state is unlikely to be as important to the industry in the first halt of the next decade. What will take its place?