Inside Westminster: The Inner Circle

The problem with the corridors of power is that there are just so many of them: about three miles-worth in the Palace of Westminster, which also houses 1,100 rooms and 100 staircases. It’s easy to get lost.

Some think this is just what has happened to the government’s chief construction adviser, a role that was designed to transform Whitehall’s relationship with an industry that has been historically neglected, despite contributing between £88bn and £104bn to the economy every year since 2003. There have been two holders of the post since its inception in 2009, with former Institution of Civil Engineers president Peter Hansford succeeding the ex-senior partner of Davis Langdon, Paul Morrell, in 2012.

The business select committee recommended the role’s creation in 2008, envisaging what was then called a chief construction officer who would be “a senior official equivalent in standing to the government’s chief scientific adviser or the chief executive of UK Trade & Investment”.

That was some ambition. Nearly seven years on, few in Westminster or the industry would argue that Hansford is as well known as Sir Mark Walport, who provides scientific advice directly to the prime minister, or Dominic Jermey, who has been tasked with doubling UK exports to £1tn by 2020.

While notoriety isn’t the only measure of influence, a senior aid to Danny Alexander, the chief secretary to the Treasury who chairs the Cabinet’s infrastructure sub-committee, says he hasn’t heard of him – though Hansford claims he is in regular contact with Alexander. The source says: “I’ve never come across him [Hansford]. I see the content of all the infrastructure correspondence with Danny and I’ve never come across that name.” So is this anecdote a one-off anomaly, or is construction’s key contact-point with Westminster lacking the influence the industry desperately needs?

Starting out

The business committee’s 2008 report, Construction Matters, set a number of priorities for the adviser. A handful of these have been superseded by events in the years hence. Notably, the notion that the adviser would co-ordinate the timing of major projects to “facilitate planning by the industry” became the role of Infrastructure UK, a division of the Treasury that was established in the first weeks of the coalition coming to power.

On the whole, though, the adviser’s objectives remain relevant. They include improving the industry’s image; ensuring regulatory consistency across government departments; developing a culture of best practice in procurement across the public sector; and, perhaps most importantly, “function[ing] as the single main point of engagement between government and the construction industry”.

Crucially, this all means the adviser has to have the ear of ministers, particularly the business department (BIS) and Cabinet Office, between whom the role is shared (though BIS leads on it).

Advertised as a three-day-a-week job, Morrell was asked in his interview whether the job could be done in that time; he told them it couldn’t and that he would inevitably work full-time.

There was some suspicion when Paul first joined that, being from the private sector, he would either be a loose cannon or ineffective. They didn’t seem to contemplate that he might be neither of those things

Whitehall source

Morrell still accepted the £120,000-a-year role - good money, but less than the celebrated quantity surveyor could have commanded in the private sector. The fact that Hansford is on only a little more money - “less than the prime minister”, he laughs, when asked, which means under £142,000 - for a five-day week shows that the business department never really thought this was a part-time position. Morrell faced an obvious problem: the Labour government was, as a senior construction figure puts it, “dying a death”. He adds: “The whole first year was ineffective, with ministers coming and going - Paul couldn’t do anything really.”

A Whitehall source adds that the Treasury was “sceptical” about the need for the role. The Office of Government Commerce (OGC), then a Treasury agency, was territorial, worried that the adviser would challenge its role of overseeing procurement across government. Morrell’s appointment was at least delayed by the OGC’s concerns.

“There was some suspicion when Paul first joined that, being from the private sector, he would either be a loose cannon or ineffective,” says the source. “They didn’t seem to contemplate that he might be neither of those things.”

Taking power with a vow to balance the nation’s books, the coalition was concerned about its inherited construction adviser’s focus on frameworks, which the select committee had said would foster “longer-term relationships” between government and industry. Ministers worried that these stifled competition and were therefore costly; one critic huffs that “frameworks went the way of the wind” and that industry fragmentation is now “as great as it ever was”.

Morrell says he spent the early days “designing the job”, which involved taking the “broad brief of the select committee report and then looking, practically, on what would be the best return on one’s time”. Even this was tricky, as Morrell was hoping to focus on sustainability, but the new government “switched much more from carbon [reduction] to cash”.

And these weren’t just teething problems while the job bedded down. Building can reveal that more recently the post came perilously close to being axed, with civil servants and ministers willing to let the job come to an end next month, weeks before the general election. A senior Westminster source says only a last ditch phone call from Labour’s former construction minister, Nick Raynsford, to a top business department official last year led to Hansford getting a 12-month extension to his two-year deal.

The Greenwich and Woolwich MP, who is vice-chair of the All-Party Parliamentary Group for Excellence in the Built Environment, won’t confirm the specifics of what happened, but argues “common sense prevailed”. There was no way, he says regretfully, that any new government would put resurrecting the role at the top of its priorities post-election had his plea not been heeded: “That would have been the death of the job.”

The outcome means the next government, whatever its hue, can take a fresh look at the position and decide whether the chief construction adviser is a job worth its six-figure salary.

Construction strategy

Despite its difficult birth, there is no denying the role has had some impact. The Cabinet Office, under Francis Maude, became more interested in the adviser’s work and, together with Morrell, they drew up the government’s construction strategy in 2011. This set out a target for big-spending departments to reduce construction costs by more than a fifth, with the Department for Education now close to having hit it. The Highways Agency and Ministry of Defence are also among those that have also subsequently claimed big savings. The benefit for Morrell of the focus on cutting as much money out of programmes as possible was that it allowed him to get sign-off on the widespread use of cost benchmarking data across government.

A Government Construction Board, comprising senior officials from big spending departments, was set up to oversee the way this strategy was implemented and has, ever since, been used as a forum where they can swap ideas on controlling costs.

By introducing Building Information Modelling (BIM), encouraging SMEs to bid for lower value work of £10,000 or more through a single internet portal, and expanding the use of project bank accounts, whole-life cost reductions of £279m were made on new contracts awarded in the first year after that strategy was published.

This strategy was the foundation for the similarly named Industrial Construction Strategy, drawn up and launched by Morrell’s successor in summer 2013. Hansford points to this as one of the role’s great successes, as it effectively tied the public sector and industry to hitting a series of targets by 2025. These included a 33% reduction in costs, a 50% increase in exports, significantly faster build times and much lower carbon emissions.

Hansford argues that developing a long-term plan means that “with a change of government there shouldn’t be a state of flux” for himself or his successor. Certainly, it is a plan with cross-party support - shadow construction minister Iain Wright says that he would do no more than update the plan should Labour win in May.

Hansford also argues that government and industry have come round to the idea that reducing carbon can also save costs, which many had previously argued could only be done “at a premium”.

A Green Construction Board has helped push this idea, and has shown how major retailers reduced their bottom line by switching all their lights to LED bulbs. It is now working with the British Retail Consortium and the energy department to persuade small retailers to do the same.

Influence

But following this progress, the question of where the role stands in terms of that all-important cross-government influence remains. While he is a supporter of the job, Raynsford concedes the role “hasn’t achieved all of its objectives”, such as around improving the image of the industry.

Anecdotally, one of the industry’s best-connected lobbyists reports seeing business minister Matthew Hancock “talk over” Hansford in a recent meeting, something he interpreted as denoting a lack of respect for either him or the role. “The impression given was that Hancock and other ministers are not that influenced by what he has to say.”

However, in contrast, another industry source says civil servants do admire him for being “practical [and] knowledgeable”.

In response to these concerns, Hansford himself says that he meets construction minister Nick Boles at least monthly. He says he is in regular contact with Infrastructure UK boss Geoffrey Spence, commercial secretary to the Treasury Lord Deighton, and even Danny Alexander, whatever those close to the Scottish Highlands MP might say.

But Hansford admits that this ministerial access hasn’t necessarily translated into success on all fronts. For example, he admits the major aim to improve the industry’s image has yet to be tackled. “It’s a long game,” he explains. “You can’t change image quickly - I agree that the image hasn’t changed much since 2008, but we’ve only really started focusing on this in the past 12 months.”

Stephen Ratcliffe, the director of the UK Contractors Group, says this is one area where he has been “a bit disappointed” by the adviser’s impact, with the poor image of the industry seen to be a key reason for the difficulty in getting more people to make their careers in the sector. Certainly, it’s no easier finding suitably skilled workers than it was in 2008; the RICS recently found that nearly half of construction firms complained about labour shortages over the past three months.

Hansford insists that the “job has done really well”. But the fact that some senior officials were happy to simply let him work through his original contract and then not replace him shows that there are still those in Whitehall who do not take the role seriously.

Certainly, the likes of Infrastructure UK’s Spence and its chairman, Paul Skinner, not Hansford, are the names that come to the mind of many civil servants when they talk about construction, according to several of the Whitehall staff spoken to for this article.

Sir Peter Luff, the Conservative MP who chaired the business committee when it issued the report original report recommending the creation of the role, says he is “strongly in favour of revisiting” its findings and assessing the impact the role has had.

At the very least, a fresh report would remind officials and the next government that the adviser should not be left to aimlessly wander those corridors of power.

Spheres of influence: Construction’s key ministers and the figures close to them

1. George Osborne, chancellor of the exchequer
2. Danny Alexander, chief secretary to the Treasury
3. Lord Deighton, commercial secretary to the Treasury
4. Vince Cable, business secretary
5. Nick Boles, construction minister
6. Patrick McLoughlin, transport secretary
7. Nicky Morgan, education secretary
8. Brandon Lewis, housing minister
9. Andy Rose, chief executive, HCA
10. Graham Dalton, chief executive, Highways Agency
11. Mark Carne, chief executive, Nework Rail
12. Peter Lauener, chief executive, EFA
13. Geoffrey Spence, chief executive, Infrastructure UK A former adviser to Alistair Darling when he was chancellor, Spence is not universally liked. His National Infrastructure Plan of 40 priority investments, from HS2 to the Mersey Gateway Bridge has been derided as “a list, not a plan”, but he remains one of the Treasury’s biggest power brokers.
14. Paul Skinner, chairman, Infrastructure UK A former chairman of mining giant Rio Tinto, the unfailingly polite Skinner is a true City grandee. There are suspicions that he is distracted by his work with the Ministry of Defence, though, where he is helping to overhaul procurement.
15. Sir David Higgins, executive chairman, HS2 The Department for Transport arguably broke civil service rules when it fast-tracked the former Olympic Delivery Authority boss’ appointment to save HS2 in 2013. Even the ferocious Public Accounts Committee chair, Margaret Hodge, turned a blind eye to this, as, like most senior MPs, she is convinced that the former Lend Lease chief executive is the best person to deliver major infrastructure projects.
16. Terry Stocks, deputy head of estates, Ministry of Justice The chartered structural engineer has been responsible for rolling out BIM across government departments. Hansford praises Stocks for “offering his expertise” across Whitehall, encouraging departments that normally work in silos to share their ideas.
17. Allan Cook, lead non-executive director, Department for Business, Innovation & Skills The WS Atkins chairman is one of the band of business figures brought in to help advise and bring greater commercial nous to government departments since 2010. Upon his appointment last year, business secretary Vince Cable lauded Cook’s “formidable track-record”, which has included senior roles at GE-Marconi and BAE Systems.
18. Mike Green, capital director, EFA
19. Lord Adonis, shadow Treasury spokesman The former journalist might be in opposition, at least for now, but his influence can be seen in some of the most significant infrastructure programmes of our time. Academies and HS2 are just two of his ideas.
20. Alex Morton, special adviser on housing and planning, Number 10 Policy Unit Morton was, in the words of Conservative Home, “one of the jewels in the think-tank’s crown” when he was poached by Number 10 from the Policy Exchange at the end of 2013. Having previously recommended building 1.5m new homes by 2020, he was drafted into Downing Street to replace Miles Gibson as David Cameron’s planning adviser.