Let’s go back to basics

Somewhat predictably, the general election campaign avoided direct reference to the concerns of the construction industry – but scratch beneath the surface and it’s clear the industry is essential to achieving the objectives of the main political parties.

Without the necessary skills and support for the sector, the government’s lofty ambitions will not be achievable, but no politician voiced that connection. RICS has therefore published a five-point plan which, if implemented in the next few months, should lay the foundations to ensure full recognition of the industry:

1: A dedicated construction minister with full responsibility for the built environment

2: A public procurement strategy that focuses on delivering value for money

3: Implementation of EU regulations enabling a level playing field throughout the EU

4: Fiscal incentives to improve residential and commercial property’s energy efficiency

5: Increased investment in science and technology-based courses.

The first two points should be the first priority. With the current disparate array of departments and regulations, it’s no surprise the governance of construction is confusing.

The reallocation of portfolios has raised an opportunity for serious consideration of how the sector is to be shaped

Because the industry operates across such a wide range of sectors, the reallocation of portfolios has raised an opportunity for serious consideration of how the sector is to be shaped.

The significantly reduced Labour majority prevented Blair from moving Prescott but, amid signs of a subtle sidelining of the Deputy Prime Minister, David Miliband has been parachuted in to ODPM as the first additional Cabinet-level minister for that department, akin to the Chancellor’s Chief Secretary. This, combined with the new Department for Productivity, Energy and Industry, means there is real potential for interesting changes – but precise roles are unclear at the time of going to press.

Once this is established, the Government can concentrate on the sector’s key priorities – the most important of which is to ensure that the public procurement strategy delivers value for money. A recent RICS report (see Quantifying Quality at www.rics.org/pfi) highlights the need for significant reform here.

If you consider that in 2003–04, more than 30% of total public capital expenditure was invested through PFI, but restrictive costs mean less contractors are entering the bidding process – then it is clear we are mixing a recipe for disaster. We cannot continue in a situation where so much is spent on PFI public service projects with no guarantee that the full pool of talent is entering the bidding process.

We recommend: 1) recognition that the bidding process needs improvement (one route is to provide payments for a proportion of unsuccessful or abortive tendering costs for shortlisted bidders); 2) that a ‘standard form of PFI cost report’ be established; 3) that the Public Sector Comparator undergoes wholesale reform to recognise, for example, value for money criteria relating to risk transfer.

Tackling these issues would go some considerable way to providing a framework within which the industry, in partnership with the Government, can deliver the promised effective investment in public services.