James Moore: Taxpayers hit by corporate cowboy sting
Wednesday 23 September 2009
Outlook The cowboy builder has become something of a British archetype, providing a steady stream of easy fodder for television consumer shows when they're short of ideas. And when the crooks are exposed, they give the bigger boys the chance to suck air into their teeth and counsel people only to use proper accredited companies that might not be cheap, but do things properly.
Well, yes, because as was made clear yesterday, when many of those proper accredited companies do the dirty on their clients, they prefer to do it in a "respectable", white-collar way. You won't find the Kiers, the Interserves, the Carillions and the Balfour Beatty's of this world spreading tarmac on driveways that melts on a sunny day or throwing up conservatories that collapse at the merest hint of a breeze. They're proper blue-chip companies that only deal with big-ticket projects.
It's just that, as the Office of Fair Trading showed, they still rip their clients off, not so much by cutting corners and using shoddy materials (although that's not unknown). No, its about getting together in smoke-filled rooms (the OFT's probe dates from before the ban) to ensure that competitive tendering processes are anything but. They are staged so that the winning bidder usually faces no competition because the other bids are from companies that don't have any interest in the work.
We have the suspicions of a Nottingham hospital to thank for this, and its concerns that something wasn't altogether kosher about a contract bidding process. Hearteningly, there are indeed people in the public sector who have their eyes peeled. Even more hearteningly, it seems they don't always have to suffer for this. Because what they have exposed amounts to a massive con trick on the taxpayer (oh, and Lord Sugar, too). A con trick that permeated throughout the industry.
Ever wondered why public projects so often appear to be eye-poppingly expensive? Ever wondered why cost overruns appear at so many levels of the process as layers upon layers of subcontractors become involved? Now you know.
A total of 103 companies were fined yesterday. So nearly everyone was at it (although Balfour's and Carillion were at pains to note that they were only hit thanks to dodgy subsidiaries bought after the dirty deeds had been done).
The only thing that was surprising was the leniency of the penalty handed out. Fines totalling £129.5m sound like an awful lot, but when they are spread around that many companies, it does not amount to a hill of beans. Some, of course, have gained credit by "copping a plea" – confessing their misdeeds early and co-operating with the OFT's investigations. The watchdog has also paid regard to the battered state of the industry, not that that did anything to stop the usual coterie of trade bodies and lobbying groups piling in with dire warnings about what these fines will do to the industry and truly pathetic whines about them "not being fair".
It is these that Mandy appears to have listened to ensure that fined firms will not face exclusion from future lucrative public sector tendering exercises. So in effect the worst bit of corporate cowboy building we have seen this century has resulted in a slap on the wrist and a telling-off. A hard one, to be sure, but a slap on the wrist and a telling-off nonetheless.
Yes, the construction industry is at a low ebb, and yes, we don't want to endanger a recovery that the CBI today says is "fragile".
But surely the innocent should get some credit? Surely they should receive some reward for keeping their hands clean when everyone else had their fingers in the pot and, as a result, be rewarded with a few juicy contracts which they can presumably be trusted to fulfil for a reasonable price to the taxpayer?
Unless, of course, by implication, there weren't actually any innocent parties at all, and everyone really was at it.
In which case, what does that say about this industry and the way it might behave in future?
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