Vince Cable warns on 'short-term' deals

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Vince Cable admitted today that recent "controversies" over the way major government contracts had been awarded were caused by ministers being "too short-term".

The Business Secretary said "very real questions" were sparked by high-profile deals that had seen the UK lose out to overseas companies.

Government has come in for intense criticism over its decision to award a £1.4 billion contract to German company Siemens to build Thameslink trains over the Bombardier factory in Derby.

At a major speech on manufacturing to think-tank Policy Exchange in Westminster, Mr Cable insisted he was not "lurching" towards protectionism.

"We do recognise there is scope for government to recalibrate its approach towards public procurement to boost supply and to boost support for UK infrastructure supply chains," he said.

"Currently the regime is underpinned by two basic principles - one is cost and the other is European Union competition rules.

"These are fundamentally sound principles but applying them too narrowly risks neglecting wider considerations.

"To be clear, I'm not advocating a lurch towards protectionist procurement or breaking international rules.

"We have had some recent controversies over procurement which have raised very real questions about what's the best way to balance short term cost considerations with long-term value for money.

"To be very frank, we have just been too tactical and too short-term."

Mr Cable said the Government is planning to boost companies which supply leading manufacturers after the sector had been allowed to "wither".

Many "superb" British companies often used machine tools made in Italy, Japan, Germany or Switzerland, but rarely in this country, he told the conference.

"When visiting Dubai Ports at the London Gateway, I was saddened to see no British-made cranes at that important development. The skills and capacity have just gone.

"A new dimension to manufacturing is the growth of global supply chains, contributing a component or an associated service rather than making the finished product.

"In order to choose to base operations in the UK, multinationals need to know that they that they will have local firms of the quality needed to supply parts in a totally reliable way."

Mr Cable said the Government was working with industry bodies to identify demand for goods and services which could be met by UK firms.

"My department is looking at how government can support UK supply chains across a number of sectors critical for future growth.

"We are taking a flexible approach, looking at what might be done in terms of skills and management development, and targeted support for capital investment and research and development. I will be able to say more over the coming months."

Mr Cable said that big new industrial investments are taking place at firms including Airbus, Jaguar Land rover, BMW and Nissan, but added: "In other areas, we have allowed our latent capacity to wither."