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Contractors defend deals with subbies

Main contractors have insisted they are not trying to “crush” subcontractors by passing on price cuts on public sector jobs.

Chief executives at a Construction News debate last week said they were only looking for their suppliers to agree to the type of agreements they were signing themselves.

The government is looking to cut the cost of capital projects across the public sector as it fights to reduce the national deficit. Cabinet Office minister Francis Maude has asked for savings from its biggest contractors on existing projects, while Partnerships for Schools is seeking 40 per cent cuts to the cost of approved schools schemes.

In some cases, the squeeze has been passed directly on to subcontractors, and the Specialist Engineering Contractors’ Group has written to Mr Maude in a bid to protect suppliers.

But main contractors insisted they were acting fairly. One chief executive said: “We are happy to do deals on price with the government in return for guaranteed work. We expect our subcontractors to do deals with us in the same way.”

Another chief executive said: “We are looking for more upfront input from our supply chain but without them we are dead. We need to help them through hard times.”

One panel member added: “Crushing subcontractors by asking for huge discounts is not how we operate. Lots of subcontractors have been hit by the failure of main contractors.”

Contractors said they had been left to rely on faith of a recovery after the severe public sector spending cuts outlined at the Comprehensive Spending Review.

One chief executive said: “The crystal ball looks a lot cloudier than it did a couple of years ago. Where it has become clearer in the last month, it has revealed rain rather than sunshine.

“I think it is a lot harder to keep your nerve and back yourself. I keep asking myself whether I am crossing the line between courage and foolhardiness.”

Another said: “We are spending millions of pounds speculatively in the energy and waste sectors. We are presuming that new nuclear will happen but we have no certainty from the planning system or the investment market. We are taking on a lot of risk.”

However, there was strong backing for the way the government has been interacting with industry.

One chief executive said: “I get the strong feeling this is a government that listens more than before. It is looking for help from industry on a growth strategy.”

Another added: “I cannot remember a time when I have been invited to so many government events and workshops. I thought the coalition government would be a disaster but I have been tremendously impressed. There is a willingness to accept advice.”

There was also agreement at the debate - organised in association with ConstructionSkills - that the industry faced a period of restructuring in the light of reduced spending and raised carbon targets.

Construction News last week revealed that offsite manufacturers were teaming up with new entrants to the industry as well as traditional architects and developers to play a major role in the overhaul of the UK’s housing estate.

One panel member said: “Entrants from the Far East might restructure the industry. Offsite manufacturing could well be a driver for change.”

Another added: “We all use offsite techniques to an extent. Why has it not broken through fully yet? Something in the way we do business has to change and then we can start to move forward.”

However, there was scepticism about the government’s ability to hit its carbon targets.

“There is huge uncertainty about whether there will be demand for the Green Deal,” said one industry figure.

Another added: “[Chief construction adviser] Paul Morrell keeps saying ‘we want more for less, and by the way it has to be green’. But the government has not got the skill to execute that vision.”

There was also a rallying call for main contractors to help the Health and Safety Executive reduce injuries, particularly on smaller sites. “It is the tail where the accidents arise,” said one chief executive.

“But it taints the whole industry. We need to offer our help.”

 

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