BREXIT: THE ANSWER TO THE UK’S PRODUCTIVITY PROBLEM?

Brexit is at the forefront of the UK’s construction community as they seek to prepare their businesses for life outside the European Union and the single market.  Business leaders are busy trying to predict the future of the commercial, legal and regulatory frameworks that will govern doing business in the UK and Europe. 

In all the discussions revolving around our likely trade deal with Europe after Brexit, the likely cost of the divorce, the status of Europeans working in the UK, and the rising cost of imports as a result of our currency devaluation, we have had little public debate as to what may, and more interestingly, could happen as a result of leaving.

Currently, we are bound by legislation arising from EU Directives that have been implemented into UK law. Our exit would thus have no immediate effect with all the provisions flowing down from the Directives still applying. The UK will still be bound by Regulations that require equal treatment, non-discrimination, transparency and mutual recognition. The core ethos of promoting equal opportunities under a fair and transparent system has been key to driving better value in public procurement and eliminating corruption and local favouritism. The UK is well known for its adherence to these principles; we are seen as a very ‘just’ place to do business.

Thus, on the face of it – why change anything? Well, some procurement specialists and clients could argue that following the Regulations to the letter may not always lead to the right answer for UK plc.  What we are dealing with here is the most effective use of public money to deliver on behalf of the British public and whilst we are not advocating a sea change in the way we undertake our procurement activities, we are suggesting this may be the right time to investigate opportunities to provide more flexibility in the award of contracts. So whilst we would support transparency of opportunities, the strict methodology currently deployed during the procurement process can result in procurement teams being more concerned with following due process than to award to the ‘right’ tenderer.

Could we in future stipulate a degree of ‘local content’ as part of public procurement conditions, such as supporting local SMEs, investment in local manufacturing capability, or providing jobs and training? On a long-term project, for example, we could look to invest in local skills, and once you multiply this through the supply chain, this could have a significant impact on UK skills base and ultimately productivity. As the Government noted in the Industrial Strategy Green Paper, public sector procurement can help drive innovation and competition in the supply chain, while ensuring best value for money for the taxpayer. We would like to see debate around these topics to help influence any future changes.

We also believe that if there are to be change, then this needs to be finalised as soon as possible. The construction community has developed significant process and governance around our current Regulations; thus, any changes need to be well signposted to allow sufficient time for business change.

We believe with Brexit, we have a unique opportunity to further enhance what is currently a robust process to give local businesses a competing advantage and address some of the challenges around jobs, skills, productivity and regional disparity if we are prepared to embrace the necessary changes and stimulate local content.

About the Author

Paul Dyson is a Partner at HKA. HKA provides expert advisory and consulting services for the development of major infrastructure and construction projects.

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