Bombardier: How Best Value turned into a monster

Derby’s not normally my turf, but I don’t think there can be many people in business around here who haven’t heard about the Government’s decision to give a £1.4bn London rail contract to Siemens in Germany.
They’ll do a fine job, I’m sure. But so could Bombardier in Derby – which, in case the civil servants who signed off this process have forgotten, is just up the road from London.
The decision to send the contract abroad makes sense if you believe in the absolute purity of markets and that European competition rules are sacrosanct. However, the long-term collateral damage those rules are likely to deliver to Derby – one of the UK’s major manufacturing cities - suggests that if you follow this argument to its logical conclusion you’ll also be comfortable with vultures picking over the corpses of the dead. It’s a cost-effective way to get the job done, yes, but the bones left behind are a stark reminder of what you’ve lost.
I’m not going to rehearse the gory details of this awful deal (my colleagues at the Derby Telegraph have, as ever, done a brilliant job documenting the shocking reality).
What is worth wider attention is a letter sent by Derbyshire & Nottinghamshire Chamber to David Cameron about the issues which this decision raises.
The letter has been written by Chamber president Ian Morgan, who, as chairman of bus firm Trent Barton, knows a thing or two about transport; indeed, he’s part of a consortium which will run the next tram lines in Nottingham. He doesn’t go in for the ritual condemnation of the EU – he points the finger directly at Whitehall.
I quote: “My Chamber believes that your Government and the previous government are prisoners of highly paid civil servants in London who devise and operate a procurement process prejudicial to manufacturing in the United Kingdom. This ‘London centric’ view takes no account of the need to sustain and build manufacturing activity in the country as a whole.”
This is a serious accusation, and it plays to a widely-held suspicion that while EU rules are bad enough, the way they are enforced by Whitehall makes a bad situation worse.
Morgan says that when Ministers decided to award the £1.4bn Thameslink contract they were not aware of who the bids had come from – in other words, they were making the decision blind. This sounds like a sensible way to avoid accusations of bias – but Morgan claims that a blind process is NOT a requirement of EU competition rules. In any case, I have great difficulty believing that civil servants specialising in transport infrastructure couldn’t have guessed that Bombardier would be one of the bidders.
Morgan also suggests that the main justification for the decision – that it represents best value for taxpayers – is also a disastrously one-eyed interpretation of where the value lies.
Again, I can do no better than quote the letter that has landed on David Cameron’s desk this morning: “Now that we know that one of the consequences of your Government’s decision to award the contract to Siemens may be the closure of the last train manufacturer in the United Kingdom, we would ask that you publish the comparative value of awarding the contract to Siemens against the cost of the destruction of the train manufacturing industry in the United Kingdom.”
Transport secretary Philip Hammond has sought to suggest that he has done no more than confirm a decision delivered by a process set up by the last government. That doesn’t make it right.
Neither is it jingoistic to suggest that this simply wouldn’t have happened in France or Germany. All of the trains, trams and buses procured in France are made or assembled there. And Morgan says 90 per cent of German transport procurement is German.
No one is suggesting that government should support industrial dead ducks; this isn’t the 1970s and Bombardier is not an industrial dinosaur where bad practices are propped up by subsidies. Derby has been a centre for transport engineering expertise for decades, which is why a global firm like Bombardier is based there.
The truth is that the way the public sector interprets best value rules has been a problem for years, all the way from Whitehall to your local council. I can remember a Nottingham-based public body which managed to send a contract all the way to Bournemouth for a routine service which could easily have been done (and done better) in this city.
The only way the Bombardier decision will deliver any real value to the UK is if it leads to a change in the way these rules are interpreted. Civil servants – and politicians – have got to get it into their heads that the maintenance of technical knowledge and specialist manufacturing capacity have an economic value that goes far beyond the price of a single contract - or, indeed, a grotesque obsession with administrative purity.

Champagne, chips and property development

The buildings I like most are those that instantly leave you in awe, that say something about the world they are part of. As a kid, I used to see Nottingham’s domed Council House as a symbol of civic grandeur, and stepping on to the platform at St Pancras inspires a similar feeling.
Particularly so yesterday, as a part of the station’s landmark hotel was turned into a suburb of Nottingham for the evening. The Invest in Nottingham’s Club’s London event attracted an audience of approaching 200 people, many of them connected to the city’s development industry, some outsiders who had been invited to hear what we have to offer.
I spent the evening chasing people whose badges didn’t have the red dots which picked them out as club members or Nottinghamians of one sort or another. Why? Well, the can-do approach of Club members was great to see but it’s the impact this has on those outsiders that determines whether they will do what the club’s name suggests.
The responses I got will be explored in some detail in next Tuesday’s Business Post, but they were broadly mixed – not in a negative sense, but in that they thought Nottingham was absolutely right to chase investment but could not buck a universally tough market. Impressed as they were by some very slick presentations of large-scale development, they wanted to know that in a difficult climate Nottingham’s planners would do everything possible to make sure that red tape did not make an already tough process frustratingly slow or expensively pointless.
At the moment, development money is heavily biased towards London and the South East, where a stronger economy is delivering more obvious opportunities for investors and financiers who remain risk-averse. So anything which makes it more difficult to operate in the provinces won’t help change that.
Nottingham’s new director of corporate development, David Bishop, was in the audience rather than on the podium, though he spent a lot of time quietly chatting to people. But his voice and his department’s approach to planning and development will need to be heard soon.
In the meantime all praise for St Pancras, a fabulous building whether you are arriving from Nottingham or Paris. I can certainly recommend the Champagne bar, where a fine non-vintage went down remarkably well with a bowl of chips.
So well they should just call it The Nottingham Special on the menu.

Anyone for tennis?

This could be one of those light the blue touch paper and retire to a safe distance moments.
There’s been a suggestion today that when Wimbledon gets underway next week, you should let your staff take time out to watch it in the office.
Why? Well, the theory is that they’ll cadge a view of Andy Murray making a meal of things anyway, sneaking a peak on the interweb or turning in via the office TV if you’ve got one.
So, rather than come over all Montgomery Burns and bark ‘Get back to work!’ at them, you should let them chill, take time out and benefit from an exercise which will, it’s said, improve morale and encourage team-building. Hmm.
Now, the idea has been floated by two not-altogether-disinterested parties. One is TV Licensing and the other the Chartered Institute of Personnel Development. They have done a survey of 700 employers on this very subject.
But while CIPD researcher Dr Jill Miller says that when employers act flexibly employees are more likely to go the extra mile, the vast majority of the firms who responded to the survey made abundantly clear they are not inclined to set up deckchairs and serve lime cordials in front of the flatscreen. Which didn’t really surprise me.
I’ll lave the last word to Brendan Barber, general secretary of the TUC: "Rather than impose a blanket ban on tennis, and run the risk of de-motivating staff and losing hours through unauthorised sick days, we would encourage employers to let people watch the games at work or at home if they like – and claim back their time afterwards. That way, everyone wins."
Over to you...