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.
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