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Report supports N-E construction campaign, say bosses
THREE of the region's leading construction firms have hailed a report, which casts a spotlight on the billions being drained from the North-East economy by southern-based firms, as a major boost to their own jobs campaign.
In response to an article which appeared in The Northern Echo on Wednesday, Surgo Construction, Esh Group and Tolent voiced concerns about the damage being done to local jobs and investment by the government's strategy for procuring construction, which hands the lion's share of work to big national contractors.
The problem is part of a wider malaise, featured in a new report by the High Pay Centre, which accused high street retailers and supermarkets of taking money generated in the North-East to fund executive pay and shareholder payouts.
Brian Manning, chief executive of Durham City-based Esh Group, said:
"The report makes total sense but let's face it, it's not just about consumer sector spend.
"By diverting more public sector spend into our regional companies it will make a massive difference to the prosperity of the regions.
"Our campaign in the construction sector highlights this because if you take the North-East as one of the seven regions identified by the Education Funding Agency for its small works framework, this indicates that in this region alone, £750m could be spent over the next four years with regional companies.
"If other public sector bodies such as the Ministry of Defence, Ministry of Justice and the National Health Service were to do the same, the region's construction economy would be adding massively to the wellbeing of the region.
"There is still a lot more work to be done in cutting out leakage from local authority spend and avoiding the use of national frameworks such as Scape which is tantamount to taking money out of the regions in wagon loads.
"This is not parochialism - it's just common sense."
John Wood, chairman of Tolent Construction based in Thornaby, near Stockton, said his company, which he established in 1983, has seen turnover fall dramatically during the recession.
"If we are starting to make the government sit up and take notice with our campaign, then I am delighted. For too long now everything has been moving in favour of the big boys and how many boxes you can tick on a project questionnaire - your ability to do a good job is almost immaterial.
"We have five offices around the country and I know from our office in the South, that it is a completely different market there. However, we are a local North-East firm and this is where the majority of staff are employed.
"This new report shows that it is not just a case of sour grapes and the North-East feeling it needs a leg up again.
"It shows that perhaps we do need special consideration when government policy is being made, because we are a very much smaller economy here.
Ian Walker, chairman of Newcastle's Surgo Construction, said:
"The procurement system currently used favours the large national firms. This does not necessarily mean they are better than regional firms or that they offer good value to the tax payer either – it just means that they have a large turnover.
"There is a great talent pool in the region and we have a duty to try to keep work here to ensure our future economic success.
"We have had some encouraging results from the campaign so far and the Education Funding Agency (EFA) has taken our comments on board, we think, by announcing a small works framework, but even with this, the turnover threshold has to be a minimum of £25m.
"How many construction companies in the region have this kind of turnover? I can tell you, it’s just a handful.
"So whilst this may be a sensible requirement in the South and Midlands where there has been so much more construction work over the last few years and companies have been turning over more money on bigger schemes, here in the North-East it is still far too high and excludes the vast majority of construction firms who could very competently take on a lot of the schools work that needs to be done."
The High Pay Centre report "The Corporate Conquest" will be presented tomorrow (FRIDAY) at Newcastle University.
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