Southern firms gobble up Government cash as Sunderland and Durham companies miss out on contracts, claims businessman

Brian Manning, chief executive of Esh Group

Brian Manning, chief executive of Esh Group

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NORTH-EAST construction firms are missing out on Government contracts worth millions because the rules favour big southern companies, claims the boss of the Durham-based Esh Group.

Brian Manning says the taxpayer is losing out too, because the number of companies able to bid for work is limited.

Mr Manning has joined forces with Surgo Construction chairman Ian Walker and Tolent boss John Wood to write an open letter calling for a change to the way public contacts are awarded.

“As directors of three of the largest independent construction contractors in the North of England, we believe it is vital we highlight how public sector procurement strategy is delivering a poor deal for the taxpayer,” it says.

“Not only is it threatening the future of many sound, well financed and highly-skilled Northern firms, but the livelihoods of many thousands of people.”

Under schemes such as the Government’s Priority Schools Building Programme, work is awarded to companies which have been selected for two procurement panels.

“We know, because we have tried, that it is impossible for firms the size of ours, to qualify for a place on these procurement panels – even as a joint venture with a combined annual turnover of £250million we were still ineligible,” says the letter.

“Government procurement strategy has been shaped by lobbyists and representatives from large companies which have persuaded Whitehall that it will save money to work in this way.

“We know this is simply not the case. And what of the growth prospects for smaller firms which lose the opportunity to become the multi-nationals of tomorrow?”

The framework for local authority work requires contractors to have a £500million-plus turnover, even for schemes costing £2million.

“Few regional contractors meet this turnover criterion, whereas many are more than capable of carrying out the work,” says the letter.

“Using a framework for time or ease rather than best value, is lazy procurement.”

The policy has a knock-on effect on the North East economy, with national firms ignoring local sub-contractors and suppliers, and money projects being siphoned out of the region.