New report backs up North East construction campaign

High Pay Centre claims that £6bn a year is drained from the North East to big business in the South

Three North East construction contractors calling for a major shake-up in public sector procurement policy say their stance is vindicated by a new report to be presented at Newcastle University today.

The Corporate Conquest report, by Luke Hildyard of the High Pay Centre, claims £6bn a year is drained away from the region to big businesses headquartered in the South.

It comes in the midst of a high profile campaign by Newcastle’s Surgo Construction, Co. Durham’s Esh Group and Gateshead’s Tolent, who joined forces to highlight how current procurement frameworks tend to favour larger national companies over smaller regional ones, regardless of their level of expertise.

Ian Walker, chairman of Surgo, the region’s longest established local building firm, said: “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 that it’s just a handful.”

Chief executive of Esh Group, Brian Manning 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 EFA 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.”

John Wood, chairman of Tolent, agreed, saying: “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.”

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