We all pay for cost-cutting in the long-run

THE site of the unfinished West Midlands Metropolitan Hospital in Smethwick has been silent since Carillion went bankrupt in January.

This is despite Government assurances work will be restarted imminently as the contract goes to another builder. Once more, bureaucrats are demonstrating how little they know about the real world of business.

For a start, it is a fact of life that a new contractor will want a lot more money just for picking up this work, for there would be substantial costs just to recreate the plans and issue new contracts to specialist firms.

Carillion grossly under-priced this hospital. To a certain extent, Government must shoulder a measure of the blame not only for the current state of affairs, but also when accepting the Carillion quote. They did not have to accept the lowest tender, and their advisers should have perhaps been ringing alarm bells.

The debate over printing of British passports is a case in point. The difference between the De La Rue’s submission and that of Gemalto, the French-Dutch preferred supplier, is substantial, yet both labour and material costs are comparable. I just wonder if there might be a problem here in the years to come.

However, the West Midlands desperately needs this new hospital and the longer the site remains silent the more it is going to cost. Funding for the Smethwick hospital was through a public private partnership (PPP), and without putting too finer a point on it, this entity has to accept that either they swallow the loss and walk away, or face up to the substantial cost increase.

Over the years, I have been threatened with legal action for not accepting the lowest tender, and in one case, was sent an invoice for quotation preparation by an unsuccessful bidder. It is necessary for buyers to satisfy themselves that prices being quoted for any job are realistic and can be delivered.

The current Tory Government will have a lot of egg on its face if the passport contract goes pear-shaped in the years to come.

Always prudence before purchase. Russell Luckock is chairman of Birmingham pressings firm

AE Harris