Headlines: April 18th, 2008

Local authority leaders are calling for any fines imposed on construction companies found to have been involved in rigging bids for contracts to be given to councils rather than going into central government coffers. Construction workers’ leaders, meanwhile, have claimed the price fixing uncovered by the Office of Fair Trading is an inevitable result of privatising and outsourcing of public sector building work.

The OFT has made formal complaints against 112 construction firms, alleging bid rigging activities. The Chairman of the Local Government Association, Sir Simon Milton, said there could be no excuses for collusion, bid rigging or cover pricing which left councils and local people to pick up the bill. “If construction firms are fined by the Office of Fair Trading the money should not go into a central government piggy bank but should instead be given back to councils who have been the victim of these unlawful practices to invest in their local area,” Sir Simon

Councils, he said, worked hard to ensure that new buildings they were paying for were delivered at the best value for the taxpayer but it appeared some firms were not abiding by the law. “Firms that are found to have colluded to inflate prices should not only have to apologise to the public but also should consider giving money back to local areas where this alleged activity has taken place,” he added.

The construction workers’ union, Ucatt, is calling on the OFT to levy the maximum possible fines on the guilty firms and said it would monitor the situation to ensure action was taken swiftly. The union’s General Secretary, Alan Ritchie, said it was outrageous that ordinary workers had featherbedded what he called, ‘fat cat construction bosses’ through their tax and council tax payments.

“The widespread and systematic price fixing uncovered by the OFT is an inevitable consequence of the systematic privatisation and outsourcing of public sector construction work, especially in local authorities. If the public sector is not able to build properties and buildings directly, then you are at the mercy of collusion among private contractors to artificially increase prices,” he said.