by Neil Grundon5 minute read
In the 1980s, Margaret Thatcher took a scythe to a bloated and unproductive public sector with the introduction of ‘Compulsory Competitive Tendering’ (CCT). Like most things Thatcher did, it was divisive but effective, and eventually undone by its dogmatic application to everything. For Grundon, it opened up a huge opportunity, although not quite in the way we originally planned.
I was the envy of my class at school, my pen pot was a wheelie bin and I also had access to an unlimited supply of ball bearings from our workshop. There was a slight complication when I wiped the oil off the ball bearings on my mother’s kitchen towels, but that hitch aside, I became an unpaid distributor of both items to my classmates.
This was probably a bit how the Sulo salesman felt at the time. When he arrived at our offices in 1983, he rocked back in his chair when my father placed an order for 300 bins. ‘It’s not possible,’ he replied, ‘I cannot possibly give away 300!’ ‘No’ my father replied, ‘this time I want the real ones.’
The tender age
Our master plan was to bid for two local authority contracts. The USP (or ‘good idea’ as it was called then) of our bid was that shops and offices would receive wheelie bins, rather than the cylindrical paladin bins that they were used to – often utilising them for burning rubbish.
We failed. Our bid was not cheap enough.
Rather than give up, we used an important, but little noticed aspect of CCT, the ability to provide an alternative commercial service; our representatives hit the streets and the rest is history.
In 1997, however, everything changed with the introduction of ‘best value’. The local authority collection market had stagnated, polarised into those that were determined to keep services in-house and those that had gone through so many bids that the hassle of changing contractors was all too much bother. It was time for a change.
This was New Labour. It was now acceptable to be stinking rich in business or in life, as long as ‘profit’ in the public sector remained a dirty word. This was the time for the community champions, the ‘not for profits’ with their fancy cars and salaries to match. The market sprang to life, slightly, mainly due to those councils whose councillors joined the third-way revolution and handed themselves the contracts.
At Grundon, we built Materials Recovery Facilities and spent the next ten years arguing with a sector that wouldn’t use them over why we had built them. The simple answer was that we had built them at our expense for our own customers to keep their costs down. Whether the public or third sector chose to use them was down to them. The community companies eventually sold their losses to organisations that saw synergies rather than sense and we arrive at where we are today.
The present market is about as functional as a Betamax video recorder. What council in their right mind would ditch a contract where the contractor has made provision for millions of pounds of losses against the bid, just to set the industry on an even keel? Why should a council check a contractor’s tax status if his residents get a better deal? Why shouldn’t a council accept an underbid from a new market entrant seeking a toehold in a lucrative market?
Furthermore, why do we need a market at all? Why don’t we go full Corbyn and wrestle back the means of production into the hand of the working man?
The trouble is that the collection of waste is not a political choice, it is an environmental necessity, and the moment it becomes either too expensive or too cheap to bother picking up, it doesn’t get picked up, and that affects us all.
This year, First Group won its first rail contract in the USA in Dallas, Texas. First Group is a British company that runs bus and rail services in the UK and North America, and it employs 110,000 people. It owes its success to the fact that back in the 1980s, councils trusted UK companies to run buses – heaven forbid they are trusted with dustcarts. The industry flourished and now our services are offered around the world, a great example of what can be achieved.
If only today’s waste collection market were so dynamic.
Keeping bad company?
The latest response from local authorities to austerity in our sector has been to form Local Authority Trading Companies operating under Teckal exempt contracts; a bigger dog’s dinner could scarcely be imagined.
It’s not as though this is a new idea: many local authorities set up waste disposal companies in the early 1990s and a few are still operating successfully today. Others were sold into foreign hands or to domestic players along with their disposal assets.
The current evolution, however, is effectively nothing more than lorries with contracts and neither the scale nor the vision to compete on an international stage. Without access to private capital they will tread water until the wheels fall off.
There have been rumblings within the political world about an ‘industrial strategy’ and that can only be good news. Perhaps our resources industry would be a good place to start – after all, it has to be better than the road to nowhere.