Engineering news
The government has admitted that “very real questions” exist over the way in which contracts for big engineering projects are awarded.
The comments, made by business secretary Vince Cable, came in the wake of controversies such as the decision to award a £1.4 billion contract to build Thameslink trains to Siemens at the expense of Derby's Bombardier.
In a speech on manufacturing to think-tank Policy Exchange in Westminster, Cable said recent concerns over the way major government contracts had been awarded were caused by ministers being “too short-term”. Cable added that "very real questions" were sparked by high-profile deals that had seen the UK lose out to overseas companies.
The government came in for intense criticism over its decision to award the Thameslink deal to German company Siemens instead of to the Bombardier factory in Derby, which could lead to 1,400 job losses if the company does not find further work.
Cable insisted he was not "lurching" towards protectionism. But he said: "We do recognise there is scope for government to recalibrate its approach towards public procurement to boost supply and to boost support for UK infrastructure supply chains.
"Currently the regime is underpinned by two basic principles – one is cost and the other is European Union competition rules.
"These are fundamentally sound principles but applying them too narrowly risks neglecting wider considerations.
"To be clear, I'm not advocating a lurch towards protectionist procurement or breaking international rules.
"We have had some recent controversies over procurement which have raised very real questions about what's the best way to balance short-term cost considerations with long-term value for money.
"To be very frank, we have just been too tactical and too short-term."
Cable said the government was planning to boost companies that supply leading manufacturers after the sector had been allowed to "wither".
Many "superb" British companies often used machine tools made in Italy, Japan, Germany or Switzerland, but rarely made in this country, he told the conference.
Cable said: "When visiting Dubai Ports at the London Gateway, I was saddened to see no British-made cranes at that important development. The skills and capacity have just gone.
"A new dimension to manufacturing is the growth of global supply chains, contributing a component or an associated service rather than making the finished product.
"In order to choose to base operations in the UK, multinationals need to know that they will have local firms of the quality needed to supply parts in a totally reliable way."
The government was working with industry bodies to identify demand for goods and services that could be met by UK firms, Cable said.
"My department is looking at how government can support UK supply chains across a number of sectors critical for future growth,” he said.
"We are taking a flexible approach, looking at what might be done in terms of skills and management development, and targeted support for capital investment and research and development. I will be able to say more over the coming months."
Cable said that big new industrial investments are taking place at firms including Airbus, Jaguar Land Rover, BMW and Nissan, but added: "In other areas, we have allowed our latent capacity to wither."