How ‘competitive tendering’ is ruining our economy

Year on year, every year, contractors and suppliers have to do their job for less money. These days it is written into the contract that savings will be made next year and the year after, so it is no longer just about suppliers believing they can save money now, it is also about faith in a future that will somehow, from somewhere, deliver savings.

So if I bid for a contract to clean a residential street, I must calculate the cost of the worker and the cost of his brush and pan, and then I must seek to reduce it. Next year I must reduce it more, and the year following, more still.

The previous Labour government were very much a part of encouraging this process, because the economy used to be so inefficient, and there is no doubt that we have a more competitive economy as a result. However, there are costs to the never ending pressure on suppliers.

Companies bid so low for contracts that they have to then make a profit by cheating small amounts from the fringes. This has become epidemic in the culture of our economy, and is turning us into a nation of petty crooks.

The ordinary consumer suffers similar infuriating raids. We get fined for parking, fined for paying our bill, fined for this, fined for that. Extras are piled on top of extras. The price in the end is always greater than the price up front.

Everything is about presenting one figure then aggressively snatching money through underhand tricks. Dishonesty and cheating is the new norm.

Government policies made it worse. Working Family Tax credits subsidised wages and enabled suppliers to enter lower bids. Immigration brought into the country people willing to work hard for less money allowing bids to be lower still.

The real problem is that Competitive Tendering has outlived its usefulness. We live in a world where “Meals on Wheels” are delivered for such a low price that the elderly person doesn’t even hear the word “hello” before the delivery person is back out the door and onto the next address.

There was a time when efficiency simply didn’t exist in the system. That was why we sought to create value. We trimmed the fat and made systems streamlined. It was a good thing that we did this. However, the job is now done. The fat is trimmed. Why are we continuing? Do we need to trim bone? This isn’t doing any good. Much the opposite. We’re creating a very nasty society.

We need a new concordat which is based on values beyond money, and allows the supplier to make a profit without defrauding at the fringes.

We need respect for our fellow human beings whether they receive a service or are part of the team that delivers it. We need to recognise that Competitive Tendering is no longer the solution, but is now a part of the problem.

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