TUESDAY 12 DECEMBER 2006

EEF

  Q60  Chairman: I was interested in your observation that the government was not looking at whole life costs when it procured. If true that is an important assertion. Can you produce evidence to support it?

  Mr Temple: There are examples of companies but I cannot immediately identify them. We can supply you with examples.

  Q61  Chairman: You have talked about how the public procurement process is difficult for companies. The point that I was going to make about office chairs was that sometimes a contract would be let once and a few months later they would want it again and because of the risk-averse culture the whole process would have to be gone through again from the beginning rather than just buying them off the shelf from the same company that met the test the first time. But if one does make it easier for companies it will not necessarily help British businesses; it will help everyone who applies. There is no particular advantage to British companies from that change.

  Mr Temple: We think that the value to British companies very often arises from the bigger projects when one is talking about early involvement and information. Typically, that is what one comes across in other countries. After that, having had access to early information it is up to them to win the contract in a competitive way. One can give advantage only so far and there are very strict rules about it which we must recognise.

  Q62  Chairman: The question of taking advantage is one that Lindsay Hoyle often raises. One cannot imagine the Italian police force buying a British car, if there were such a thing. Somehow, miraculously they always use Italian cars; the French use French cars and the Germans have German cars. What are they doing differently that we are not doing?

  Mr Temple: I think there is a cultural as well as a procurement element here.

  Q63  Chairman: They are supposed to observe the same procurement rules that we do but we seem to get a different result from the rest of Europe.

  Mr Temple: We would certainly encourage people to look to stuff made in the UK as a general principle. We would ask them to look favourably in that area. One has that point in the back of one's mind all the time but obviously there are limits to which one can take it.

  Q64  Chairman: We have often heard from manufacturing companies that in some sense the British Government's procurement processes are much fairer, even-handed and open than that of other Member States of the European Union or other countries like the United States of America.

  Mr Temple: We would say that in general it is very easy to do business with government here compared with some overseas countries.

  Q65  Chairman: America keeps complaining about subsidies to the aerospace sector in Europe but subsidises it like crazy itself. Do you support the view that anecdotally in other countries of the world there seems to be a greater willingness to procure the national champions' products rather than go for international solutions?

  Mr Temple: I do not want to get trapped in a debate about protectionism. A fundamental part of our continued success will be free and open markets. We compete on that basis and can win on that basis. Yes, we accept that we can also be challenged and lose on that basis, but without free and open markets we will have real problems with the development of vibrant and strong international manufacturing. I must make that point very clear to begin with. That is not to say that we do not wish sometimes for what might be called a legal un-level playing field which looks with favour on companies that base their operations in the UK no matter where their ownership may lie as long as that is a process which takes into account all the parameters that one must to get fair purchasing. Certainly, there are countries which start with a basic predilection to buy from companies based there, and that is why you see the sort of cars of which you spoke earlier. People are culturally more inclined to buy from home. We do not have that culture to the same extent.

  Rob Marris: To ask a simple question, you are sitting on the fence. Where was it made—in the UK or abroad?

  Q66  Chairman: That is a rhetorical question. I am not sure that it is capable of an answer.

  Mr Temple: Perhaps we may just make a point about the Wood review.

  Mr Radley: An important point to make is that a few years ago a review of this issue was made by Alan Wood. Not surprisingly, it showed that there was very limited evidence about breaches of procurement rules in other countries, but there were lots of shades of grey. One thing we need to do it was a recommendation of that review is help UK companies compete more effectively for public procurement contracts abroad. In some cases that may involve them in setting up an operation there to give themselves a better chance, but in many cases it is about developing a better understanding of the practices in different markets.

  Q67  Roger Berry: Do you not accept that on the one hand you cannot assert the need for free and open markets and, on the other, have a whole range of interventions by government in skills, procurement and so on, as we have been discussing in the past hour? Is not the issue: in the real world where government should intervene and where it should not? But a dogmatic statement that we believe in free and open markets but on the other hand culture may determine whether or not our police forces buy British cars is an attempt to sit on the fence, is it not?

  Mr Temple: I do not see the contradiction in terms of the skills debate that we have had. There are issues about society and what we provide to society through government. We are talking here about an entirely different area. What we have to use is intelligent procurement that works to proper rules and gives people a real opportunity to do their jobs professionally. We are saying that professional procurement in other parts of society outside government works very well, delivers well and is not so bureaucratic and difficult to deal with. I cannot see why that cannot be translated more into government procurement than it is today.

  Roger Berry: I think that is an answer to a different question. I do not disagree with what you have just said. I simply note that I think it answers a question I did not ask.

  Mr Hoyle: What benefit does the UK taxpayer get from buying Mitsubishi four-wheel drive vehicles operated on motorways when we build the finest four-wheel drive vehicles under the badge of Land Rover? For the life of me I cannot understand why we should waste taxpayers' money supporting Japanese industry. Do you?

  Chairman: I believe that is a rhetorical question although a very important one. It is also an important philosophical point which I suspect the next witnesses will explore with us. We have run out of time. I know it is frustrating. We would like to ask you more questions, but we are grateful to you for your oral evidence and very good written evidence. Some of the points that colleagues may believe have not been made in this oral session are very firmly dealt with in written form, for which I thank you very much. We look forward to further dialogues in future on other subjects in this ongoing inquiry into manufacturing industry.