Why do local governments seem to overpay so much for everything?
Posted by blizeH@reddit | AskUK | View on Reddit | 52 comments
I know I’m overlooking a number of things, in particular the fact everything has to be done ‘right’ but lately there have been some things that have stood out to me including the lido shutting down and not being able to re-open without £5m investment, and now there are talks of rebuilding the stakepark at a cost of around £700k - how can a skatepark cost more to rebuild than double the value of an average home rebuild?
Bifanarama@reddit
Because a) they are given a budget and, unlike in the real world, there is no incentive not to spend the whole budget. And b) people in the public sector mostly have no idea what they're doing and don't know when they're being massively overcharged.
Yes, I worked in the public sector. It's tragic.
blizeH@reddit (OP)
Regarding the first point, I remember working in a school and the head of department buying any old rubbish just because if they didn’t maximise their budget for that year, it will be reduced for the next year :/
lost_send_berries@reddit
This happens in the private sector too, we just don't care about it
jaminbob@reddit
Having worked within of for councils as a contractor most of my career imho:
- They don't overpay as much as people think they do. For the big things at least, that's often just how expensive stuff is because;
Stuff goes wrong and the council always have the bad stuff. They have the stuff that the private sector don't want; retaining walls, public swimming pools, culverts, old people and orphans to look after, multi-story car parks built in the 1950s. Its going to cost a developer a lot less to build something on a green-field site than a council to try and renovate something and;
Risk transfer - When you contract stuff out, private suppliers cover their arse in contracts and are very good at pricing in risk. Council's cannot as they carry the can the last resort.
Politics and consultation. So in my niche, private providers will just maximise profit. The council have to run rounds of consultation, the projects are interfered with (extras: e.g. must look pretty, must not remove parking, or impact the local shop, the guy who lives nearby, there's a petition to save trees etc).
Also;
- They have quite insane procurement rules, which to their credit are very good at making outright corruption very very rare. But make things inflexible.
- Decades of cuts have hollowed out expertise and knowledge. They pay badly and have been making skilled people redundant / giving early retirement for two decades now. They don't have in-house expertise such as surveyors. This means they have to pay people to find out how much stuff costs in the first place. (My job should really be done in-house but my clients have lost the expertise).
Council's really are in no win scenarios 99% of the time. Their job is to mop up all the crap people / companies can't or don't want to do. Yet at the same time they have to be transparent and are under huge scrutiny.
kraxis@reddit
I work in a local authority and this explains the situation perfectly.
I will add that some of the “inflexible” procurement rules might be there to encourage changes in behaviour or market shaping in the private sector - the LA might overpay for something that allows local suppliers to tool up to be able to do that sort of work elsewhere encouraging local growth.
Similarly, as part of the procurement we might require a number of apprenticeship places to upskill residents and help them get into secure work and off benefits or other types of support, using capital investment to realise revenue savings.
maccon25@reddit
it seems to me so many gov private sector contracts are fulfilled to a low standard or ridiculously slowly - eg constantly having to bail out train companies, or how long the smart motorways have taken, even how poorly pot holes are filled - why is the gov unable to do anything about this? why do these companies / ‘entrepreneurs’ still seem to get gov contracts / suffer no consequence for not fulfilling their side of the contract?
jaminbob@reddit
Well that all fine. But as a small company of 6 people those rules are a just a ball ache. Derivations can usually be got, but it's yet another week of emails.
The big point is that a lot of stuff councils contract out they should be able to do in house (including my job). My clients are increasingly clueless, often having multiple jobs due to restructures and rounds of layoffs. They really don't know what they're doing almost of time.
Great for me I guess bad for UK PLC though.
merryman1@reddit
I feel the last point is most important.
You get the feeling a lot of this stuff made a lot more sense when it was being issued by people who knew what they were doing and had a full team working with them. Now its some haggard thousand-yard-stare vet who's wage has been stagnant for a decade and seen half their team fired, being expected to do two times the work they were doing 10 years ago while they're just counting down the days until retirement.
Sea_Weakness_Pi@reddit
Stop staring into my soul!
Competitive_Test6697@reddit
Speak to anyone in procurement about the stress of getting anything done with all the rules and regs.
windymiller3@reddit
For my sins I did a stint working alongside our councils procurement team.
Procurement only knew about the pcr regs.
Oh it must go on a portal that only national firms can afford to be on.
They knew nothing about the regs of the work involved, or how the industry worked.
Hence why things went up in price.
PCR regs are massively detrimental.
trippykitsy@reddit
The government gets really bad rates from contractors because of the amount of red tape needed to do a government job. The government hires a Principle contractor who hires subcontractors who hires subcontractors who hires subcontractors.
wongl888@reddit
This is not the main reason why it costs so much. It costs ai much because of the government tendering process. Most smaller companies don’t have the manpower nor the expertise to submit a bid for the tender. Even if they do did, they probably wouldn’t meet the required financial/clearance checks.
So there are usually only a handful of bidders for most government tenders. It wouldn’t be surprising to find price fixing amongst a small number of bidders (as has been several cases in the news) such that they take turns in winning the tenders with the lowest bid received.
Used-Needleworker719@reddit
Pretty much this. I’m a freelance comms. I can’t apply for any tenders because there’s so many systems and accreditations I don’t have that would discount me from bids, such as ISO certs, social value proof, etc. you have to be of a certain size to even apply, so the bigger you are, the more you have to charge because your overheads are more… it’s a vicious circle,
DepressiveVortex@reddit
It's also because successive governments would rather give contracts to their 'friends' than someone who will do and cost the job correctly first time
BuildingArmor@reddit
Those sort of situations would be navigating around the normal process, and very unlikely to be the case for these small scale local projects
trippykitsy@reddit
yes, that would be the Principle contractor
wongl888@reddit
Sometimes.
stewieatb@reddit
All building works require a Principal Contractor under the CDM Regulations 2015 apart from very small domestic projects.
Coconut681@reddit
I've been trying to buy a bit of software recently. Quotes direct from the supplier are 4-5k a year, same product via a framework is 10-12k. Crazy
TheSecretIsMarmite@reddit
Ah, good old G-Cloud.
Ok-Ordinary-6762@reddit
Because you have no idea how much it costs to actually design and construct a skate park....
Far too many people have had an extension done and think that's comparable to a piece of infrastructure
Saltypeon@reddit
Middlemen.....so many of them. Its not just local government either. Its everywhere.
I saw a service charge for wireless devices of £2 a month. Mouse £95+£2 a month connectivity fee. Same mouse £24 quid from a retailer without a bullshit fee.
sfe1987@reddit
Mostly because the quality of person who works in local government is pretty low. They don’t have the competencies to challenge tenders and understand cost breakdowns. My dad sees it all the time in his role as a quantity surveyor.
KingEivissa@reddit
My mum works for a local council and the stories she tells me about what she's seen pisses me off more than surprises me.
We really are pissing money up the wall keeping some really shit people out of the dole queue.
I wouldn't employ them and as it happens nor would she!
No_Mood1492@reddit
This just simply isn't true.
It's due to the procedures that must be followed, not the incompetence of staff.
It's a little ridiculous to suggest that adults without learning difficulties don't understand cost breakdowns.
KingEivissa@reddit
Red tape; rules and regs etc.
Some of it is important - private businesses have procurement policies. Ours cover everything from basic propriety to ensuring the supply chain is free of modern slavery/exploitation.
Some of it is just nonsense/ incompetence.
You as a private individual can pretty much hire whoever you want to do your extension. He can be a cash in hand merchant; he can have 5 or so people working less than minimum wage/ without right to work etc without your knowledge of the same.
You can pick a name out of the Yellow Pages or off Instagram these days.
Local authorities cannot. If it is found out that even with the best of due diligence that their supplier was a dodgy heads would roll.
You on the other hand, you might end up needing to get someone to replace Mr Dodgy.
theartofnocode@reddit
It's not their money, why do they care?
FreeBogwoppits@reddit
I worked for at council at the point they moved over from local purchase to approved suppliers. We went from popping into the local shop and buying binders for £2, to £18 for the same binder only available in packs of 50 and on six week delay.
A few weeks later the entire senior management team went on an all expenses paid 'fact finding week' in Las Vegas. Apparently the procurement company had, by coincidence, sponsored this through a feeling of civic duty.
jaminbob@reddit
I've worked in or for council's most of my career and I've come across actual blatant corruption once at a high level and then petty nonsense maybe 3-4 times.
If this story is true you should have reported it.
OkSun8521@reddit
This didn't happen.
kilgore_trout1@reddit
Well this just sounds like blatant corruption - when was this and what was the council? This should absolutely be reported and dealt with. That sort of thing carries a custodial sentence in the UK.
Master-Trick2850@reddit
UK is infamously full of red tape, and everyone knows you can rinse government projects for all their worth
OkSun8521@reddit
Thanks Daily Mail.
srogijogi@reddit
Various reasons: 1) everything has to go through regulated route, sometimes it's so regulated and complicated that it may be easier to send people to Mars than redo some pavement, 2) money they spend is not their, so who cares, 3) there is no real incentives for working efficiently and fast.
AdonisCarbonado@reddit
The extraction of public funds is a destructive model & it’s these type of questions that OP asks that are really at the centre of the ‘decline’ & ‘downfall’ of this country. Not nearly so much as the mainstream moral panics that we hear so much of. At the same time this extraction of wealth holds up a lot of folk who can afford to pay their bills, buy property, contribute tax etc. So whilst it is recirculated somewhat it is sticky to the past awards.
ActionBirbie@reddit
The sheer amount of red tape, regulations and due diligence that needs to be done is eye watering.
Stunning-Pudding-514@reddit
It's the same with the NHS, everyone has to use an ''approved'' supllier/ contractor etc, they can't just use Joe Blogs who can probably do the same quality of work for half the price. I was working on hospital refits 12/13 years ago and one job was new kitchens. The manager in charge of repairs was annoyed with the system as he had to use approved suppliers, as an example he said there was a local company that sold exactly the same wall units that we had there to install. From the local company the unit was less than £200, from the approved supplier it was £700.
RandomHigh@reddit
We have the same issues in schools. We try to work around when we can.
We had some new toilets installed at the end of last year, and they have different locks on the doors to our existing doors.
A student kicked a door a month or so ago and damaged the lock so we had to get a new one.
I contacted the company that installed the door and they sent me a link to buy the locks and they were priced at £154 plus VAT.
I found the same locks on Amazon for £40.
We still have to use approved suppliers for things like cleaning equipment, but on the repair side we get a little more flexibility.
edent@reddit
Is it the same lock? Or is it Amazon's comingled inventory?
If the lock breaks, will the random company who sold it to you still be trading? Can you get a refund? If it hurts someone, are they insured? Do they have all the fire safety documentation and other paperwork?
What's the cost to you spending time looking for the cheapest deal?
Sure, maybe they are ripping you off as a monopoly supplier - or maybe they're providing a service in a regulated environment which is worth slightly more than any savings made by shopping on Temu.
CaptainSwaggerJagger@reddit
There's also a point on if you're appointing a catalogue provider (I.e a stationary contract) you will absolutely find examples where certain items are cheaper on amazon or whatever but you're contractually obligated to buy that stapler from the awarded supplier at the higher price - that's because the contract was awarded to the person with the cheapest price on a set "basket" of goods with your volume estimates, so some items will be more expensive, but across the board it's cheaper if you agree with one supplier they get all the orders. Sure they get higher margins on the staplers, but the paper is barely above cost, so it balances out.
A lot of people experience that micro level of "it's £5 extra to buy this stapler, just think how much this must all add up to across the council" and not realise that this stuff has already been considered, and there's a reason why it's done this way. It also works the other way - yes it might be £5 more than the amazon one, but it prevents less budget concious staff from ordering the £60 luxury stapler because it's not their money, which amazon would happily sell them and would absolutely never feature in your stationary suppliers catalogue.
BigFaithlessness618@reddit
I work in supplier management for a large bank we often pay more that someone locals because.
Now for a kitchen fitter it seems overkill but unless we are closing the building they might have access to customer information, they can hear customer conversation ect. If we have an issue we want to be able to go back to one company and not chase. It's not worth the risk to use someone small and local instead we will use a large maintenance company who probably outsource it and might not do the contracted checks but that's on them and not us.
bacon_cake@reddit
I supplied some goods to my local council once and they essentially had two avenues to supplying them. One was basically petty cash, they'd pay using the department credit card and that was that. The second was to become an approved supplier for the council, the person I was dealing with acted like it was basically a money printing machine. She said if she managed to get us on the list we'd be approved to supply that particular product going forward and from that point as long as we weren't TOO greedy we'd be able to charge what we wanted.
Deep_Top8433@reddit
It’s because absolutely every single rule must be followed, whereas in B2B the managers will just gloss over some rules and regulations to get the job done. Also £700k for a skate park sounds pretty competitive, assuming it isn’t just a half pipe and and a rail.
edent@reddit
Nearly every contract for Government work is published. You can take a look at https://www.contractsfinder.service.gov.uk/Search
You can see exactly what they specify, what their requirements are, and who won the bid.
Here's a random Skate Park example for a similar price - https://www.contractsfinder.service.gov.uk/notice/6a24b08f-b34b-44d5-bdb2-d1ae3b23a0e8?origin=SearchResults&p=1
Find your own, have a read through, and see if you can do it cheaper.
If you really think the council have overpaid - email your local councillors and demand they look in to it. https://writetothem.com/
Scasne@reddit
I've also heard stories where companies underbid on small work to get appointed then because they make no profit or rules change they just say it had to go the next item up the list, for example changing street light bulbs, (some later said it was originally quoted viable but the government changed the rules regarding working at height or needing a second person) that every replacement bulb became a replacement unit.
RandomHigh@reddit
I've seen the opposite of this recently, where a contractor was asked to put in a deliberately high quote to make sure they didn't get the job.
A lorry had driven into some gates and they were looking at getting quotes to get them repaired. The regular guy could do it fairly cheaply but it would take a while as he was a small self employed welder.
Seeing as it was going to be paid for by the insurance company of the lorry, and the fact that they have to get 3 quotes as part of the official procedures, he was asked to put in a high quote to make sure he didn't get the job because they wanted it done as quick as possible. And they wanted to get a large company in to do the work who quoted they could get it fixed in 2 weeks.
Spottyjamie@reddit
Transparency
If a council says our tender for a new IT system is £1.5m then by some sheer coincidence all the bidders will be quoting that price
warpedandwoofed@reddit
Don't really agree with this. Although the total contract value needs to be published via a transparency notice, detailed breakdowns are commercially sensitive and aren't made public. TCV is also indicative (unless a contract is firm price), so there are opportunities to make savings through the life of the contract and total costs will vary according to what needs to be delivered and how a project is managed. I do accept that pricing can be reverse engineered for straightforward requirements, but for most contracts it would be difficult because you're predominantly sourcing outcomes rather than on a fixed capacity basis.
Zealousideal-Low3388@reddit
If you’re confident that you can organise the work on that skatepark for less than £700K, I hope you submit a bid. Save the public purse some money and introduce competition into the bidding
Sarcasm aside, there’s procurement procedures that drive up costs as well as fairly endemic croneyism in local government contracting
ChinSpeedy@reddit
Old school contracts.
To prevent councils from hiring their family members for jobs, they have to use approved companies, often agreed upon ages ago.
And because they can only use certain companies, these companies can basically charge whatever they want to.
Same with how paracetamol is cheap at the store to us, but getting it prescribed by the NHS costs them an arm and leg despite it still being the same chemicals.
This explanation might be oversimplified, and I am sure someone else can go into better detail
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