Highways Agency – going to a GoCo?

So I hadn’t picked up on this till the weekend, very remiss of me. Apparently the UK Department for Transport is considering a GoCo (government owned, contractor operated) model for the Highways Agency, the organisation that plans, builds and maintains the UK's major road system.

The GoCo structure first came to prominence when it worked well during the Olympic construction programme, and more recently it has caused some controversy when the Ministry of Defence announced that the Defence Equipment and Support organisation (DE&S) might become a GoCo.

Now the Highways Agency is clearly not as sensitive as DE&S. Balfour Beatty contracting for and managing road building programmes doesn't create the same frisson as the possibility of Bechtel running the UK's nuclear submarine construction programme. But even this proposal does raise again some fundamental questions about the GoCo concept.

·         This proposal is based around the GoCo being “more efficient” than a public sector Agency. But why should that be the case?

·         If it is a question of skills, why can't we get the right skills into the public sector? And if that is simply that the salaries aren't attractive enough, can't that be solved without moving to a GoCo?

·         If we don't have the people / skills to manage current contracts in the Agency, hence the need for a GoCo, how are we going to manage the GoCo contract, which will by definition be bigger and more critical than any current contract?

·         Can the improved performance of the GoCo more than compensate for the (presumably) higher salaries GoCo staff will command, and the profits / return to shareholders that will be required?

·         Is the move to GoCos “hollowing out” Government  - are we moving to a situation where government will just be the buyer / commissioner of services, which will be delivered by the private sector? There are indications that this is happening, in Welfare to Work, prisons and probation, defence, even health (Foundation Trusts are virtually private sector organisations, we might argue)?

Picking up the last point - it is fascinating that this is taking place without any serious philosophical debate about the role of the state, or even discussion about what the government’s "core business" should be.

In the private sector, we would hope that good procurement leaders would stimulate strategic debate about the boundaries of the organisation, and insource / outsource decisions. Yet it's not clear whether these discussions are happening within government. We're certainly not hearing about it if it is happening – or are decisions are being made on either tactical or ideological grounds, or based on a simple believe that the private sector is just inherently "better" or more efficient than the public?

We’re not opposed here to private sector involvement. And I wouldn't advocate for a moment that the Labour Party should take a simplistic stance to oppose that in all cases. But perhaps the time is right for some more visible and open debate about what is going on.

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Voices (2)

  1. Trevor Black:

    I don’t understand what you are worried about. It is now Government policy (borrowed from Animal Farm) that private is good and public is bad similar to the other philosophy that all profit is private and debt belongs to the public. Remember if it all ends in tears there is a cunning plan as a highly skilled commercially competent civil servant assisted and supported by Francis Maude, will simply re-negotiate the contract! Simples!!!

  2. Dave Orr:

    From GoCo to HoHo? “Highways are Ours, Highways are Outsourced!”

    What does our road infrastructure have in common with the Olympics then?

    The Olympics had a huge budget with 100% contingency funding; a once every leap year event; a glamorous global sporting event watched by the world; attracts massive sponsorship by global brands and is essentially a one-off spectacle.

    Doesn’t sound too much like the steady day-in-day-out utility of managing and maintaining road infrastructure does it?

    Peter puts his finger on the key issue:

    “how are we going to manage the GoCo contract, which will by definition be bigger and more critical than any current contract?”

    Or is it a case of NoGo?

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