Welcome to post-Brexit Britain where UK firms still come last
AT last, Brexit appears to be ironed out, and we can move on. To what? That’s not an anti-Brexit observation but one directed at those responsible for ensuring we enjoy the benefits, ahem, of leaving the EU. The omens are not good.
So far, there has been precious little sign of the “Brexit dividend”. We don’t seem to realise that we’ve left the EU and there are gains to be had.
This week has seen a case in point. French company Sodexo has been awarded the contract to make post-Brexit border checks. It beat London-listed Wincanton to run Inland Border Facilities for HM Revenue & Customs.
Wincanton holds the current contract, worth £71 million. The work will now transfer to Sodexo in June this year.
The stock market gave its verdict, marking Wincanton shares down by nearly a quarter and wiping more than £100 million off the company’s worth. The British firm said it was “extremely disappointed” not to have been awarded the new contract. That’s polite corporate-speak for a mood that is unprintable here.
Wincanton has every right to be furious. It’s a solid company, specialising in warehousing, logistics and haulage. If that does not seem like it should be making border checks, then Sodexo is best known as a contract caterer, second in Europe only behind Compass. But Sodexo is a giant organisation, with a market capitalisation of £12 billion, versus Wincanton’s £300 million. The French corporation is branching out into all manner of services, hence the pitch to HMRC.
The British loser, it’s acknowledged, had done nothing wrong in the fulfilment of the existing contract. Indeed it had hit targets ahead of time.
Apparently, the present border-checking operation is expanding into a “wider array of services” beyond warehousing. Sodexo, it was felt by HMRC, was better suited to taking on this extra activity. Perish the thought that the poor Brit has been undercut on price by a much bigger international operator.
It’s all very reminiscent of what occurred in 2018 with the contract to make post-Brexit UK passports. Instead of going to the British supplier of the old passports, De La Rue, it went to the Franco-Dutch firm, Gemalto. De La Rue’s share price has never recovered.
Now, with Wincanton, here we go again. This, though, was not supposed to happen. Brexit was meant to give us the freedom to favour the domestic supplier.
HMRC can argue that Wincanton was not up to the job, but surely they could have been trained and assisted? In the EU that would be forbidden as the improper use of state aid. But hello? We’re not in the EU any more. There would be nothing to prevent HMRC giving the work to Wincanton and Sodexo could not have done anything about it.
This sort of inertia is worrying. If we’re going to enjoy the fruits of freedom from the EU then we have to start helping ourselves, giving leg-ups to our own.
Not only is it good for the economy, for tax receipts (the Revenue side of HMRC, please note) but it creates jobs, training, the development of new skills. If Wincanton had been awarded this business, it would have emerged a stronger, better company, equipped to win similar orders worldwide.
Whitehall should look at Preston. Yes Preston in Lancashire. For years, its council has been deliberately deploying a policy of “progressive procurement”, sourcing as much as it can of the goods and services it needs locally and eschewing outsiders. The result is a place enjoying relative healthy growth and strong employment, despite being in an economically bleak area of the North-West of England.
There’s no reason why the Preston experience cannot be translated nationwide. That, though, requires a sea-change in attitude and not taking the easy route out and basing everything on price. Such an approach is short-sighted and damaging to Britain. Please, start realising: we have left the EU, we can do what we want. More imagination and loyalty, make that patriotism, is required.
Chris Blackhurst is the author of Too Big To Jail: Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan)