Mr. Kevin James:

The Chair makes a good point about small contractors. We must protect the small supply chains, which we are fully dependent on, and ensure we do not create barriers to entry. In the pre-qualification process, whether for consultants or contractors, providing professional indemnity cover at a high level is an instant barrier due to their inability to provide cover that satisfies the requirements for public procurement. There are definitely barriers that prohibit small and medium enterprises and small contractors from being able to deliver certain projects.

The question about material prices is the crystal ball. We have done workshops about what the future looks like. While the war in Ukraine continues and it is difficult to anticipate its impact, there are some green shoots. We recently did some research on the European supply chain and delivering reinforcement. In the middle of last year, reinforcement cost perhaps €600 per tonne, which spiked to €900 per tonne by the end of the year. Speaking with contractors over the last weeks, they could quote €1,400 or €1,500 per tonne of steel. Apartment complexes have basements that need steel and developers are asking if they should pay a 100% or 120% premium to buy that product to start that first phase of a development and whether it makes sense. What message are we sending to the industry by indicating that accepting a 100% or 120% premium on a particular material is acceptable?

While there are embargoes on Russia and with the war in Ukraine, after speaking to suppliers of steel coming to the UK and Ireland, they were forecasting a 20% reduction because they are beginning to work out their logistics. The energy issue is significant, because suppliers making products in Europe do not yet know how much the product will supply. Significant amounts of fossil fuel are required to make glazing systems and steel. Suppliers are still calibrating their figures. The subcontractor supply chain cannot fix the price. Subcontractors pass that message to the main contractor, which then passes it on to us. It is about understanding the risk profile and what contractors are prepared to accept. It is difficult to anticipate the trajectory.

We saw 13% last year but there are no immediate signs in the short term of tenders coming back. At a personal level, we tendered a project last week for which the spread of tenders ranged up to 25%. That is significant in terms of the capacity of the industry and the appetite to take on certain work. We are seeing quite a lot of movement in the market but, again, it is down to how we anticipate what risk premiums contractors are applying to public sector projects versus private sector ones. There is a premium-----