I am asked to talk about ‘The Politics of Major Projects’. I should start by acknowledging that our politics run now in two tracks and, though I try to speak in general terms, nevertheless I speak as a Minister of the UK Government and ask your indulgence if I use many examples from south of the border.

I want to address the subject from the point of view of how far Government should, or should not, be involved in major projects; and some of the particular factors which influence that judgement. They come down to three core elements: Money, Risk and Control. On the first and last of those, there is infinite scope for debate. I could comment on the rise and fall of political theories, on the use and abuse of power and influence, on the standpoint of particular parties and interest-groups. But this is a rather sensitive time and I will try to take an objective and longer-term view.

Who provides ? Who pays ?

Historically, public works have generally been undertaken by public authorities for two reasons:

The lesser one is the feeling that, where facilities are needed by a large part of the population with no choice of provider, they should not be controlled by a small group of private individuals. There should be democratic accountability. But we have not been entirely consistent in that. The canals and the railways were built by private enterprise and there is an ancient precedent in the licensing of ferry crossings to individuals. I will come back to this issue of who controls.

The major issue has been money. Until quite recent times, there was no way of providing large amounts of capital without the mechanism of a public authority with the power to levy taxes or charges. Highways were a mess until turnpike authorities were set up with both the duty to improve the roads and the right to charge for their use.

In Scotland a valiant attempt was made in 1786 to improve communications through a joint-stock company, the British Fisheries Society. But there was never enough money and little was done in the next seventeen years, until in1803 the Government created the Commission for Highland Roads and Bridges. Under the visionary leadership of Thomas Telford, safe harbours were then provided for the fishing and coasting fleets, great rivers were bridged and roads were driven through the mountains. Public sector funding had been essential to the construction of the basic infrastructure.

In Victorian times the Municipal Authorities were set up because the huge investment required for sewage removal was entirely beyond the old arrangements for civic governance. The Authorities needed the power to impose taxes for the public benefit.

The Railway Age began to alter the balance, and some major undertakings were accomplished by private capital, including such landmarks as the Forth Bridge. But the predominance of public funding continued well into the twentieth century. The nationalisation of coal and steel and railways after the war was not only a matter of political doctrine. It was necessary because private enterprise, exhausted by six years of war, was wholly incapable of raising the money needed to restore the capital assets of these industries. The funding which was needed could only be provided by Government through taxation.

So there grew up, over many generations, the expectation that our physical infrastructure would be provided by public authorities and funded from taxation.

But the last fifty years have seen a radical change in the balance. As Governments have accepted increasing commitments to revenue expenditure on health, education and welfare support, they have shrunk from the tax implications of funding heavy capital investment as well. The result has been a consistent failure by a succession of Governments to make proper provision for renewal of infrastructure.

When we took office, we faced both a chronic under-investment in public services and a £27 billion deficit on the public finances, so our first task was to create stability and sustainable public finances. We have made the tough choices we needed to. We have set clear fiscal rules over the economic cycle: and today we not only have low inflation and stable growth but sound public finances and the national debt falling towards 30 per cent of GDP.

It is this sustained improvement in our public finances that makes possible the prospect of sustained investment in our public services. In the three-year spending review last summer, we announced an additional £4 billion of capital spending across the UK this year, and net investment by the public sector is set to double to £19 billion in 2003-04.

But the constraint on funding from taxes is still there in principle.

Conversely the size and capability of the financial markets have developed beyond the contemplation of our fathers. Indeed the fate of the Pound in 1992 and the Euro since its launch in 1999 has shown unequivocally that the big money is international and no longer deployed by Governments. So it became possible by the 1980s for the private sector to raise the money for a huge project such as the Channel Tunnel or now for the upgrading of the rail routes between Scotland and London.

The ability to raise capital from the markets does of course require the prospect of a commercial return - something which is not intrinsically on offer for facilities such as hospitals or schools or prisons where we do not charge the customers. But the Private Finance Initiative, with the concept of paying for a service over 20 - 30 years, rather than paying for a building in one go, has created a means of providing a commercial return on such projects. Thus we have a vehicle for private capital in projects which were previously the unchallenged domain of public funding.

So where lies now the old assumption that large projects can only be funded by public authorities ? To use Fagin’s expressive refrain from ‘Oliver’: "I think I’d better think it out again."

The provision of private sector finance depends of course on an assessment of risk, and the price rises accordingly. There will still be some projects where the risk cannot be sensibly assessed, or may be regarded by the markets as unacceptable.

In those cases we are still tied necessarily to public funding - at least to resolve the risk. The Greenwich Peninsula was one such case - a forgotten piece of land in a loop of the Thames which has sprung to prominence as the site of the Millennium Dome. The site had been used since Victorian times as a gasworks, with all sorts of noxious fluids allowed to leak into the ground and an uncharted array of underground structures and dumping grounds. Who should take responsibility ? The degree of contamination, and uncertainty about what might be involved, were such that no commercial operator could be expected to take it on. The basic principle is that the polluter pays, but we have these historical situations where the polluter is long gone and the only practical answer is to resolve the problem with public funds. They were provided here through English Partnerships which has a specific responsibility for the reclamation of old industrial sites.

A host of less well-known sites across the country have faced a similar situation. Many have been addressed by tackling the remedial work under public funding, and bringing the site up to a condition in which it becomes commercially viable. Once it is retrieved from the dustbin of history, it can be sold for development like any other site.

The same pump-priming approach has sometimes been adopted with a valued historic building. A notable case was Hill Hall, an Elizabethan mansion near Epping in Essex, which was left as a shell for some years after a major fire. No commercial organisation would look at it; the risk was unquantifiable. But English Heritage restored the roof and walls to provide a weatherproof shell, and the potential then became clear. From that state it became possible to attract developers, and Hill Hall is now being converted to a complex of residential apartments. It retains the character and much of the detail of the original, but now has a viable use for the 21^st century.

Governments tend to be risk-averse because of the public-relations impact if things go wrong. A serious delay or overspend is always a tempting target for the press and, within the Westminster ambit, for the Public Accounts Committee. But in economic terms it is illogical for Government to be risk-averse. There is a well-accepted principle that government does not carry insurance. The risk evens out over the whole span of government activity, and commercial insurance would simply mean adding the insurer’s margin to public expenditure. In similar vein, a systematic offloading of risk must surely result in poor value for money because every project will be priced for risks which may or may not arise.

A generation ago, Government was probably taking too much of the risk - in the nationalised industries, in local authority building departments and in a range of services which we now feel are better contracted out. Commercial risk is best handled by commercial organisations. But we may now have swung the other way; perhaps we are unloading too much of the risk.

The proper principle of handling risk is to place it where it can best be managed. All too often this becomes: ‘place it on whoever is least able to avoid it.’ That is not only unfair, but it also means that the party which might resolve the risk most efficiently has no incentive to do so. The allocation of risk should be by deliberate decision, not by default.

If we take a rational and objective view of risk, some risks can clearly be allocated:

The risk of late or incomplete design information is surely best carried within the design-construct team - and woe to the client who upsets that responsibility by injecting late changes.

On the other hand the risk of a project being built with the wrong capacity - a prison with empty cells or a hospital with not enough beds - must clearly rest with the client, and that has been recognised in the structure of PFI contracts.

Some risks are driven by factors beyond the control of the project team. Who then should carry the risk ? Technology develops, sometimes too quickly, sometimes too slowly. Legislation may be driven by wider social changes.

Let us look at some examples:

After the fire at Hampton Court Palace in 1986, a new alarm system was installed. A mere six years later, in the review after the Windsor fire, the system was deemed to be obsolete. It was still fully effective in detecting and reporting a fire, but the advance in data-handling capabilities had provided new systems with a different order of ability to pinpoint the location of a fire in a huge building.

In that case the time lapse was such that the upgrading was an entirely new project. But what happens if that sort of technological advance, or a change in legislation, occurs while a project is under construction ? Requirements for providing access to people with disabilities have increased in sharp steps. It must surely be unacceptable to commission a major new public building with access arrangements which fail to meet current standards. So we may be faced with a series of late changes which will cause delay, disruption and extra cost ? Who should carry that risk ? If Government were to accept financial responsibility for the effects of changing statutory requirements, that would open the floodgates. So presumably the project must carry the risk. The expertise required for the design and planning of a long project must therefore include the difficult matter of forecasting the development of technological and social standards.

In other circumstances the technology doesn’t develop quickly enough. On the railways, moving-block signalling must surely become the norm, just as certainly as track-circuiting and coloured lights replaced the old semaphore arms. But development didn’t happen quickly enough for the Jubilee Line Extension. In the end it had to be admitted that ‘moving-block’ could not yet be made to work reliably and there was an embarrassing delay and cost in reverting to known technology. But someone has to take the risk of developing new systems, otherwise we shall make no progress.

So there comes a time when construction and commissioning are complete and the numbers can be added up. At this point the commercial office developer, having done his job in a high-risk business, will probably sell to a low-risk investor - a pension fund, or some other body which wants a safe investment in a money-earning asset. If the developer has done his job well and fortune has smiled, there will be a capital profit as his reward. If there have been problems along the way, he will hope that the sale-price will at least cover his costs.

Our new generation of PFI suppliers also reach this point where the new building is in service and a high-risk venture is transformed into a low-risk one. The opportunity then comes to replace expensive venture-capital with less expensive long-term capital. The margins on the project may thus be substantially improved and we may hear cries of ‘profiteering’. The commercial sector may reasonably cry ‘Foul’. If they manage the risk well, the public sector wants a bite of their reward; if they manage it poorly, they will get little sympathy and certainly no help. No one ever talks of ‘losseering’.

One has to ask at this point if the allocation of risk was right. In other forms of contract we sometimes use a target cost, with variations upwards or downwards shared between client and contractor. So the contractor has a strong incentive to bring the project in below the target cost; but if the cost should go up, part of that risk is shared by the client. Some forms of Public-Private Partnership do of course share the risk.

I referred earlier to the question of control. There are some projects, under the generic title of ‘public works’, which can safely be transferred almost entirely to commercial control. There are three basic criteria: the project needs to be financially self-sustaining; there must be reasonable alternatives for the user, so that there is an element of competition as a discipline on the operator; and the project must be outside that sphere which the general public will regard as core government responsibilities. The great advantage of total transfer is that government, having once awarded the concession, can stand back and leave the whole responsibility and risk to the private sector.

Perhaps the outstanding example of total transfer is the Channel Tunnel. The charging mechanism is straightforward and should cover the costs. Alternative cross-channel routes are provided by the Ferry Companies and the Airlines, so competition is assured. And the public saw the project as a legitimate commercial venture. So the Government was able to place the entire responsibility in the hands of a private sector concessionaire, on whom rested the judgement as to whether the tunnel offered value for money. There was of course a competitive process to determine which bidder would offer the best deal in terms of length of the concession, facilities to be provided, and so on. But thereafter the Government had no involvement. The financing and the construction cost were entirely up to the concessionaire. So were the protracted commissioning problems. And when there was a major fire in the tunnel, the consequences were again entirely up to the concessionaire. It is interesting to note, however, that the consortium itself decided that it was helpful to have clear water between client and provider. So it split itself into Eurotunnel as client and TransManche Link as constructor.

Perhaps there is a lesson there for the public sector in the separation of client and provider. It has indeed been widely adopted, particularly in a range of local government services.

There are lesser examples of total transfer. The great estuary crossings, funded by tolls, have been generally successful, from the Mersey Tunnel to the Forth and Severn Bridges. The Mersey and Severn crossings have of course been duplicated under extended concessions. Where the circumstances are right, this approach certainly works well.

But there are other circumstances in which it is less easy for Government to distance itself. Few people would disagree that the Government needs to keep a rein on the privatised utilities, since they provide essential public services on a monopoly basis. In other cases the Government demands at least to be consulted as the representative of the public interest. It is not easy to explain in logical and objective terms why the Government should have a role in the future of the Wembley Stadium - it will receive no public funding other than a Lottery grant in which Ministers play no part - but there is no doubt that many people expect a government voice in something which plays such a central part in the English national consciousness.

On the other hand we have some projects which are intrinsically government ones, but into which we draw private funding. For example, where a house-builder proposes a comprehensive new development, he may regard a new school or health centre as integral to a high quality environment, and something to which he should contribute some of the cost. And once one starts accepting money from other parties, then it is only reasonable to allow them some say in what is built.

This of course brings us to the Millennium Dome, where we drew in extensive funding from private sector sponsors. How far should Government control or finance such a project ? Let us look at some of the precedents and how the project came into being.

There are many historical and overseas examples of public funding for exhibitions and major festivals. Sometimes they have been in the nature of commercial promotion of a nation - an investment for future export success. Sometimes they have been simply for the prestige of nation or city, or even individual. Often they are seen as the justification for building new facilities which would otherwise not be a priority.

The Great Exhibition of 1851 was driven by Prince Albert, partly as a celebration of Great Britain in her prime and partly as export promotion. It was funded by donations and subscriptions, with The Queen and Prince Albert setting an example. The concept was heavily criticised by The Times. The MP for Lincoln, Colonel Charles de L Waldo Sibthorp described it as "the greatest trash, the greatest fraud, and the greatest imposition ever attempted to be palmed upon the people of this country." But despite the Colonel’s condemnation, it was of course a huge success. The proceeds provided the land on which the Albert Hall and the South Kensington Museums would be built; Joseph Paxton’s Crystal Palace remained a very popular visitor attraction when it was moved to Sydenham Hill; and the 1851 Commissioners still distribute grants from an endowment fund. Would that we could achieve such success !

A hundred years later, the 1951 Festival of Britain was funded by taxation and driven by a politician, Herbert Morrison. Sadly there was a change of Government soon afterwards and Morrison was no longer in a position to reap the rewards. The Dome of Discovery and the Skylon were demolished, much to the distress of many people, but the Royal Festival Hall remained as a lasting gain to the nation.

There have been various sporting festivals on which large amounts of public money have been spent. Edinburgh hosted the highly successful Commonwealth Games in 1970 and gained the Meadowbank Stadium and the Commonwealth Pool. But the Olympic Games had become an impossible burden on Governments by the time of Montreal in 1976, and revival at Los Angeles in 1984 depended on private sector funding from the mass-marketing of television rights. Always there was a long-term legacy of new stadia and other facilities, perhaps most notably in Barcelona which reclaimed a derelict port area on the back of the 1992 Olympics.

So there are respectable precedents for a festival which may cost money at the time but leaves a legacy which future generations can enjoy. But we must think about the question of control in the public interest and about the relative position of public and private funding in the light of the risks and the long-term benefits.

The lead-funder for the Millennium Dome is of course the National Lottery, not the Exchequer. Lottery funding is classified as public money, though its use is determined by the Distributing Bodies, not by the Government. The underlying intention has always been that lottery money should be used for purposes outside core tax-funded government expenditure. However, this is surely one of those areas where Government oversight, on behalf of the nation, is essential. So Government lays down the ground rules and one of those was that lottery funds should be used to celebrate the new Millennium.

The Millennium Commission was therefore established with some £2 billion of lottery money and a brief to Celebrate the Year 2000. There was to be a major exhibition, a range of other major new buildings, and a host of smaller buildings and events around the country. Scotland got the Forth-Clyde canal link with its spectacular boat-lift at Falkirk; Wales built a new stadium; Manchester built the Lowry Centre; London gave the Royal Opera House a new life. These and many others will provide landmark facilities for future generations. Importantly, Millennium Commission funding was limited to 50%, so these were not projects parachuted in by a remote government, but ventures for which local bodies had to raise substantial amounts of money. That element of local ‘ownership’ is surely right.

Both the 1992 Government and we in 1997 took the view that a major national festival needed a degree of Government involvement, but not full control. So the Millennium Commission was established with two Ministers and an Opposition spokesman joined by a range of independent members. Thus the Government was clearly involved in the decision to mount a major Millennium Exhibition, and in the selection process which saw it located on the Greenwich Peninsula. No private sector concessionaire would have been willing to spend so heavily on an attraction to last a year, so the £628 million form the lottery was crucial. But the private sector joined in enthusiastically, contributing some £150 million. Ticket revenue was £58 million, but of course we had hoped for much more.

The Dome project falls under four headings: the dome itself, the contents, the visitor record and the wider regeneration.

The building itself was an unqualified success. It is the most famous and distinctive Millennium building in the world, successfully built and fitted out to an immoveable deadline. It is a triumph of British engineering and has won a string of awards:

A radical leap in cable-net technology won the rare accolade of the MacRobert Award for the engineers, Buro Happold.

The McAlpine/Laing Joint Venture team responsible for construction management won ‘Project Manager of the Year’ in the Contract Journal Awards, recognising their success in delivering the Dome structure on time, working with a wide range of contractors and using innovative management systems.

the Dome was the winning Major Project in the British Construction Industry Awards, in recognition of its overall design and construction excellence.

And the Dome also won an RIBA Award.

The adjacent stations for buses and the Jubilee Line too have been built to a very high standard of architecture and have also been award-winners.

The success of the contents was always going to be a matter of opinion. Two of the zones also won RIBA Awards. These were ‘Mind’ by the Office of Zaha Hadid, and ‘Work and Learning’ by Allford Hall Monaghan Morris. The Millennium Show received an incredibly positive and enthusiastic reception among audiences. The visitors who liked the dome greatly outnumber those who didn’t.

More than 6 ½ million people visited during the year, making it the most popular pay-to-visit attraction in the UK. We never expected everybody to like all of it. In fact visitor satisfaction levels were at the higher end of industry norms and far exceeded our expectations. But there is no avoiding the fact that we planned for many more visitors. For many reasons the original target was clearly wrong. For various reasons, many of them outside the control of the NMEC, the much expected "Millennium fever" did not materialise. We tried to deliver a visitor attraction within a budget, and to a degree of success which Disney could not manage. We should have been less optimistic.

But it is important not to let the problems obscure the very real achievements and successes that the project delivered, not just in the main operation, but in several associated factors:

A positive environmental policy was adopted from the outset. The project was delivered within principles of sustainability, with an innovative grey-water recycling scheme; a new and sustainable ecology for the Greenwich Peninsula riverbank; and a "reduce, re-use and recycle" policy for waste management and services. This provides a model of best-practice which we hope will be replicated in projects across the UK.

Recruitment and employment policies were also exemplary. They were developed in consultation with the Employment Service, Manpower and Greenwich Local Labour and the trade unions. NMEC co-ordinated the development of Pre-Employment Training (PET), which ensured that job opportunities would be available to those with or without the generic skills that were sought (for example, Disability Awareness, First Aid, Foreign Languages, Food Hygiene, Health and Safety, Local Knowledge and Supervisory Skills). So jobs were open to the unemployed as well as the employed.

Some of these elements might have been provided by a commercial operation, but the project gave an opportunity for the Government to actively promote values which it wished to see adopted more widely. This ‘exemplar function’ must surely be one of the benefits of a government-run project.

The greatest long-term benefit of the project lies in the regeneration of the Greenwich Peninsula, one of the largest brownfield sites in the South East. The Dome has given a kick-start to the economy of one of the most deprived local authority areas in England. Through private sector and National Lottery investment the peninsula is being transformed into a new urban quarter for London, and the benefits have spread much wider. As a direct result of the Millennium Experience over £300 million of business went to contractors and suppliers across the country. Significant additional tourist revenue has been brought into the UK economy. This is good news for Greenwich, the Thames Gateway and the UK as a whole.

We already have the first phase of the Millennium Village in the southern part of the Greenwich Peninsula. The concept is to provide housing and facilities which are genuinely designed for the future, as opposed to the usual housing policy of doing what has been proved successful in the past. We felt that this would only be achieved if Government were to drive the strategy.

We wanted housing designed for low energy use and for modern communications. We wanted designs which could be built with a high degree of prefabrication and standardised components, so as to encourage more work in factory conditions and less in an adverse site environment.

It has not been easy. There were problems in developing the concept into detailed construction plans for the project. Ground-breaking innovations in construction and design required investment to set them up, but in the longer term they should drive down costs in construction and use. Sainsbury’s have built an award-winning supermarket to very high standards of sustainability and the millennium village school is also now coming to completion with every sign of success. There has been some impatience with the speed of change, but one cannot do everything at once. The next phases of the development will take the principles further.

This settlement will grow, and the stinking derelict wasteland of the late twentieth century will be a prized part of London in the twenty-first. That would not have been achieved without the flagship building at one end of the peninsula. I believe that Government leadership and an element of Government funding were essential to this huge regeneration project. But it has only been delivered through the dedication, skill and enthusiasm of a vast range of people, from the scientist working out new ways of handling contaminated soil to the acrobat in the Millennium show.

Whatever the arrangements for financing and managing a project, Government must be involved in the strategic decision. Greenwich needed the decisions to reclaim the area, to have a Millennium flagship and to put it on that site. The Channel Tunnel required a strategic decision on whether to build at all - and that one took 170 years on its own - and on the proper mix of road and rail. On a local scale the Town and Country Planning system provides decisions on behalf of the public about what may be built where. The strategy is inescapably a Government interest.

For much of the postwar period Government has encouraged a strategy of building to a criterion of lowest cost. We see the results all around us in a built environment which is bland and repetitive, dulling the spirits rather than inspiring, and all too often failing to provide long-term value. The rejection of that lowest-cost theme is one U-turn which can be wholly welcomed. The proper criterion is best value - the optimum combination of quality and whole life costs.

The Prime Minister’s drive for ‘Better Public Buildings’ was launched last October and carried forward with a major conference last month. He is challenging us to match the best of what we inherited from past generations - to regain an old ethos in which public buildings were the pride of Britain’s towns and cities, exemplars for others to follow.

Architecture always says something about the society and the people who built it. Glasgow’s City Chambers and the great Victorian town halls of Northern England are tangible expressions of the value placed on municipal government in the late nineteenth century. Similarly the new Scottish Parliament and Welsh Assembly buildings will express the confidence we share in the success of devolved government in the UK. Happily, great architects were chosen for both buildings.

I want to reflect for a moment on the new Scottish Parliament building which is going up apace at the other end of the M8. It takes a degree of courage on the part of Government to commit itself to an international designer competition for a civic building. However, in a quest to secure the best in the world, that is exactly what the former Scottish Office did with the result that the site of the new building is already firmly established on the international architecture trail. I understand that the associated interpretative centre has already attracted over 6,000 visitors since it opened in the late autumn and this alone shows the fascination which the new building holds for people. It is a tribute to the work of the late Enric Miralles and his Edinburgh collaborators, RMJM, that the initial concept has held true while the total area has almost doubled in response to the needs of the new Parliament. I have no doubt that once it is complete in late 2002, the new building will feature highly in the index of modern public buildings and will speak volumes about the self confidence and vision of the country that inspired it.

But good architecture is not just about flagship buildings. (And here I must depart from the theme of ‘major projects’.) People’s everyday lives are affected far more directly by the quality of schools and housing estates which they see every day; by the doctors’ surgeries and job centres where they come in time of need. The character of public spaces is defined by the buildings around them, even for the people who never go inside but simply pass by. All of this helps to determine whether we are uplifted by our built environment, or deadened by it.

Ordinary people are unavoidably consumers of architecture. So they should also have a voice in what is to be built. The success of the 1999 programme ‘Glasgow City of Architecture and Design’ showed that the interest is there. So it is not enough for government, local or national, to act as guardian of the public interest. We need to develop the means to inform people and communities and hear what they think. The Lighthouse, a permanent reminder of 1999, is an excellent example of how this might be done.

Good design yields a host of benefits, not just in the engineering sense of a sound and economical structure, but in the effect on people. Architecture, in its broadest sense, is fundamental to our lives. There is growing evidence that patients recover more quickly in well-designed hospitals, children learn better in well-designed schools, office-workers have lower sickness and turnover rates in well-designed premises. The framework document ‘The Development of a Policy on Architecture for Scotland’ affirms these values. In short, life is more pleasant in a good built environment.

For those with a more materialistic view, there is evidence in a recent research study, undertaken for DETR and the Commission for Architecture and the Built Environment, that well-designed commercial developments bring hard financial benefits by delivering more lettable area, reducing whole-life costs and increasing worker productivity.

Nevertheless there are still places where lowest cost rules. Only a few weeks ago the Leader of a London Borough Council defended a heavily criticised design for a new library, saying: "This design was the cheapest in terms of the council contribution." I hope he may be proved right, but experience suggests otherwise. The cheapest initial price may be attractive, but it usually leads to mounting costs over the years from high maintenance and energy consumption, extensive repair and renovation, and perhaps premature replacement. This design will do little to enhance the character of his Borough, unlike that other library in Peckham, which won the Stirling Prize and is drawing unprecedented numbers of people to enjoy the building and all it has to offer.

We have appointed a Minister as Design Champion in each Department to drive home the message that Government building is to be high quality building. Each Design Champion will personally sponsor two projects, both to ensure that he or she understands the issues and to set an example to others. I am pleased that the Ministers from the Scottish and other devolved executives are associated with this group. The Prime Minister has also instituted an annual ‘Better Public Building Award’, to be presented as part of the British Construction Industry Awards, for high standards of design, construction, delivery and performance. That award is open to projects large or small, and to all parts of the United Kingdom. This is all part of the drive to achieve a change of culture running right through the system to ensure that design quality is fundamental to every project.

The design agenda is closely allied to our adoption of Sir John Egan’s recommendations in his report ‘Rethinking Construction’. Too many buildings are handed over late, over-budget and with a string of defects yet to be rectified. And the safety record of the industry is unacceptable. The Demonstration Projects under the Movement for Innovation have already shown how much scope there is for improving these things, to the benefit of all participants in a project.

The underlying message is that design and construction are a single subject. Engineers should always be interested in the aesthetics of what they build. Architects should always be interested in how their designs will be constructed. Specialist subcontractors have a contribution to make at the design stage. And a well-informed client, committed to high quality, is essential.

The Government is making a massive investment in rebuilding public services, and we expect a return for that investment. The public expects high quality services to be delivered on time, and the taxpayer deserves that they are delivered at the best value and to budget. Our overriding aim is always to secure better value for money - not as a cost-cutting exercise, but as a way of delivering more and better services and facilities from public investment. Excellence in design, procurement and construction must go together.

Here is an area in which Government must give a firm lead for the general benefit.

What do we learn from all of this? I think four things in particular:

First, Government must set the strategy and the standards, and this Government is determined that the standards should be good ones.

Second, we have to be realistic about the strengths and weaknesses of Government as an institution. Governments, national or local, are not chosen for their commercial expertise and it is perhaps better to leave commercial activity as far as possible in the hands of the experts.

Third, we need to be objective about the allocation of risk. Let us place it, as far as possible, with whoever can manage it best. A one-project client will understandably want to offload most of the risk. But Government, with a huge spread of work, will not benefit in the end by paying a risk premium on every job. If there is no one genuinely able to manage a risk, it may be best left with Government.

Fourth, the market is imperfect and Government must be prepared to regulate where necessary.

There sometimes comes a point where a commercial project is presented to the Board and the project leader gives his conclusions, supported by an impeccably logical case. The managing director chews it over, and says: "It feels wrong. We will do it my way." Many case studies prove that his feel was right. That is why he is the Managing Director.