Opinion: O’Rourke pays unfair price for PAYE workers

Grant Prior 12 years ago
Share

Sympathy would have been in short supply at rival contractors around the country on hearing Laing O’Rourke’s latest results this week.

Britain’s biggest private construction company doesn’t go out of its way to make friends when it comes to doing business.

So rivals could be forgiven a wry smile when news broke of a 15% drop in turnover and more than 3,500 redundancies.

The falling figures signalled an end to years of spectacular growth.

But O’Rourke’s woes are bad news for the whole industry because every contractor experienced similar pain last year – albeit on a smaller scale.

And O’Rourke has also been unfairly punished for employing the vast majority of its workforce rather than hanging on to the self-employment model which the government has been trying to stamp-out for years.

A large directly employed workforce can be an advantage when order books are full.

But O’Rourke, and other firms like Rok who have a lot of PAYE site staff, have found it can be a millstone around your neck during lean times.

The brutal truth is that when work dries-up you either pay people to do nothing or let them go.

O’Rourke rightly received plaudits for its direct employment model. But public bodies still awarded work to contractors who subbed everything out.

The combination of little benefit in boom times and a huge disadvantage in a downturn will kill-off any future hopes of making direct employment the industry’s standard model.

O’Rourke flew the flag for direct employment and it has proved a massive financial problem for them resulting in mass redundancy pay-offs.

The firm invests a fortune in training which makes it even tougher to let well qualified staff go.

A lot of O’Rourke’s unpopularity is down to its success and driving ambition.

The latest bad results may have prompted a few smirks.

But what’s bad for the UK’s largest private contractor is bad for the industry at large and a death knell for changing construction’s working practices.

Latest news

ISG wins £600m Hertfordshire Hollywood film studio job

Holywood studio Sunset awards pre-construction contract for 90-acre studio complex in Broxbourne
1 day ago

NAO calls for road programme cuts as costs soar

Public spending watchdog calls for roads programme review amid project delays and cost overruns
1 day ago

Kier hires Laing O’Rourke veteran for London office push

Gus Wright takes up new London regional director role in January
2 days ago

VolkerFitzpatrick lands starring role on £174m film studios

Contractor to start main works on Eastbrook Studios in Dagenham
2 days ago

Wates poaches Balfour director to lead North West operation

Sarah Cooke to lead Wates Construction in the North West
2 days ago

£3.4bn Sellafield infrastructure race delayed to New Year

Contest to start in January for four partners in infrastructure delivery shake-up
1 day ago

Rebuilt TBM launches into second HS2 tunnel drive

Balfour Beatty Vinci TBM Dorothy starts second Long Itchingwood HS2 drive
2 days ago

Materials lead times back to pre-pandemic levels

Pinch points around gas boilers to persist until mid-2023 because of shortages of semiconductors
2 days ago

Bond strength helps TClarke towards £500m turnover target

Building services giant predicting a record year in 2023
2 days ago

All-clear for £125m Guildford Debenhams redevelopment

Native Land's St. Mary’s Wharf will comprise 185 homes
2 days ago

Thompsons brings down historic Redcar blast furnace – video

Redcar demolition clears the way for new net zero future
2 days ago

Wolverhampton picks McLaughlin & Harvey for £50m learning campus

Main construction to start next spring on City Learning Quarter
3 days ago

Michelmersh buys offsite brick cladding and chimney maker

Pre-built brick products producer Fabspeed sold for over £6m
2 days ago

Pagabo acquires mental health monitoring business

Framework giant makes move after Moodbeam goes into liquidation
2 days ago

Green light for London timber office block

Construction to start next year on six-storey cross-laminated timber block
4 days ago

Government pushes ahead with £3bn building safety levy plan

Affordable homes projects and small schemes developed by SMEs will be exempted
3 days ago

Rejigged £340m Museum of London plan approved

McAlpine tipped to take £340m job for new museum at Smithfield market
3 days ago

Ex-construction minister joins cladding repair firm

Intelligent FS appoints Lord Richard Harrington after government contracts send turnover surging
4 days ago

Willmott Dixon limbers up for £18m Rainham sports centre

Work to start in April on New Splashes Sports Centre in Rainham
3 days ago

Plans in for BBC’s new home in Birmingham

Project will be one of the first net zero carbon in construction office buildings
3 days ago

McLaughlin & Harvey wins Lowestoft harbour design

Lowestoft Eastern Energy Facility is expected to cost around £25m to build
4 days ago

Van Elle first-half revenue hits record £81m

Piling specialist upgrades full-year profit forecast after strong first-half trading
4 days ago

Forterra plans fourth brick price hike in 12 months

New Year increase follows 16.5% jump in October
4 days ago

640-home plan lodged for £250m Trafford scheme

Developer Glenbrook aims to start work by next summer on Lumina Village
4 days ago

Kier construction boss Liam Cummins to leave next month

Stuart Togwell to take over at Kier in New Year
5 days ago

Severfield profits jump as steel price hikes tempered

First-half pre-tax profit rises 29% to £10.2m as steel price rises successfully passed-on
4 days ago

Land deal reboots stalled Earls Court 4,500-home scheme

40-acre West London site could be redeveloped with 4,500 homes
4 days ago

Firms readied for £46m Norfolk bypass job

Work timetabled to start in 2024 on Long Stratton Bypass
4 days ago

2023 to be ‘Year of Catch-up’ for London office projects

Twenty-six schemes in demolition raising hopes of major project starts ramping up again
5 days ago

Galliford Try buys green water specialist

Latest deal boosts contractor's offering to the water sector
5 days ago

Contractor services