SOMETHING FOR NOTHING
Page 73
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EN transport economists start talking about road pricing or the maximization of this, that and the other, the average road operator, even if he cannot understand everything that is being said, can be reasonably certain that he will hear nought for his comfort or to his advantage. It makes a pleasant change to read the results of a survey designed not to get still more money out of the road user but, on the contrary, to give him something for nothing.
A document, Roads and Resources, prepared for the British Road Federation by two young economists, Mr. Richard Moore and Mr. Nicholas Pettinati, comes to the bold conclusion that over the next 10 years the road programme could be trebled "without having to call for a larger share of the scarce resources available to the nation". This does not mean that three times as many roads could be built for the same money. The report says, perhaps a little airily, that "the availability of the necessary finance has been assumed".
THE MAIN THEME The main theme of the document is that there is considerable scope for a substantial rise in productivity within the civil engineering firms engaged on road construction, and that up-to-date equipment and sufficient materials would be available for a rapid expansion of the road programme provided that the firms could be assured of a steady flow of work. Obviously, if these conditions could be met, the cost per mile of building roads would be reduced. The road user as well as the Government would be getting better value for money.
Trebling the programme means increasing the mileage of motorways under construction at any one time from an estimated 160 for 1965 to about 500 miles by 1975. The annual completion rate would be about 250 miles, assuming that it takes two years to build a new motorway. On this basis the goal set by the County Surveyors' Society of 2,700 miles of motorway would be reached before 1980.
The waste entailed by the lack of a longterm plan is shown convincingly in a graph at the end of the document. The motorway programme has approximately doubled since the end of 1959, but construction activity has fluctuated widely. In November, 1960 there were 64 miles "under construction". In November, 1961 it had risen to 144. After a reasonably stable period it was down to 119 in April, 1964, up to 163 in November of that year and back again to 124 in April, 1965.
All the way through there were slack periods during which the resources available could not have been used to the full and periods of excessive growth during which presumably the resources were being strained. The conclusion seems irresistible that with a steady rate of increase the cost to the country would have been less.
The facts marshalled in the document are well known, at least to the Ministry of Transport and to the Minister. The Banwell Committee, which reported in 1964 on the placing and management of contracts for building and civil engineering work, drew attention to the reluctance of firms to buy expensive equipment without an assurance that it would be in use for some years to come and to the waste involved in allowing the knowledge and team spirit built up during a major project to be dispersed as soon as the project was finished.
It was to meet these difficulties that some years ago the Minister of Transport announced a five-year rolling programme for roads. The idea did not go far enough, says the BRF report. It had Treasury backing for only the first year and the commitment given to a contractor did not extend further than the length of the contract, normally two years. If Treasury endorsement could be given for the whole programme contractors would be able to tender for work due for completion in three or four years' time.
TREASURY INTERFERENCE An example of Treasury interference on a comparatively small scale was the postponement of some parts of the road programme announced in July, 1965. Mrs. Barbara Castle has now been able to tell the House of Commons that the cuts amount to £7m. in the current financial year and £12m. in 1966-7, and that it is hoped the ground will be made up before the end of the five-year programme. Nevertheless the postponement must have added to the difficulties of deploying the available resources to the maximum advantage. In plainer words a stop-go policy wastes money instead of saving it. Freedom from Treasury interference is one prerequisite of any road construction plan for the future. The Government's National Plan allocates resources to roads which would allow the volume of new construction to rise by 74 per cent between 1964 and 1970. On this basis Mr. Moore and Mr. Pettinati arrive at a provisional figure of 122 per cent as the increase over the 10-year period from 1966 to 1975. If productivity could be raised by 35 per cent as a "once and for all" gain during that period, the ultimate aim of trebling the present programme would be achieved.
MANY ADMINISTRATIVE DIFFICULTIES Higher productivity depends to a large extent upon stability in the road building industry. Mr. Tom Fraser's assertion in May, 1965 that competition provided an effective restraint on costs and prices is described in the BRF document as "perhaps over simple in its logic". More relevant would be a system of serial tendering whereby the first contract would be awarded on the strength of competitive tenders and the successful firm would have a guarantee of further contracts in due course.
Administrative obstacles might be the most difficult to overcome. They cover a wide range. At one end of the scale is the mass of detail required when designs and tenders are drawn up. For a £5m. contract the bill of quantities might run to 2,000 or 3,000 items. The report compares these figures with the 120 to 150 items sufficient for a similar contract in the USA.
At the other end of the scale are the notorious "32 steps" which have to be taken before a new road is built. From the time of the initial decision to build, seven years may elapse before a road is in use, although the actual construction takes only two years.
It is much easier to define this particular problem than to deal with it. Many of the stages provide safeguards for the individuals or interests likely to be affected by the building of a road. They must have freedom to express their opinions, time to pursue objections, and compensation if they are found to have a genuine grievance. Curtailment of the liberty of the individual cannot be permitted lightly even in the interests of the greater productivity of the road builders.
Janus