Spending Spree
Page 70
If you've noticed an error in this article please click here to report it so we can fix it.
DURING 1955 and 1956, the British Transport Commission had in their supplies organizations a staff of 7,816, receiving an estimated salary of £3,806,000, and handling purchases of about £300m. a year. The figures, which the Commission confirm, are taken from the report to the Minister of Transport by Sir Harold Howitt, following criticisms by Mr. E. L Gethin, former supplies and production adviser, that came to light in Parliament last July.
Sir Harold quotes the figures to illustrate an allegation by Mr. Gethin that the staff are excessive, largely because there is "no practical co-ordination" between the railways and the road services. Sir Harold refrains from comment, for which he would require "a detailed review of the entire organization." The Commission, he is assured, have the point " closely under review," and their Blue Report, produced by a committee and dealing with the reorganization of the purchasing procedure, "envisaged substantial savings." What British Road Services may think of the allegation is not recorded Whatever the reasons for producing the figures, one is glad to have the image of nearly 8,000 people, engaged all the year round on what must be one of the biggest spending sprees of all time. Like ants forever scurrying backwards and forwards, often crossing each other's trails, the gallant 8,000 have spent nearly a hundred times as much as they earned.
We know, of course, that in reality the system is not so haphazard and carefree. Purchase by or on behalf of the Commission is subject to a procedure to summarize which Sir Harold needed several pages. His report cannot avoid drawing attention to the extent of the purchasing power concentrated within the Commission. Like all power, it can be used for good or bad results. Sir Harold partly absolves the Commission from the particular charges levelled at them. He cannot altogether dispel the feeling that behind the charges there are deeper causes for dissatisfaction.
Struggle for Power Monolithic though it may seem to outward view, the Ivory Tower, like most other institutions, is the centre of an unceasing struggle for power. Each form of transport within the Commission has its separate ambitions. There are arguments on the policy of central control as compared with decentralization. The old • guard that came over with the railway companies and the acquired undertakings resent the new men.
Occasionally, sounds of strife reach the outside world. The Howitt report has been welcomed by some people as lifting the veil behind which the Commission are pursuing their task of bringing the railways up to date. In fact, only a corner of the veil is lifted. It would be beyond the powers of one man to deal with every aspect of a purchasing procedure that in a. year was responsible for spending about 1300m. Sir Harold has confessed the need to set a limit to his inquiry, "for otherwise there would have been no end to it in so vast an organization."
One example will show how he tackled his task. Mr. Gethin had alleged that the appropriate committee were strongly against asking any but the " traditional " suppliers for vacuum-brake cylinders. Only after competi D28 tive quotations had been received did the leading traditional supplier reduce to £23 the price that had been virtually approved at 130 13s. 4d.
Sir Harold carefully sifts through the evidence he has collected, going back as far as 1949. He feels that " competitive tenders might have been of advantage.' New methods adopted by the traditional supplier, Westinghouse Brake and Signal Co., Ltd., may have yielded significant economies and accounted for the reduction in price, but "the knowledge that other firms were probably tendering was also a factor." Although the Commission's ultimate decision may have been correct, "insufficient effort was made by the staff concerned to explore alternative sources of supply."
A difference in price of £7 13s. 4d. may not seem large enough to justify a White Paper. The total requirements for vacuum brake cylinders, however, are around 80(1,000, and at one time it was expected they would be around 1.1m. If the final price had been the same as the likely estimate, the Commission would have lost at least £6m. without turning a hair.
Even a small error of judgment can be costly when multiplied several thousand times. On most of the specifia allegations that he considered, Sir Harold absolves the Commission from over-spending. On others, he is less certain.
Error of Judgment "I can see no reason why competitive tendering was not adopted," he says in the case of the replacement of S.S. " Dinard."
There was an "error of judgment" in another case. Assurances on price "should have been sought in the early stages of the negotiations" on cables and switchgear.
The road operator has reason to be. interested in' the report, and in the many things it does not cover. He is no more pleased than anyone else by the recent increase in the bank rate, followed by corresponding adjustments in hire-purchase terms.
More than ever, he must envy the railways their privilege to borrow money at special rates, and even to borrow extra money to pay the interest. They can spend nearly all their loans on themselves. What with purchase tax and high interest, the road operator must feel that soon, for every vehicle he buys, he is paying twice over, once to the dealer, and again to the State and the finance houses.
There may seem some comfort in the statement that railway expenditure is to be curtailed or slowed down, but not expenditure on the roads. In fact, as the Commission are careful to point out at every opportunity, only a small proportion of their expenditure goes on the permanent way, their equivalent to the roads, so that economies forced upon them by the Government will merely. .match economies forced upon the road operator by economic circumstances. If the railways are not laying out their money to the best advantage, it may become _necessary for the Government to make further advances. At a time when money is short, the temptation would be to divert expenditure from the roads.