HC Deb 21 February 1873 vol 214 cc803-15

in moving that— A Select Committee be appointed to inquire and report upon the existing principles and practice which in the several Public Departments and Bodies regulate the purchase and sale of materials and stores, said, that economy in public expen- diture was to be secured rather by minute investigation than by general discussion. The difference between the two methods appeared to be that a general discussion and the declaration that the expenditure was too great and ought to be reduced was like a physician entering a sick room and declaring that the patient was very ill and ought to get better, while the minute inquiry was like a physician making a diagnosis of the disease and applying a distinct remedy to it. That what he might call disease and disorder existed in some of the public Departments all, he thought, were agreed, and the importance of investigating their symptoms would appear from the expenditure of 1872–3. It appeared by the Estimates for that year that the Departments spent upon military and other stores in the following manner:—The Navy expended over £2,000,000; the Army, £3,600,000; upon India, £1,400,000; for workhouses, £2,000,000; for prisons in the United Kingdom, £625,000; upon the police, £435,000; the Stationery Office expenditure was £376,000, and the Post Office £353,000, making in round numbers the vast sum of £10,800,000 spent without any concert between one Department or body and another. They each acted according to their own free will, no pre-concerted method existing, and no general rule being laid down for their guidance. The Treasury was, he might say, the counting-house of the nation, and from the Treasury rules and regulations ought to be sent forth to the different Departments. The House of Commons was the guardian of the public purse, and yet the House had never yet issued any regulations upon this all-important subject. The result was that in place of uniformity being the rule it was entirely the exception. The House would agree with him that there ought to be some comprehensive scheme for buying and selling stores in the great Departments, and his object in moving for a Committee was that some uniform system might be arrived at for their guidance. The Committee could take evidence from the different Departments, and would then be enabled to compare the various methods of buying and selling which they adopted. The Committee could also take evidence of the different plans at present pursued by Belgium, France, Austria, Prussia, and probably the United States, from most of which he believed information would be found readily available. Nor should they forget to take evidence of the course adopted by the different public companies and large commercial firms in our own country—for no nation was so much accustomed as our own to make purchases upon a large scale. Taking what was good from all these different sources, and eliminating what was evil, the Committee would have the opportunity of founding a good sound system, at once simple and of general application to all our Departments. This was not the first time that such a Committee had been asked for in the House of Commons, for in February, 1856, the late Mr. Ricardo obtained the appointment of a Committee to inquire into the making of contracts for the supply of public Departments, and the effect the system of that day had upon the public service. That Committee sat during three Sessions, but owing, unfortunately, to the death or illness of some of its Members, it never reported. But although the country did not have the advantage of its very protracted labours, it had such an influence upon some of our great spending Departments as to lead to a reduction of expenditure. He might here say that in seeking the appointment of this Committee he had no preconceived idea as to what would be the best system for the country to adopt, and no sensible man with our present limited information on the subject would venture to hold any very strong opinion upon it. The duty of the Committee would be to enter on its labours in a philosophical spirit seeking to obtain information in the most careful and impartial manner, and determining how to apply it to the several Departments. He would readily acknowledge that Her Majesty's Government deserved very great credit for what they had done in the past. He was willing to acknowledge that they had endeavoured to make inquiries, and had followed up those inquiries in a very marked manner. The Local Government Board, the War Office, and the Admiralty had each of them instituted these inquiries; but the fact that each of these Departments had made these inquiries for themselves was an argument for a general inquiry into the different methods adopted for the purchase of stores, whence all Departments could alike gain advantage. To give the Committee a notion of how very opposite some of the plans adopted by other countries were, he would instance the cases of Belgium and Prussia. In Belgium everything required for the public was purchased by public tender. They were advertised for in the most public manner, and tenders might be put into the box within an hour of its being opened. The examination of the tenders was held in the presence of the reporters, the public, and the contractors, and, if possible, the lowest tender was accepted then and there, security, of course, being taken for the fulfilment of the contract. The goods supplied under these contracts to the Army were supplied direct to the officers requiring them, these officers being furnished by the War Office with a sample, which they could use as a test of quality. If the articles were rejected, the contractor had an appeal to a Court composed of officers of a higher rank, and from them he could again appeal to a tribunal composed of three persons, one of whom was appointed by the War Minister, and the other two by the burgomaster. The Belgian plan was thus simple and beneficial to the public, and satisfactory to the manufacturer and contractor. In Prussia, again, though all the power was vested in the central authority, purchases were made to a large extent locally, the local authorities making the purchases under a responsibility which was well defined and insisted upon. Already some very valuable information had of late years been gathered upon these points by our public Departments. The Report of the Local Government Board, for instance, with reference to the metropolitan workhouses, showed that the want of preconcerted action had been productive of considerable mischief, and had led to the most extraordinary variation of price paid by different unions for the same articles. He could see no reason why the workhouses should not combine and buy for the entire body, distributing afterwards what had been purchased, instead of asking for small tenders and competing against each other, as if they had rival interests to deal with. It would be as easy for the metropolitan unions to purchase, for instance, coal, and divide it amongst themselves, as it was for the Admiralty to purchase coal for the Navy and distribute it amongst the different stations and ports. During the Crimean War the War Office had a number of sub-spending departments. They were brought under one head in 1869. The Admiralty had done the same, and both had laid down rules for their guidance, and if the two Departments were to go a little further and consider the best mode to adopt for the purchase of stores, the result could not fail to be a great public advantage. The system of limited tender which existed in the different Departments at this moment he could not but regard as very mischievous. As in ordinary life, the Government Departments ought to encourage sellers to come forward, and by advertising openly and doing away with the system of limited tender they would, he believed, be doing much to encourage the large manufacturers of the country to come forward as competitors. He would even go further. He thought that in advertising for tenders the quantity purchased at the last tender and the price given for it ought to be stated, so that there might be some guide for the manufacturer. Another duty of the Committee would be to remove some of the anomalies that existed under the present system. Why should they have the War Office and the Admiralty advertising at the same moment for the same article, as if they were competitors? The nation was able to make prompt payment and was a large buyer, and the public ought to gain the full advantage of these two circumstances. But the anomalies were not confined merely to the purchase of materials, but extended also to the sale of stores. The sale of stores was carried on at the present time without any attempt at regulation, and, in some instances, while one Department was actually selling stores of a certain kind, another Department was purchasing stores of exactly the same character in the open market. They ought undoubtedly to have a system of exchange of stores, and a list of articles to be disposed of might be made out and sent round, so that one Department requiring such articles might obtain them from another Department having them to spare. The principle had, he believed, been carried out lately in the case of some timber very successfully, and he could see no reason why it should not be adopted in relation to all other stores. From the want of preconcerted action they found the War Office, the Admiralty, and the Board of Works purchasing coals each on its own account, instead of as one great firm, and in reference to this matter there arose a very curious anomaly a short time since. The coal contractor who had a running contract with the War Office went and said that, as the price of coals was so much higher than when he had accepted the contract, he should be glad to receive the difference in price. The War Office did not agree to this, but they generously gave him the half. No such application was, however, made to the Admiralty. He was not now making any charge against the War Office, but a little preconcerted action would have probably saved the taxpayers a considerable sum, and have secured more business-like conduct. Anomalies also existed with regard to running contracts which required alteration. Another point to which the Committee might, he thought, well turn its attention was to the question of arbitration. At present we had no well-regulated system of arbitration throughout our Departments, and he believed that a well defined system would be exceedingly valuable, because it was of the greatest importance that they should do all in their power to induce the best men to come forward and serve them. Arbitration, it was true, was already partially adopted in some of our Departments, but the experience of everyday commercial life would furnish the Committee with ample materials for drawing up a good, sound, and well-defined general system. A system of this kind would also give the House a grasp and control over a large section of our national expenditure such as it had never had up to that time. It would also be of great service to political officials going from one Department to another. Indeed, the absence of such a system had at least an indirect influence in increasing our expenditure. A political official going from one Department to another found a system in the one totally different from that which prevailed in the other. The first he had brought himself to understand—perhaps to a certain extent had been its author—and the probability was that he immediately set to work to reform the system of the second Department—a serious consideration when they remembered that every change involved additional expenditure. He had scarcely done more than touch on the question, on account of its magnitude, but he hoped he had shown enough to prove that such an investigation as he asked for would be conducive to the public interest. It would be impossible to have sound and wholesome economy until we had reformed our present system.


seconded the Motion.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "a Select Committee be appointed to inquire into and report upon the existing principles and practice which in the several Public Departments and Bodies regulate the purchase and sale of materials and stores,"—(Mr. Holms,)

—instead thereof.

Question proposed, "That the words proposed to be left out stand part of the Question."


I rise to say in very few words that which it is necessary to state on the part of the Government with reference to the Motion of my hon. Friend, and justice compels me to commence by acknowledging that, in our opinion, my hon. Friend has performed a public service in bringing the subject before the House. With regard to the mere question of form, I hope my hon. Friend will consent to withdraw his Motion, but simply on the ground of form, inasmuch as another subject of interest is likely to follow this, which could not be brought on if my hon. Friend's Resolution were put in opposition to the Motion that you do now leave the Chair. There will, however, be no difficulty in agreeing to it when this Motion is made substantively, with the same approval on the part of the House which it will receive from the Government. My hon. Friend justly observes that there is a great deal which might be said on this question, while he had only lightly touched upon it. I think my hon. Friend in so doing exercised a sound discretion, because it is not at all required that either a case of corruption or of negligence should be established in order to warrant his Motion. In the immense magnitude of the expenditure, and in the great difficulty of regulating that expenditure properly, my hon. Friend has an ample warrant for what he has done. Necessarily an argument such as he has used assumed a somewhat accusatory colour. But I do not think that was the inten- tion of my hon. Friend. It grew naturally out of the statements necessary to justify this inquiry. My hon. Friend is aware that in one great Department of the State considerable efforts have been made of late years by my hon. Friend near me (Mr. Baxter), now Secretary of the Treasury, and those with whom he served at the Admiralty, towards bringing the system to the best state of which it is susceptible. Upon one point, I think, my hon. Friend was not quite fully informed—namely, as to the machinery of Government applicable to this question. I will mention it without scruple, because what I have to say tends to strengthen rather than weaken the case he has made out. He appears to be under the impression that it is in the power of the Treasury to issue rules and regulations for the guidance and. conduct of the Departments with respect to the making of contracts for the supply of the public service. Well, there are certain Departments of the State, and not unimportant Departments, in regard to which undoubtedly the control of the Treasury is sole and paramount, and there, I apprehend, it would be within the power of the Treasury to issue those regulations. But still there are eases which are not of primary but secondary importance. The two great spending and contracting Departments are the War Office and the Admiralty; and I apprehend, with regard to those two Departments, it is not within the power of the Treasury, by any authority of its own, to make regulations which would bind the representatives either of the First Lord of the Admiralty or of the Secretary of State as to the manner in which they shall make contracts for the public service. My hon. Friend will see that, if I am right in this—and I do not entertain any doubt as to the correctness of what I say—that is an additional reason for appointing a Committee of this kind; because the question will arise—and it is not a very easy question, and one which will deserve careful examination—to what degree it may be possible to establish some unity of control with regard to the regulations for making contracts. This is a question of very great difficulty, in which the Executive will cordially welcome any aid it may receive from the House of Commons. The Departments of the Executive for the most part, and the great Depart- ments in particular, have really sufficient difficulty—such is the load of their engagements—in getting through their work as it comes up from day to day, without reconsidering to that extent which I fully feel would be desirable their general position and the general rules applicable to the transaction of work. It is eminently within the constitutional functions of the House of Commons that this sort of general review and consideration should be undertaken either by it, or by its most appropriate organ—a Select Committee. Having said this, there is no reason why I should travel over the same ground as my hon. Friend. From us he will receive the most cordial assistance and co-operation. The difficulties inherent in the system of large supplies for the public service can never be altogether got over. You never can find in regard to the public service a perfect substitute for that vigilant, that ever-living sense of self-interest which applies to private concerns; but the question is, how near can we get to the provision of an efficient substitute, and my belief is that my hon. Friend will render us a very important assistance in the solution of a problem of great difficulty. I undertake to say this on the part of the Government; first, because I can say it without in the least degree appearing as a party in the case, inasmuch as no hon. Member of the Government is less immediately in contact with this subject than myself; and also because it is a matter which does not concern alone any one public Department, but embraces so many, all of whom have a common interest in lending their co-operation to my hon. Friend.


said, he was glad the Committee was to be appointed, because he was convinced it would do some real good in the matter of contracts. It should have two objects steadily in view—that the contracts should be so drawn as to protect the public, and on the other hand to do justice to the contractor. Many of these Contracts were so vexatiously framed that it was believed the best men in particular trades were prevented from sending in tenders. The supply of fuel used in that House and in other Government buildings would naturally come under one form of contract. Valuable evidence might be obtained by the Committee from the Midland and other railway companies which had store depart- ments and used large amounts of stores, as to the best form of contracts, &c. He anticipated much benefit from the labours of the Committee.


believed that the House would receive the appointment of this Committee with unquestioned satisfaction, which would be equally shared by those contractors who supplied the large buying Departments. What was wanted in the interests of economy was the establishment of a system of cooperative buying on the part of the Government. The plan of having "select lists" in contracts was a grievous evil. Another point was that the Inspector of Contracts should never be brought into contact with the contractor. If these and other improvements were introduced great advantage was likely to arise to the service. He had no doubt that the labours of the Committee would effect a great reform in the present contract system.


said, it was thought by some a profitable thing to get a Government contract, but as a rule the Government did not pay too much in buying. A great many were of a different opinion, but he asserted that as far as his experience went on the subject, the Government bought very well. He had known his hon. Friend (Mr. Baxter), when at the Admiralty, buy to as much advantage as anyone else was able to do. It had been pointed out by the Return of the Local Government Board on the contracts for the metropolitan workhouses, that one contract for tea was at 1s. 2d. per pound, and another at 2s. It all depended upon the quality. You could go into the market and buy tea for 9d. per pound, and there was plenty to be had for 2s. 6d. The price of sugar, tea, or any other article was, therefore, no certain criterion of quality. In most instances the Government exercised great judgment in making their purchases, and he wished to give them credit for this. Indeed, many persons who entered into contracts with the Government found that they made exceedingly little by their bargains, and, indeed, people with a large business, as a rule, would not be bothered with Government contracts. There were so many tests and examinations; and, besides, perhaps they could not get their money when they wanted it. Another difficulty arose from the fact that individuals who were thoroughly competent to make purchases could obtain higher salaries from private firms than were given in public Departments. Again, it ought always to be borne in mind that private firms learnt to buy goods because they had afterwards to sell them. In like manner, if gentlemen in the Government offices had to sell their goods as well as buy them, they would soon learn how to purchase in the best market.


wished to say a few words on this subject, as the hon. Member for Hackney (Mr. Holms) had referred to the inquiry over which he had had the honour to preside. He felt assured that the result of the labours of the Committee just moved for would be satisfactory to the public; though he could not altogether agree with the hon. Member for Hackney as to the advantages which would accrue there from to the public service: for it was so essential to have supplies of stores at a short warning, that prompt measures must be taken to procure them, or else we must lay in a large stock of stores, in order to be prepared for any emergency. Now, of all evils in a public Department the greatest was having a large stock of stores in hand, and therefore he would caution the House not to expect too much from the coming inquiry. Nevertheless he thought the information which the Committee would obtain must be productive of some good results. The hon. Member for Hackney had alluded to the method adopted by continental nations in laying in supplies of stores; but it should be remembered that their stores were of a different description from ours and were not subjected to the same severe test. The strict inspection of stores purchased for our public Departments deterred many contractors from sending in tenders; for the Inspector was exposed to the most severe reprehension and loss if the slightest defect was discovered in any of the articles delivered. It should also not be forgotten that many articles required, especially in the War Department, were different in pattern from those in common use, and therefore required to be fabricated expressly, and would be a dead loss if rejected. He might here mention that the hon. Member for Hackney was wrong in supposing that the War Department and the Admiralty did not act together in purchasing certain articles; for instance, groceries, salt meat, rope, and other articles, were obtained by the War Department from the Naval stores; while the Admiralty was supplied by the War Office with ordnance, projectiles, and ammunition. In expressing his satisfaction at the right hon. Gentleman at the head of Her Majesty's Government having so readily assented to the Motion, he wished to express his conviction that whatever mistakes might have been made, it would be found that his right hon. Friend the Member for Ripon (Sir Henry Storks), and the right hon. Gentleman the Secretary of State for War, had given great attention to the subject, and had carefully watched over the interests of the public service, in everything relating to contracts and the purchase of stores. In conclusion, he said he was sure his right hon. Friend the Member for Ripon would willingly testify that the War Department owed much to the services of Mr. Thomas Howell, who for 17 years had acted as Director of Contracts, and who was a most excellent and conscientious public servant.


wished to make a few remarks, because what had been said by his Eon. Friend the Member for Hackney (Mr. Holms) might possibly confirm a misapprehension which existed in the public mind on the subject of arbitration. It was supposed that when a contractor sent in goods to the Admiralty or the War Office he was entirely dependent on the judgment of the Inspector, from which there was no appeal whatever. This was formerly the case, he regretted to say. The consequence which was found to be produced was, that many men of the highest positions would not submit to the judgment of an official who was probably in the receipt of a very small salary, whose decision could not be appealed against, and who in some instances had no special qualification for judging between one article and another. Many years ago a change was made at the War Office, and he had not been at the Admiralty more than a month or two when he mentioned to the First Lord of the Admiralty the fact that the practice at the War Office had been altered, and said he thought it indispensable that there should be an appeal from the decision of an Inspector of Contracts direct to the Financial Secretary. His advice had been adopted, and now whenever a contractor felt himself aggrieved and thought his tender ought to have been accepted, all he had to do was to write to the Financial Secretary, who would at once direct that an officer should be appointed to judge between the contractor and the Department. There were now no complaints, and he wished it to be understood among the mercantile classes who were likely to send tenders to the Admiralty that there was an appeal against the decision of Inspectors.

Motion, by leave, withdrawn.