HC Deb 16 May 1956 vol 552 cc1998-2004
45. Mr. Dodds

asked the Prime Minister if he will make a statement, following investigation into the disposal of Government surplus stocks; and if he will state the details connected with the introduction of a more efficient system designed to eliminate waste.

The Prime Minister (Sir Anthony Eden)

I informed the House on 15th March that I had invited my right hon. Friend the Chancellor of the Exchequer to consider the outcome of Departmental inquiries which were being made into, and to report on the general procedure for, the disposal of surplus stores by the Service Departments and the Ministry of Supply. This my right hon. Friend, with the assistance of my right hon. Friend the Financial Secretary to the Treasury, has now done.

My right hon. Friend's conclusion is that in general the present system is working properly, and that it would be a mistake to try greatly to tighten the safeguards at an expense of staff, time and money which would be likely to be quite out of proportion to the results achieved. He has, however, made certain recommendations on the procedure in and between Departments for offering surplus stores in advance of public disposal.

I accept my right hon. Friend's conclusions, and I have given instructions for his recommendations to be put into effect. I am also taking steps to impress upon all concerned the need for Departments to keep constantly alert in this whole matter.

With permission I will circulate in the OFFICIAL REPORT a full statement on this subject.

Mr. Dodds

While thanking the Prime Minister for the statement he has made, which is very different from the Answer given on 1st March, and whilst hoping that the new arrangements will considerably curb the wicked waste of public money, may I ask the Prime Minister to bear in mind that I propose to continue to keep a keen eye on Government surplus activities? Is the right hon. Gentleman not aware of the considerable interest and curiosity, both inside the House and outside, as to the reason why for so long I have not been able to put forward my case in debate on the Floor of the House?

The Prime Minister

I am entirely in favour of the hon. Gentleman keeping his keen eye upon this subject, and to keep it in practice during Whitsuntide he will find that the statement I am circulating, which is a good, eight-page document, takes quite a lot of study. I thought that he would like to have it before we went away, and if he is not satisfied he can put down more Questions when we come back.

Mr. Bence

Can the right hon. Gentleman give us an assurance that contractors who acquire surplus stocks through Government disposal are not restricted to price maintenance in tendering again for supplies of similar products to Government Departments?

The Prime Minister

I would rather that the hon. Gentleman read this statement, if he will, on which much labour has been spent, and then any Questions can be put afterwards.

Mr. Nicholson

Is my right hon. Friend aware that public anxiety arises from what are alleged to be the large profits made by people who bought surplus stocks at auction, and would he consider changing the system so as not always to dispose of stocks by auction, but by employing agents or some Government Department to find markets?

The Prime Minister

Some of these recommendations are about the offering of surplus stores, and it is in respect of them that certain changes are recommended in this procedure.

Mr. Robens

Although this Question deals with surpluses, may I ask if there is not now a case for considering the question of Government buying, particularly of those things which are common to a number of Departments? Would the Prime Minister not agree that the House owes a debt of gratitude to my hon. Friend the Member for Erith and Crayord (Mr. Dodds) for raising this matter and pursuing it so vigorously?

The Prime Minister

I have already said that I am entirely in favour of hon. Members raising points of this kind. It is exactly that kind of vigilance which the House favours. Frankly, I do not think that the hon. Gentleman's strictures are deserved, but even if a hundredth part of them were deserved it would be good that we should try to put the matter right.

Following is the statement:

1. During the immediate post war period, the principal consideration was to get out of Service hands and into civilian use as quickly as possible, not only in order to relieve the pressure on storage space at Service depots but to meet part of the pent-up civil demand for various kinds of stores at a time when new production was only just beginning to get under way again.

The circumstances are different today. The attractiveness to traders and to the public of Service surplus stores, as goods, is much diminished by the fact that new goods, of known and proven quality, are readily available. But it is still important to get surplus stores out of Service hands and into civil circulation to ease the Services' manpower and storage problems, and also to ensure that the fullest use is made of existing resources before increased demands are made upon new production.

For both these reasons it is essential to dispose of surpluses as quickly as is reasonably practicable. The Government must certainly try to avoid undue haste, whereby they might spoil their own market or sell things which they themselves could use. On the other hand it would be a mistake to risk Over-elaborations of the administrative machinery for disposal, which might well prove self-defeating and disproportionately expensive in manpower and money.

2. The Services are unlike most other large purchasing organisations in that much of their planning and purchasing is to meet contingencies and emergencies which may never arise. Particularly when there is a material change in strategic plans, large quantities and classes of Service stores may from time to time become obsolete, or surplus for other reasons, and thus available for disposal. But avoidable accumulations of unneeded stores may also result from excessive procurement, due to a variety of causes, from faulty store-accounting to failure to review requirements in the light of large-scale redeployment of Forces.

This problem is a general one which concerns all the Services; the Ministry of Defence has therefore undertaken to coordinate a general examination by the Service Departments and the Ministry of Supply, in conjunction with the Treasury, of their procurement policy and procedure. Each Service Department is also actively engaged, in association with the others and with the Treasury, on reviewing its own storekeeping and stock accounting practice. This work is the more important since it is certain that during the next two years surplus stores will be thrown up for disposal in a volume greater than has been experienced since 1950.

3. Her Majesty's Government are satisfied that adequate arrangements exist in each Service Department for considering proposals to declare stores or equipment as surplus to requirement, and for ensuring that other branches within a Department are aware of stores and equipment thrown up as surplus by any given branch.

4. Each of the Service Departments is informed by certain civil Departments of any categories of stores in which they are likely to be interested. It is on the basis of the "shopping lists" sent to the Service Departments that the Service Departments notify the civil Departments concerned of stores coming up for disposal. The Service Departments have arrangements for continuous exchange of information with each other, although they do not exchange formal "shopping lists". Departments thus have an opportunity to offer for surplus stores before they are made available for public disposal.

My right hon. Friend has recommended certain improvements in this procedure designed to make Departments aware of each other's requirements and disposable stores as early as possible, and to give purchasing Departments as long as possible to inspect stores and make up their minds whether to purchase. I have given instructions for these recommendations to be put into effect.

The principal recommendations are:

  1. (a) purchasing Departments should notify the Service Departments of the kinds of stores in which they might be interested, if they do not already do so; and, if they already do so, should bring up to date the shopping lists which they put in;
  2. (b) such lists should continue to be kept up to date by regular review;
  3. (c) the Service Departments should review their arrangements for consulting each other to ensure the fullest and earliest possible exchange of information on each other's availabilities and requirements of surplus stores;
  4. (d) the Service Departments should give as early notice as possible in general terms to the Civil Departments of probable avail-abilities of stores on their "shopping lists", and as long as possible in which to decide whether to buy any particular stores available for disposal;
  5. (e) Departments generally should consider whether they can permit some relaxation of their normal standards and specifications in order to be able to take advantage of Service surplus stores which, though not ideally suited to their requirements, may yet serve their purpose.

5. The Ministry of Supply (which disposes of all War Office surpluses in this country) and the Air Ministry, both of which sell a considerable volume of stores by auction, distribute copies of a catalogue, a short time before an auction is due to take place, to potential buying Departments and other bodies, but this can only be a "long stop" precaution.

6. Her Majesty's Government take the view that the arrangements for exchange of information in advance of public disposal should normally be limited to Government Departments, but that other public bodies (e.g. the nationalised industries and local authorities) can and should be sent copies of the auction catalogues (if they wish to receive them) or be invited to tender at the stage at which stores are disposed of to the public.

7. The Admiralty disposes of surpluses in the United Kingdom by tender, generally competitive, and by negotiation, and conducts no auction sales. The Ministry of Supply and the Air Ministry dispose of about one-third of their surpluses by auction sale, and the remainder by tender or negotiation.

In deciding which method of disposal should be adopted for any particular stores Departments have to take account of:

  1. (a) the need to dispose of surplus stores quickly and without undue expenditure of money or manpower;
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  2. (b)the need to ensure as fair a price as possible by giving opportunity to purchase to as wide a field as possible of potential buyers;
  3. (c) the quantity, nature and location of the stores; and
  4. (d) the availability of facilities for sale.

Amidst so many different circumstances and considerations it would be impossible to lay down hard and fast rules. Departments must continue to decide each case on merits, and these matters will continue to demand vigilance and the exercise of careful judgment on the part of all concerned.

8. Ministry of Supply and Air Ministry auction sales are widely advertised, and catalogues are available for two weeks before the sale. Sales are conducted by qualified auctioneers. For items of interest to civilian users and small traders it is the general practice to offer some lots of single items or small quantities, but most of the stores are sold in comparatively large lots. It has been found in practice that the large lots usually bring in higher unit prices than the small lots.

The selling Departments take steps, the nature of which it would not be in the public interest to disclose, to guard against any possible "rings". There is no evidence to substantiate the suggestion that non-warlike stores with a civilian use are sometimes deliberately damaged before being sold, in order to protect private industry

9. My right hon. Friend has discovered no ground for thinking that the prices realised are not fair market prices, bearing in mind not only the nature of the stores and the fact their condition is not guaranteed and is often unknown to the purchaser, but also the general considerations referred to in the opening paragraphs of this statement. It would be impossible entirely to exclude the risk of selling at "give away" prices without inspecting and valuing all stores coming up for disposal; even this would not necessarily secure sale at higher prices, and however roughly it were done, it would entail a great increase of staff and considerable expenditure of public money, and seriously retard the process of disposal.

10. Her Majesty's Government consider that in general the present system is working properly, and that it would be a mistake to try greatly to tighten the safeguards at an expense of staff time and money, which would in their view prove to be quite out of proportion to the results achieved. But I am taking steps to impress upon all concerned the need for Departments to keep constantly alert in this whole matter.

11. There have been certain allegations or suggestions of corruption in connection with disposals of surplus stores. One allegation which has recently been revived was the subject of Questions in the House on 18th December, 1952. 26th January and 2nd March, 1953. This allegation related to the disposal of vehicles overseas in 1946. There have been no allegations supported by sufficient evidence to sustain even a prima facie case of grave corruption since that time, though there have been some cases of petty corruption; in these cases the dealer concerned has been struck off the Department's trade list, and disciplinary action has been taken against the official or Service man concerned. There is no evidence and no ground for suspicion, of corrupt practices at the present time. But Departments are being instructed to watch such matters very carefully.

12. A number of civil Departments also dispose of surplus stores, though on a far smaller scale than the Service Departments. My right hon. Friend's report is being drawn to the attention of these Departments, as disposing Departments. in order that they may consider how far its conclusions and recommendations are applicable to their own arrangements for disposing of surplus stores.