HC Deb 28 May 1963 vol 678 cc1271-84

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hughes-Young.]

11.12 p.m.

Mr. Dick Taverne (Lincoln)

I wish to raise the matter of the refusal of the Ministry of Agriculture, Fisheries and Food to grant aid to the Lincolnshire River Board of £12,918 for work on the Witham Improvement Scheme. This is a serious matter to the River Board and I will begin by explaining to the House the background to this matter.

This is part of a large scheme, the total of which involves the expenditure of more than £1 million. The part of the scheme with which the debate is concerned is that for improvements to the Sincil Dyke, involving the expenditure of about £½ million. Before the work could start on this scheme there was a considerable delay and the River Board had to wait for the transfer of responsibilities from the British Waterways; but at the first opportunity, in late 1961, tenders for this scheme were invited by the Board. Tenders were received in March, 1962, and the successful tender, after the necessary inquiry as to costs, was sent to the Ministry's regional engineer on 12th April, 1962.

On 25th May, one-and-a-half months later, the regional engineer wrote to the River Board asking for certain information and raised certain queries about costs. Promptly, on 29th May, an answer was received from the River Board giving him all the information he required—and, of course, he had had time to consider the figures for about one-and-a-half months. Then nothing happened. The Board became disturbed about the delay. The clerk spoke to officials of the Ministry on several occasions, and pointed out that the matter was extremely urgent because he feared that if there were continued delays prices might go up, since a fixed price had been tendered. The clerk was told by the officials of the Ministry that, irrespective of the size of the contract-which was, as I have said, for about £½ million—the Board would have to wait its turn.

In the middle of July the Board became so disturbed at the delay that a special delegation went to the Ministry. The Board was told, as the clerk had been told, in a letter which followed that visit to the Ministry, that it was hoped to deal with the matter soon. Not until 7th August, nearly four months after the successful tender had been transmitted to the Ministry, was approval finally granted.

By that time, what the Board feared would happen had, in fact, happened. The contractor told the Board, "I could not take advantage of the fixed prices which were offered to me when the tender was submitted. I have now to do the work in two winters and one summer instead of being able to do it in two summers and one winter. Winter work necessarily involves further costs, because of delays caused by the weather, uncertainties, and so on, and I am afraid that I cannot stick to the contract price." In effect, the contractor said, "I want £15,000 more for the work than I estimated."

The matter was gone into in great detail, negotiations ensued, and finally, after negotiations, the Board agreed that a fair and suitable price for the extra work occasioned by the Ministry's delay was a further sum of £12,918, which is the amount for which grant aid was subsequently refused. This was felt, after elaborate inquiries, to be the cheapest possible way of getting this extremely important scheme carried through.

As soon as possible, on 27th August, the full facts were passed to the regional engineer, who was told, as was the Ministry, how extremely urgent the matter was. The contractor also added that he would be able to stick to this further additional price only if the new work was started on 17th September. It was on 6th September—11 days before the work was due to start—at the last possible date, that the Board told the contractor, "Yes, you may carry on with the contract. We accept this offer."

When the Ministry heard of this, it at once tried to get the Board to order the contractor from the site, or to prevent him from getting on to it, but it was too late—the contract had been concluded, and the Board had no option because, had there been further delay, the costs would have risen once again, the progress of the work, which is extremely important and urgent, would have been prejudiced, the ratepayers would have been asked to contribute more and, because grant aid for a larger sum would have been involved, the taxpayer would have been prejudiced.

The Ministry told the Board, "You have broken our regulations. You had not been granted approval before entering into the contract—therefore, no grant aid." Not unnaturally, the Board was somewhat incensed at this, and the explanations from the Ministry have been two. First of all, the explanations given for the delay have been that there was originally a discrepancy between the figure of nearly £½ million put forward in the early part of last year and the original figure of some £300,000 which had been mentioned in 1959. The Ministry said, quite rightly, that a big sum was involved, hence the delay.

To that, there are two answers. The first is that the old figure of nearly £300,000—which was, as it turned out, quite an erroneous one—had been before the Ministry for a long time and, at its request, a report had been made by consulting engineers, a long time before the later figure was put forward, which made it quite clear that the other figure was too low and could not be supported. Further, as the Ministry itself admitted, and pointed out in a letter of May, 1962, costs had gone up.

The second answer to the Ministry's explanation is: does it really take the Ministry of Agriculture four months to reconcile a discrepancy in the figures? If this was a big contract, as it was, did not that fact make it all the more urgent to see that it was dealt with quickly so that no further increase in costs was involved? Did it, and should it, take the Ministry four months to consider the tender which was put forward? If that is the normal practice of the Department, it is high time that the Department was seriously examined with a view to overhaul. The Ministry knew that the matter was urgent, but it replied that the Board must wait its turn. If this means that everyone who puts forward a tender to the Ministry has to wait a period of four months, this is a very disturbing state of affairs. In my view, there was no excuse whatever for such a long delay.

The second explanation given by the Ministry, not of the delay but of the refusal, has been that, according to the Ministry, the Lincolnshire River Board has a bad record and had been warned on 12 previous occasions of breaches of the regulations. That was the Minister's answer to a Question which I put to him. There are two answers to that explanation.

First, I hope that the Minister will carefully consider these cases of warnings about breaches of regulations. I have examined 12 incidents which have been reported to me by the River Board on which this may have been based. Only one of them was a case where work on a scheme was started before approval was given. This was work to the extent of some £500, an occasion in 1957. Two of the 12 are admittedly breaches of the regulations by the Board for which the Board can offer no excuse and in which it was at fault. They were in 1953 and 1957.

Of the other nine cases, three were only minor and very technical, three were cases in which the circumstances changed owing to conditions which were quite unforeseeable by and beyond the control of the Board and where the Board's explanation was accepted by the Ministry and in which grant aid was duly given. The other three were cases in which there were variations by the Board which resulted in considerable saving.

The Board's record is not bad and perhaps the Minister can tell me whether there have not been minor breaches by other river boards of the same kind, because I suspect that minor breaches of this kind and variations of this kind are cases in which not only the Lincolnshire River Board is at fault.

The second answer is much more important. Even if there were technical breaches of the regulations by the Board in the past, does that justify delay by the Ministry? Does that mean that the Ministry can delay as long as it wishes? Does it justify delay to such an extent that an extra burden is imposed on the ratepayers and the taxpayers—for it is not only people in Lincolnshire who have to be considered, but all the taxpayers who contribute to grant aid?

The Ministry is under a duty to assist the river boards and under a duty to keep down costs and under a duty to act to prevent contracts from being delayed and prices rising as a result of delay. There is no question whatever but that the extra cost which was incurred on this occasion, this sum of nearly £13,000, was due to delay. This was a scheme which had to be pressed on, a scheme of great importance to my constituents and not only to people in Lincoln but to farmers and people in Lincolnshire generally, and it was a matter in which, as I have said, the Board had no choice.

Does the Ministry say that if there have been breaches in the past, one has to disregard the extra costs involved irrespective of the delay and abide by the strict letter of the regulations, even if the cost goes up by £10,000, £20,000 or £30,000? Was the Ministry to have no regard to the postponement of the scheme involved? Was the Board simply to wait its turn, as it was told, and, when it became impatient, to be told that it had a bad record? Whatever the record of the Board may have been, and it does not admit that it has anything in the sense of a bad record—there are a few technical breaches and only two serious breaches—its case was still entitled to be treated on its merits on this occasion. Even if there were previous breaches, the Ministry was still at fault.

This was an important scheme to prevent flooding, from which many of my constituents have suffered badly. The sum which now has to be met by the Board, and, therefore, by the ratepayers, is not a negligible sum. The total which they will have to meet on which otherwise aid would have been granted is a sum which is more than the total collected, for instance, annually from income from angling fees.

I regard this as a sorry story which throws a bad light on the operations of the Ministry. I would much rather defend the civil servants than attack them, as a body which is working for the community as a whole. I have often explained to my constituents the inevitable delays which must result in correspondence with the Ministry. One cannot expect a very large Department to answer all queries overnight.

I should like to be able to point to the Civil Service and to show it to be quite as effective as, and in many cases even more effective than, private firms. But it is this kind of delay and technical interpretation of the rules which sometimes gives a bad name to the operations of the Civil Service, which leads to the exasperation of the public and leads to talk of bureaucratic red tape which we cannot afford in a case like this.

I realise, of course, that the Minister must always defend the work of his Department, but I hope that when he has finished defending it he will give this case a more than routine examination and will ask some very searching questions of his Department. I hope and trust that if he does so he will realise where the fault lies and will then review the decision he has taken which has placed this extra burden on the rate-payers of the Board, and I hope that in future the Civil Service will proceed without unnecessary delay.

11.27 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Scott-Hopkins)

I am grateful that the hon. Member for Lincoln (Mr. Taverne) has presented his case in such a clear manner. I regret one or two of the final remarks he made concerning the Civil Service. I would point out that the decisions taken in this case stem from our decisions alone. The civil servants have been carrying out the instructions given to them to the best of their ability and, in my view, have done so extremely well. Perhaps the hon. Gentleman has not been briefed as well as he might have been by the River Board as to the events concerning this case.

It might be to advantage if I talked for a moment about the conditions of grant. Here we have gone to a lot of trouble to ensure that river boards are fully aware of the conditions that must be observed before expenditure on drainage works is eligible for grant-aid, and the importance of care in estimating costs. The hon. Gentleman made a fair point about this.

We issue a Memorandum of Grant Conditions, several copies of which were sent to all boards the last time it was revised in 1955. Very often boards are reminded in correspondence of the need to observe these conditions. The two conditions that are particularly applicable to the case we are discussing tonight are those dealing with the variation of works already approved and the acceptance of contracts.

With the permission of the House I will very quickly give two quotations from this memorandum. The first quotation is under the heading "Variation of Works as Approved" and the important sentences here are as follows: All works must be carried out in accordance with the description and drawings as approved for the purpose of grant-aid. Any variation of the scheme must be submitted through the Regional Engineer for the Ministry's prior approval. A little later in the same paragraph is the sentence: If any variation is made without prior approval, the Ministry reserves the right to withhold or reduce the grant and to require the board to refund any advances of grant which may have been made. My second quotation is from a later paragraph dealing with contract tenders, and in this case I think it is sufficient if I read just one sentence, namely: In no circumstances should a tender be accepted without the Ministry's prior approval. Perhaps I may make one further observation before turning to the Lincolnshire River Board and this particular case. Our procedure for approving proposals for drainage improvements usually entails our considering a first estimate of the cost of the works in relation to the objects they are intended to secure. This is the estimate which the hon. Gentleman was mentioning in this case. We have to consider whether a scheme is worth while. In doing this, we obviously are very dependent on the closeness of the estimate that a board can produce.

If a board makes a serious mistake and underestimates the cost of some works which, at that estimated cost, are clearly justified by the benefits they produce, we may later find ourselves in the position of having approved, at least in principle, a scheme costing much more than the first estimate and at this new price not necessarily justified by the benefits which will accrue from that increased expenditure. We take what steps we can to verify the estimates that are sent to us, but in the last resort we cannot duplicate all that a board does and must accept its findings at their face value.

The hon. Member made a point about cases over which the Lincolnshire River Board had had trouble in the past with my Ministry. I do not want to single out this Board for an unfair shale: of criticism. I would agree with the hon. Member when he mentions that there are other boards which also have had difficulties in the past, but it is fair to say that the Lincolnshire River Board has had more warnings than any other board over the difficulties and the mistakes which I have just mentioned.

I have taken the trouble to go through the past five years' record of the Board—not back to 1953 as the hon. Member did—and I have identified 12 instances of warning letters to the Board, urging it to estimate more carefully and closely, or warning it against varying approved works without prior approval. To be fair, however, none of the instances I have seen related to the acceptance of a tender without prior approval. If the hon. Member wishes, I will give him later a complete list of cases where the Board has transgressed the regulations and has spent more than it ought to have done.

I will give the hon. Member two instances now which are not minor infringements, as he said. They are quite important, particularly in relation to the sum involved. In 1959, works on the Tetney Sluice resulted in excess expenditure of £3,211, over and above the approved sum of £6,000. We warned the Board in the strongest terms of the need to estimate more closely and get prior approval to variations. The Board had committed both offences in this case. Nevertheless, we grant-aided the excess. In 1961 the Ministry refused grant on £192—a small sum, but the principle is the same. It was spent on work not approved in advance.

Mr. Taverne

Is it not a fact that the sum of about £3,000 in the case of the Tetney Sluice was expenditure which the Ministry admitted was caused by additional works which were variations as a result inevitably of weather conditions and the collapse of the old doors? Was not this accepted later as an explanation by the Ministry?

Mr. Scott-Hopkins

I said that we accepted it, and indeed paid grant on this excess expenditure, but I must make the point again that the Board did not consult us before it spent this money and that there was no excuse for that. When the Board explained the reasons to us we grant-aided that scheme.

As recently as May, 1962, we had to consider unauthorised works on the Upper Bain Improvement Scheme. Here the Board had been given approval to £50,000 but did extra work costing over £18,000 without our prior approval. All these cases are instances—and there are 12 ranging from small to big—where the principle has been breached and the Board has not kept the conditions of grant.

As to the present scheme and the events leading up to it, what I have to say does not entirely agree with what the hon. Member said. The whole scheme, of which the work under discussion is only a part, is the improvement of the River Witham and its tributaries in the City of Lincoln and a large area of agricultural land nearby. Sincil Dyke, to which the hon. Gentleman referred, is one of the two channels carrying the Witham through the City of Lincoln.

When this scheme was put to the Ministry for approval for grant-aid, in 1959—the hon. Gentleman gave the date correctly—it was estimated that the whole cost would be over £1 million, of which the Board estimated that £308,000 would he for the improvement of the Sincil Dyke part of it. In March, 1962, the Board obtained tenders, having left its estimate unrevised, for the work on Sincil Dyke, and on 12th April, 1962, it asked the Ministry to approve acceptance of a particular tender. It was then found that the tender price was £497,805. It had risen by £189,805. I have stressed the importance of close estimating in these matters, but there was a difference of over £189,000 between the estimate and the tender price. This is an important point because river board schemes of this kind attract grant of about 80 per cent., which means that approximately £800,000 of taxpayer's money is involved in this case.

Here we had an estimate that was exceeded at tender by almost two-thirds, an enormous amount. Not unnaturally, at this point the Ministry asked the Board for an explanation of the increase. We were extremely anxious about the vast difference between the two figures. At the end of May, 1962, the Board replied to the effect that there was no explanation of the difference, as the original estimate was obviously wrong. Almost as an afterthought. the Board then said that the total estimate for the Sincil Dyke part of the work should be increased still further to £548,867.

It is hardly to be wondered that at that stage the Ministry found it essential to examine the new estimate very closely and to re-examine the whole worth-whiteness of the scheme, since the original estimate of £300,000 had gone to something over £500,000, a quite enormous increase. In June, 1962, the Board told the Ministry that it was worried about delay in approving the tender and it warned us then that the price might rise if work did not begin shortly.

In July, the Ministry received a deputation which came to press on us the need to take an urgent decision. At this meeting, once again, we had a further surprise from the Board, which disclosed that the estimate could be reduced now—quite suddenly, out of the blue—by £48,000 because this was for work for a private company which would pay that sum to the Board for what was done. This was further evidence that the Board really had some difficulty in getting anything like accuracy in its estimating, and doubt was thrown on the estimate for the whole scheme. Later in July, the Board again warned us that the contractors might not be able to keep to their price.

On 7th August, the Ministry told the Board by telephone that it could accept the tender, and we confirmed this on 10th August. On 27th August, the Board said that the contractors wanted either to delay beginning the scheme until March, 1963, thereby, presumably, increasing the cost, or to increase their tender by £13,000 because—this was a point made by the hon. Gentleman—delay in accepting it had meant that they would have to work through two winters and one summer instead of two summers and one winter.

We understood that a decision on this would have to be taken by 16th September or otherwise the contractor would withdraw his tender altogether. While we were still considering this further increase—an additional increase on the £300,000 which had already gone up and up-we learned on 12th September by telephone that the Board had already accepted the tender. We discovered later that the Board had accepted the tender on 7th September, knowing that the Ministry was still considering the request to increase the tender price by £13,000, a matter for which the Board had sought approval only the week before.

The hon. Gentleman can hardly maintain that the Ministry has in this case been dilatory in trying to meet the Board's constantly varying estimates and tenders. He has said that delay costs money. The reason for the delay has been the inaccuracies of the Lincolnshire River Board, its constantly varying estimates, going up and up, suddenly dropping by £48,000, and then going up again and that right at the last moment. Then there was this final broach. It was a contravention of the conditions of grant and placed the Ministry in a difficult position. I say frankly to the hon. Member that this was a case that we could not judge in isolation. Therefore, after the most careful consideration, we felt that we had no choice but to take the action which we did.

As the hon. Member knows, because I have written to him, since we took the decision I have looked hard, long and earnestly at the matter to see the rights and wrongs of the case. I have gone a long way back into the matter in response to appeals by the hon. Member and by the River Board. I feel bound to conclude, however, that the decision not to grant-aid the final excess of £13,000 on the Sincil Dyke section of the scheme must stand.

I point out to the hon. Member that this £13,000 is likely to be less than about 1 per cent. of the total cost of the River Witham Improvement Scheme. I regret that the decision has had to be taken in this way, but I cannot find any justification for changing the decision which I have given.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Twelve o'clock.