An effective penny pincher?

HendyA red topped newspaper which is quite rightly banned from my home city of Liverpool and a number of football stadia across the UK printed a story on Saturday on the penny pinching behaviour of the Chairman of Network Rail. The story revolves around the claiming of expenses for a packet of crisps and a total claim over a three month period of some £618 on top of his £500k salary (part of his £650k remuneration package).  Sir Peter Hendy is a controversial figure on a number of levels but has only been Chairman of Network Rail since 2015 so the impact of his work on passenger satisfaction is still hard to measure. However shortly after taking up his role he identified that the funding proposals for a programme known as CP5 (Control Period 5) was unrealistic and he called for an additional £2.5Bn to be set aside bringing the total cost of the programme up to some £41.5Bn. Peter Hendy is judged to have improved Transport for London whilst working as MD of Surface Transport (2001-2006) and Commissioner of Transport (2006-2015). Along with his public role working for Network Rail, Sadiq Khan has just appointed him to Chair the London Legacy Development Corporation following the resignation of his predecessor who stepped down due to rising costs at the Stadium in Stratford. The costs have risen from £272M to £323M. There are always many risks with public procurement programmes as I know from my own experience. Companies are asked to tender for work based on an unrealistic set of criteria. In an ideal situation, once appointed the contractors should then go through the poorly understood specification and lay out what the best solution would be. The challenge then is that from the outset, before a single cable has been installed or a brick laid, the budget needs to change (usually in the upward direction). The worst case scenario which may be what has happened with Stratford is that contractors attempt to deliver either to the poorly understood specification on budget leaving a white elephant for everyone to laugh at, or bit by bit as the work progresses the failings in the orginal plan emerge until someone puts their foot down. The Contractor gets sacked or is forced off the job or out of business and then the process begins again, this time with designs that were formed by a contractor who is no longer available to explain their thinking.

If Peter Hendy is willing to step in and do as he did for Network Rail with the London Legacy DC then this may ultimately be good news for both the contractor and the tax payer. Whilst the tax payer will pay for every extra pound spent, it is better to draw a line in the sand and plan around a realistic set of designs than allow unregulated drift to continue. In practice costs usually rise simply because the original budgets were set out years earlier and inflation has an impact. However a properly considered assessment of such plans can also lead to a real term cost savings as new technology is implemented or unnecessary elements can be removed in the benefit of the current requirements. A real bonus would be if as a result of Peter Hendy stepping in, the Big Lottery Refund was paid back benefiting many charities around the UK.

The truth is that Peter Hendy is already well paid, his package of £650k may fall some way short of the top names on the BBC list but compared to a Senior Nurse or Headteacher his salary is significant. It is inevitable that he will earn even more when the LLDC remuneration is added in. The way in which our society judges such salaries is not always a balanced way. We need such effective decision makers in our public sector. Whether they should earn such sums is hard to get right. A footballer or Chris Evans will earn several times the pay of Peter Hendy and their impact is potentially a great deal less on the lives of most people in the UK. It does seem petty for him to claim for a packet of crisps, but if this penny pinching means we get to save Millions, or at least plan to spend the money in the most effective way, perhaps he should be thanked rather than criticised for this aspect of his decision making?

According to the red topped report which provoked this blog “Commons Public Accounts Committee chairman Meg Hillier urged executives to “consider their paymasters”, adding: “Network Rail is a public outfit and this is taxpayers’ money.”” I would fully agree with Meg Hillier on this point, but some of our MPs are just as capable of claiming for trivial sums from their paymasters (that is us). It would be good for the CPAC to bear down on MPs as well as Peter Hendy.

About ianchisnall

I am passionate about the need for public policies to be made accessible to everyone, especially those who want to improve the wellbeing of their communities. I am particularly interested in issues related to crime and policing as well as health services and strategic planning.
This entry was posted in Economics, Network Rail, Parliament and Democracy and tagged , , , , . Bookmark the permalink.

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