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The price of salt

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Martin Rosenbaum | 08:21 UK time, Monday, 21 December 2009

For the past few days local councils across the country have been gritting their roads with rock salt to help traffic cope with the snow. But a BBC investigation using FOI shows that these councils are paying widely varying amounts for the salt they use - and this raises important questions about value for money in public procurement.

Salt mining in Cheshire

Earlier in the year we sent local authorities freedom of information requests for details of their most recent contract for road salt, including the price paid. The table below gives data we received from councils about pricing and their supplier.

The rock salt market in the UK is largely dominated by just two companies, Salt Union, with a mine in Cheshire, and Cleveland Potash, which mines in Teesside. Some councils are supplied by a third firm, Irish Salt Mining and Exploration, based near Carrickfergus in Northern Ireland. A few others get stocks from Peacock Salt, an importer and trader which does not mine salt itself.

Table of salt prices

Several caveats are necessary: the contracts vary in size; they have been agreed at different times and they last for different periods; the price may vary during the course of the contract, eg purchases in summer may be cheaper than in winter (this is why some councils give a range); and there is the important factor of transport costs.

The information we obtained only covers some councils for a variety of reasons. About 50 local authorities refused to disclose the data on grounds of commercial confidentiality (although a few others who did this initially relented when we appealed). Some reported that they had consulted their supplier who had requested secrecy.

Some councils do not buy salt directly but instead employ outside contractors to provide a winter maintenance service for their roads which includes gritting. Others told us simply that the price varied, while some failed to respond altogether.

Gritter on the roadNevertheless it is clear even from this partial and possibly unrepresentative sample that there is great variation in what different councils are paying. The rock salt market should be a good basis for exploring value for money in public procurement, since it is a comparatively simple product purchased from few suppliers by many councils and used in essentially the same way.

David Sparks from the Local Government Association, which represents councils, commented:

"It is utterly understandable that the prices councils pay for salt should vary. Prices will go up and down throughout the year. Where land is cheap, councils may decide that it is best to buy salt when prices are low and stockpile it. In other areas, the cost of land for stockpiling salt might be too expensive or the council might decide it is better to do other things with the land. In those circumstances, councils will make other arrangements to ensure they have access to enough salt. Councils know their area and the likely weather conditions and decide how much salt to hold accordingly."

The salt suppliers emphasise the role played by haulage costs. A spokesman for Salt Union told me:

""The price of salt is affected by several variables of which the cost of delivery is the most significant. It is a high bulk commodity and the cost of shipping inevitably increases depending upon distance from our mine in Cheshire. Also salt for gritting is not a single product and some of our customers opt to pay more for variations that offer specific benefits. The other factor that influences price is, of course, the volume ordered and the length and specifications of individual contracts."

Howard Clark, the sales manager at Cleveland Potash, said:

"Transport is the main element in the differences in our pricing. We don't talk about our prices. We consider that to be private to our customers."

I also asked some of the councils paying a high rate per tonne for their explanations. Mark McCartney, highways depot manager at Wigan, said:

"Wigan has a different contract to many neighbouring councils and, unlike a number of other authorities, does not anticipate an above inflation increase. The terms of the contract we have enabled us to receive a very efficient turnaround of supplies indeed at busy times. Last winter this enabled Wigan Council to have a full stock of grit and indeed let other councils use it to replenish their own stocks."

Staffordshire responded: "We have gone through a tendering process and this contract came out as the most reasonably priced". Oxford explained that it only bought a small quantity compared to other councils and that its last purchase had been cheaper than the data supplied for the FOI reply. Torbay failed to respond to a request for comment.

Another striking discrepancy revealed by this survey was the wide difference in the level of openness adopted by responding councils, ranging from those which promptly provided all the material requested without any apparent reluctance to others which adamantly insisted that it was firmly against the public interest to release equivalent information.

One council which refused to provide the price data as commercially sensitive was Somerset. It did tell us how many tonnes it had bought, adding "using market prices you should be able to estimate ball-park costs, and if you have full disclosure from other authorities you should be better placed than us to make such estimates."

There is something strange about journalists who have never purchased a tonne of salt being told they have a better knowledge of market prices than councils which buy large quantities of the stuff. It raises the question of whether councils could and should do more to exchange information with each other to achieve better value for money, when operating in a market with very few suppliers who are therefore well-informed about what many customers are paying.

UPDATE, 22 December, 08:45: Torbay council have now told me:

"Torbay has a mild climate and so Torbay Council only needs to purchase small quantities of road salt compared with other councils. Small amounts generally cost more per tonne. Torbay Council also buys more expensive rock salt which has a special additive called Safecote. This spreads more easily, is better at sticking to the road and doesn't cause as much corrosion to vehicles."

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