THAMES BOROUGH.

Thames Star, Volume LXVI, Issue 20494, 21 December 1938, Page 2

THAMES BOROUGH.

TRADING UNDERTAKINGS.

Future Procedure.

COMMISSIONER'S POLICY

BUILDING UP RESERVES. The Borough Commissioner, Mr. A. L. Burk, in furtherance of the article published yesterday dealing chiefly with the serious position of the waterrace and matters of future requirements, has laid down the following policy for trading undertakings: — "Certain other works, such as flood prevention, bridge renewals, storm water drainage and foul sewer extcn sions, will also demand attention. These are matters which, however, can only be dealt with in order of importance and as finances are available. "In dealing with any trading undertaking, the following principles should be adhered to: — "(IV Proper provision should bo made for the liquidation of the loan at due date, cither by sinking fund or some other approved method. "(2) Maintenance and repairs, being a revenue charge, should be charged against the profits from time to time. "(H) .Depreciation, which by naturo is distinct from .repairs and maintenance should also he taken into account and properly provided for.

"The adherence to these three prin

ciples sometimes raises the criticism that the consumers of electricity are

paying at least twice for the under

taking and presenting it to the next generation free of debt. This criticism ignores entirely the possibility of a second source of depreciation,, namely, obsolescence. This danger is always present as undertakings become non-efficient and have to be replaced by more modern, up-to-date and better methods, and unless provision is made as indicated, all that is left to the ratepayers is the original loan on which capital charges have to be met, as the ratepayers of Thames can bear

ample testimony. "I propose, therefore, in addition to

carrying out the necessaary mainten

ance to build up from the present figure Avhich T require as a bare compliance of 'the statutory obligations of the Council, to what I trust wiJI be a figure which will be able to provide against all reasonable contingencies in the future.

"In determining what amount should be transferred from year to year, con sideration should .be given to, the amount the ratepayers can afford. In other words, the policy should npt be carried to the extreme lengths of involving the ratepayers in a sudden and steep increase of the basic rate. "The proposals I have outlined are in no sense spectacular. On the contrary, the process is a slow one, but if persisted it will bring ample reward, j

"So far as the future administrators are eoncenod, I shall have no jurisdiction over their actions, but I express the hope that they will adhere to what I consider are sound municipal financial methods and continue from where I leave off. "If this is done, I shall feel that 1 have played some part in the rehabilitation of your town, that the improved position brought about by the previous Commissioner shall be consolidated, that provision will be made for the future, and finally that the sacrifice? made by your ratepayers shall . not have been in vain."