The Government Lighting a Forest Fire
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The Levy, Combined with Relaxation of Licensing, Will Create Conditions Under which Rate-cutting will be Encouraged and the Benefits of Denationalization May be Nullified
By Serviteur ANYONE who hoped that the Government's oftstated readiness to consider criticisms of its White Paper on transport policy would result in the Transport Bill carrying on where the White Paper left off, must now be sadly disappointed. Operators have heard that the Road Haulage Association went several times to the Ministry of Transport to discuss the White Paper. They have not heard what, if anything, was achieved by these visits, and they now begin to understand the absence of news. What other organizations have been consulted is by no means clear, but "The Times" actually refers to "the absence of consultation • with those now running road and rail services. . . ."
The Bill represents, in terms of policy-making, a small advance on the proposals in the White Paper. If all concerned, and particularly the Government, were now to proceed to treat the Bill as though it was in fact the White Paper, and if the Government were to be sincere in its request for criticisms and in its promise to be influenced by them, one could look forward to speedy, reliable, convenient, suitable and adequate transport, of high quality at low cost, which is so clearly what the country needs. The Government's decision to deal with the Bill in the next, instead of in the current, session of Parliament may indicate its realization of the inadequacy of its own thinking.
Competition in Special Traffics Although the Bill closely follows the White Paper, there are significant differences. An important one is the proposal to let the railways carry on business as haulage contractors through one or more limited companies, such as they owned or controlled before nationalization. These companies are to be restricted to the same number of lorries as were previously owned. This provision obviously demonstrates the Government's belief that the companies which supply special facilities ought , to accept the astringent effects of competition from independent hauliers.
The Road Haulage Disposal Board is likely to be an important body, and one can imagine quite a number of people living anxiously in the hope that they will be appointed to it. It would be as well if it were realized beforehand, particularly by existing and independent hauliers, that whoever is appointed after consultation with "bodies representative of persons holding A or B licences," will not be in any way answerable to those bodies.
In fact, the acceptance by anyone from the industry of such an appointment would quite effectively cut him off from his haulier friends, and their control of him in the slightest degree would be unthinkable. It is to be hoped, therefore, that the leaders of, say, the R.H.A. are not deluding themselves and their members by saying, "We shall have someone on the Board." Potential buyers should study carefully the composition of the transport units in which they may be interested, bearing in mind that not all such units will consist of vehicles alone. There seems to be in the Bill an attempt to carry out the Government's clear intention that transport units must not be of a size that would put them beyond the purchasing power of the smaller buyers. The Commission is specifically charged with the duty of giving people a reasonable chance of tendering for units of a size that they can hope to afford.
Preponderance of Small Units It would seem that in order to give such an opportunity before it is known how many people are going to tender for how much, the Commission would have to offer more small units and fewer large ones. In this connection the Disposal Board could play an important part, particularly as it seems that securing the best total price for the R.H.E. assets is to be made no more important than giving useful opportunity to tender. In the result, of course, a better aggregate price might be achieved.
It should be noted, however, that the Board would have the duty of refusing to agree to the acceptance of a tender if it did not think the offer reasonable. The fact that the Bill refers to re-entrants as well as to entrants to the road haulage industry gives hope that, other things being equal, the would-be re-entrant may be given preference over the mere entrant.
Those who take over transport units, whether independent hauliers or the railways, will be able to have A licences for the full term of five years to cover the vehicles concerned, but no increase in these licences will be permitted during that period. Moreover, the Licensing Authority is to keep a sharp eye on any attempt to move a vehicles base or centre out of the present district. That seems reasonable enough, but the proposal which is making the independent haulier's hair stand on end is the one which provides for easier licensing, both as regards applications for new licences and for additional facilities.
Denationalization Unattractive If one thing is certain as a result of the publication of the White Paper and the Transport Bill, it is that the existing haulage contractor does not find denationalization attractive. "If they would give us a few more miles and let us keep -our permits there would be no need to denationalize, and they could leave the B.R.S. alone," some say. This may be a selfish point of view, but it would be unreasonable to expect hauliers to be other than self-interested. Their idea of denationalization is justice for those who had lost their businesses, and, for themselves, an easing of restrictions that are too rigid.
By denationalization, the more or less inarticulate haulier never meant the throwing open,.as he sees it, of his industry to combines and spivs, nor had he expected to see the railways on everlasting pension from road transport. it is true that officially the leaders of the R.H.A. asked for complete denationalization, but it seems probable that the idea was to ask for the whole in the hope of being given half.
Lip Service to Resistance ?
The R.H.A. leaders would in the long run be doing their members, themselves, Mr. Lennox-Boyd, the Tory Back-benchers and the country a great service by resisting by all reasonable means, in public and in private. those proposals, the detailed working of which their members believe will completely nullify the benefits of denationalization. It -is to be hoped that there is no truth in the remark, occasionally heard, that only token resistance has been offered to the proposal for a levy. R.H.A. leaders will have to put up as stiff a fight against the proposed levy as against the intention to make licensing easier. " Feather-bedding" is a useful expression to denote a process of making life easier for a limited number of people at the expense of a larger community. There is also an implication that the benefits conferred are undeserved. The real meaning of the, levy is that owners of private goods transport, including many who never compete with the railways, are to be. taxed to feather-bed the railways.
It is of no use to argue that this proposed increase in hauliers' costs can be passed on to their customers. This will not be easy in the face of the growing competition that can be expected as a result of the greater latitude in the granting of licences. Carriers'ficences were introduced in 1933 to put an end to cut-throat competition, -as much between hauliers themselves as between the hauliers and the railways. Despite licensing, a war was needed to make the road haulage industry financially sound.
Traffic Declining There are already signs of a persistent shrinkage of traffic. Clear indications of this trend were blurred by the effects of nationalization. The formation of British Road Services resulted in much more traffic being passed to the remaining (short-distance) hauliers, but this stage seems to have ended and the downward trend is noticeable once more.
The haulier to-day has not the resilience he had in the early 'thirties. Competition was such that, in some instances, sound financial rules were ignored and the owners of vehicles attempted to meet increasing competition by cutting rates, paying low wages, working drivers for excessive hours and neglecting the proper maintenance of vehicles or provision for depreciation.
To-day it is doubtful in the extreme whether an employer would get away with the payment of less than the statutory wages. The smaller and not easily detectable operators may succeed in working excessive hours when their bigger and more easily supervised fellows
dare not -take the risk. On the other hand, ownerdrivers, who may become much more numerous, are not concerned with statutory wages; there is no law to enforce adequate provision of depreciation, and maintenance costs can be kept down to the minimum necessary to satisfy the vehicle examiner.
There is also little to prevent drastic rate-cutting. The temptation, when work is scarce, to cut rates heavily is too strong to be resisted by the contractor who is desperate to keep his full organization in being. The c2 smaller the concern, the greater the temptation. The reason for this is clear from the following fictitious illustration:— If a vehicle, with driver, costs £2 per day for standing charges, plus running expenses of Is. per mile, the proprietor cannot escape cosfs of at least £2.per day for an idle vehicle. It therefore pays him to obtain work by rate-cutting, charging sufficient to cover his running expenses of Is. per mile, plus something towards his standing charge of £2. By this means his loss per day on the vehicle is reduced to something less than £2; his organization is kept in being for somewhat longer than if he had not cut the rates, and some immediate cash is found to pay the bills that will not wait. Once it starts, rate-cutting spreads like a forest fire.
A Vicious Circle
The combination of the levy and easier licensing would be something of a vicious circle. Competition would be keener, not only as between hauliers, but between them and the railways. The latter, working under the new arrangements whereby their rates are maxima, would inevitably reduce rates in the face of this competition. The haulier, under rights conferred upon him at the time the levy was imposed, would be forced to complain to the Transport Tribunal that the railways were charging rates which "if continued, must result in a loss "—a loss which would in time cause an increase in the levy. This would be pantomime transport.
Without the two proposals for the levy and easier licensing, the Bill provides a real chance for healthy rail and road transport; with them, renationalization would be forced on the next Labour Government in order to prevent a breakdown in the country's transport. There will be ample competition without the easier licensing system, and at least there should be a term put upon the charging of the levy. Accredited representatives of the road haulage industry must pay more attention to the industry's need than to "keeping in" with the Minister of Transport and the Conservative Party.
Potential Danger
There is another point which appears to be small at the moment, but may become important. The Bill would allow the Commission to provide, continue or develop any service for the carriage of goods by road which is provided by them otherwise than as part of the existing R.H.E., and the sub-section that makes this provision specifically lays down that the powers of the Commission under Section 2 of the Transport Act, 1947, shall not be restricted. This proposal needs to be brought right out into the light of day.
At the least it seems to mean that at the end of the first five years the Commission would be free to expand the railway-owned road haulage fleets and use them much more widely than for collection and delivery. This possibility, coupled with easier licensing, might well result in the railways, as distinct from railway-owned companies, building up a road haulage organization quite as formidable as B.R.S. This may or may not be desirable, but the matter should be fully debated before the Bill is passed.