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BREAKING RATES BARRIER

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10th November 1967

Page 204

Page 204, 10th November 1967 — BREAKING RATES BARRIER

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EVEN THE HAULIERS who have made the recent approach to the National Board for Prices and Incomes may not be altogether clear about what they expect to gain. At least they are aware of a difficulty in obtaining rates increases and they lay most of the blame on the two PIB reports.

A reasonably careful study of the two documents shows that they contain no absolute prohibition. There is agreement that the recommendations by the Road Haulage Association which started all the trouble were in line with average cost movements although there was evidence that productivity had improved sufficiently to justify rates increases of the order of 3 per cent rather than the 5 per cent recommended.

Most operators were prepared to settle for the lower figure. Their customers were not all of the same mind. They were under no obligation to read the PIB reports right through. It was enough for them to remember the more palatable recommendation that they should refuse the rate increase proposed. In the folklore of trade and industry—or of a wide section of it—the legend is firmly established that no increase of any kind should be granted without PIB approval.

Natural reluctance to pay more than is necessary for a service is reinforced by the experience of trade and industry where their own products have come under PIB scrutiny. They have been told whether they were justified in putting up their prices and they expect to be told again if they make a further increase.

From their point of view the periodical specific recommendations by the RHA were the road transport equivalent of a price rise. They may realize that these recommendations are no longer being made but they still look to the PIB to provide an acceptable substitute.

Whether or not this is a precise description of the mental blockage among the customers of hauliers it is significant that the chairman of the RHA, Mr. P. H. R. Turner, has found it necessary to spell out guidance to members in the simplest possible terms. Costs have been rising, sometimes extremely rapidly, he told the RHA conference in Bournemouth last month. It is often not possible to obtain corresponding improvements in productivity.

"Neither the Government nor the PIB can contradict me," said Mr. Turner, "when I tell members that they are under no obligation to continue in business at a loss. If this is likely to be the result of continued operation at their present level of rates members have every justification for putting them up and there is no legal impediment totheir doing so."

The words reflect a grim situation. Even in a period when squeeze and freeze have become new terms for economists the normal business expects to do more than just keep its head above water. It must make a reasonable profit with provision for replacement and expansion.

Road transport is no exception. If in a large number of cases rates are barely sufficient to balance revenue the harmful effect will be felt by trade and industry as well as by the hauliers themselves.

The FIB has an obligation to find a way out of the difficulty which it has been partly responsible for creating. It is too late now to consider whether rates charged over so wide and varied a field as road haulage were a suitable subject for reference to such a body in the first place.

Until 1965 the system of blanket recommendations adopted by the RHA worked reasonably well however unscientific it may have been.

It was unnecessary for the PIB to deplore this pragmatic approach. It would have been sufficient to acknowledge that an official Government-sponsored board must be more exact because of the greater authority which its findings would have. It was entirely at the option of the customers of a haulier whether they accepted a recommendation by the RHA wholly or in part or rejected it.

Figures recommended by the PIB would be many times more effective. They would appear to have Government sanction. Hauliers would be in a position almost to demand the increase whether or not the individual circumstances justified it.

The RHA recommendations were flexible. There was not even the pretence that they could or would be applied indiscriminately over the whole field.

While unable to copy the RHA method the PIB has put nothing in its place. Perhaps it has not yet appreciated that there is any need.

The evidence recently submitted by the RHA will not be greatly effective unless the PIB is prepared to break the log jam created by its previous reports.

The easy but the wrong way out for the FIB would be to make its third report a mere continuation of the other two.

The first report commended steps taken towards co-operation with the unions for an increase in productivity and with customers for a reduction in terminal and handling costs. The attempt to specify demurrage charges was also approved.

The second report concentrated on the possibilities of discussion in the national negotiating committee on such matters as the 40 mph speed limit, tachographs and shif working.

Having once given a verdict in these terms and with a good many other problem! clamouring for attention, the PIB may b tempted to content itself with investigatini the extent to which its earlier suggestion have been carried out. There can be littli progress to report.

The campaign for quicker turn-round ha. drawn attention to the problem but witl what effective results it is difficult to say Hauliers are finding it no easier to collect; demurrage charge.

Negotiations with the unions are stagnat ing rather than becalmed, partly it must b said because of plans by the Minister o Transport on some of the points raised 13: the PIB such as the use of tachographs am a reduction in the working week.

Not one of the PIB recommendations wa new. All of them had been discussed inter rninably for many years past and their inch sion in the reports brought them no neare solution.

It would be a poor service to the roa, transport industry if on the present occasio the PIB merely reiterated what it had said i the past, including its regret at the paucity information available from operators, an added a few more points which by the natur of things are bound to be equally familiar.

It is less easy to suggest what new method the PIB can adopt to meet the real needs the situation. The best advice one can give to be selective. Not every haulier is in th parlous state suggested by Mr. Turner. Wh; the PIB might do is to concentrate on th hard cases. A solution which suits thel ought to be acceptable to the road haulag industry as a whole as well as in the nation; interest.