Employers Need a Rise
Page 67
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CHOICE of a .suitable moment for announcing an increase in rates, as ,forecast in i:he Commercial Motor last week, apparently presented some difficulty " to 'the Road Haulage Association. The Government have succeeded in 'making the public aware that the country is running into difficulty largely because a the uninhibited rise in prices _ Some sections of industry have proclaimed their willingness to make a stand by pegging prices fOr.a period of six months or so. The British Transport Coinmissiort have made a curious bargain with the Government whereby they will increase their freight rates by 5 per cent. only. instead of something much more as they had originally. proposed.. The situation is not therefore ideal for a statement that road haulage by independent operators will
cost trade and industry more. •
Hauliers are completely justified, however, in putting their own necessary increase into effect, They must make a reasonable living, and their operating costs have risen since their rates were last adjusted in \larch, 1955. The main item will come into effect in a day or so, when 9s. will be added to the basic weekly wages of road haulage ,workers; WI other items have gone up, notably the purchase tax on commercial vehicles, which rose from 25 to 30 per cent. in November, as part. of the Government's first attack on home spending.. Vehicle prices in general have increased, as well as the price of tyres, and of many small but important commodities
and services, ".
No valid comparison can be drawn with the situation of the Commission. For some reason, theY are being treated by the Government as a special case. . The official economic policy is that the nationalized industries should pay their Way, and should fix their charges so as fully to cover their costs. The Minister of Transport has stated that this policy will be waived in the case: of -transport. To some: extent; this exception merely. involves coming to terms with the &icts.
Railm.,ay Strike ; In 1954, the Commission had a net deficit of £12m., bringing the accumulated deficit to £39m. Largely as a result of the railway strike and of increased costs and wages, some £30rn. will be added for 1955. if charges remain the same the deficit this year, might be as much as £55m,, and the total not Much less than £125m. The Commission have asked. permission. to increase their freight rates and passenger fares 'so as to increase
revenue by 137m in a full year. "
After consultation with the Minister, the chairman of the Commission has agreed to keep -the demand down to d, level that.will bring in no i-nore than an extra £20m. Some of the increases in. fares Will be deferred. Subject to the consent of the Transport Tribunal, railway freight, dock and catial charges will be increased by amounts which, in general, will not exceed 5 per cent.
It is hard to see what role the Transport Tribunal are expected to play. They have already given a good deal of consideration to the railway merchandise charges scheme, which presumably will have to be deferred indefinitely until the economic situation is calmer. They were expecting to adjudicate on an application for an increase in the existing rates, and are now told by the Minister that it is expedient not to make the increase more than 5 per cent. The Tribtinal would hardly recommend less, and there seems no need for a public inquiry. There Seems, in fact, no point in .making use of the Tribunal irtheirfunctions are to be too. frequently -Usurped in this way.
The natural reaction to the Government's interference with the' charges of the ComMiSsion -is that sooner or later a subsidy will have to be granted...This was certainly an early reaction on the part of, Mr. George. Strauss, M.P.., speaking on behalf of -the Opposition: n. the House of Commons. Even with an extra revenue of £20m. this year, the commission can scarcely avoid running up a total deficit of II0Orn., Dart of Which mum be the responsibility of the GoVernment. If this responsibility cannot be liquidated by the Commission themselves, will the GoVernmetit not have to . meet thebill out of their own reSources?
Spectacular Result:, The Minister has stated that there is no question or a subsidy. The position will have to. be re-assessed by the Commission after six months.: -Within that short timethe Minister apparently. hopes . for some fairly spectacular results. For the first time, he says, he has seen in the Commission "some of the spirit that makes private enterprise profitable:" He hopes that, i;vith the help of that spirit, the Commission, working in close collaboration with the unions, will come forward after six months with the necessary proposals.
Meanwhile, private enterprise itself might like to have some of the spirit to which the Minister refers. The Economic Surv17, 1956, points out that during 1955 prices rose less than costs, and suggests that profit margins may have fallen slightly. The experience of many hauliers will bear this out, particularly where they have not enlarged their businesses by such means as the purchase of transport units. For various reasons, operators have found that their profits are shrinking, and it is obviously time for them to do something about it.
Even the Commission are not leaving their rates unaltered. The railways will certainly increase their prices by 5 per cent. British Road Services are not subject to the jurisdiction of the Transport Tribunal, and can, therefore, maintain a discreet silence if it suits their book. It may be assumed that they have already made their own arrangements, and that the increase will be the same as over the rest of the Commission, namely 5 per cent. Hauliers whose rates may be increased by the same amount will, therefore, be charging in respectable company.
_Whatever arrangement is reached between the Goverminent and the Cqmmission, hauliers must have rates that bring them an immediate economic return. They cannot afford to subsidize the customer in the hope that it will somehoW be made up to them in due course. For many of them,.the margin of profit 'is too small to absorb next week's wa.ge increase, apart from what the Budget may add to the burden. The Government would like to see prices kept down. They can do something also to reduce the cost of such things as fuel and vehicles upon which the charges. of road hauliers are largely
based. •