The B.T.C.'s Inheritance of Folly
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An Independent Expert Blames the Appeal Tribunal for the Bad Balance of the Country's Transport System. He Condemns the B.T.C.'s Failure to Reorganize its Services and its Proposal to Use Rates to Direct Traffic
AN effective barrier to the growth of cheap road transport was set up by the Appeal Tribunal before the war, because of its decision that transport facilities in excess of requirements created wasteful competition.
Prof. Bruce Williams, of North Staffordshire University College, made this statement when he read a paper. "The Transport Act, 1947—Some Benefits and Dangers," before the Institute of Transport (Midland Division) in Birmingham, last week. It was an exhaustive study of road and rail transport economics and policies in this country.
Absence of this "wasteful competition" was, in effect, the Tribunal's definition of the public interest, he said. The Tribunal consistently refused to allow questions of rates as evidence, except in the extreme case where traffic would not pass at all were it not for the lower rate, or where traffic had been built up by charging rates uneconomic to the applicant.
Incentives to Railways
The fact that licences were not granted when it seemed that the•applicant had taken or would take traffic at the expense of other carriers, whether by road or rail, inhibited enterprise in road haulage and must have given the railways a strong incentive to "stay put."
With the growth of road transport, it would have been possible, and in the public interest, to force out the railways from those thin traffic routes where they could not cover costs and railway mileage could be cut by a third. It was just such a reorganization that road licensing hindered, at the cost of maintaining an inefficient transport system.
The outstanding problem before the war was cost. In 1935, the average charge for moving goods in England was 70 per cent. higher than in France and 500 per cent. more than in the I.I.S,A. As there was no significant expansion of the cheapest form of transport --2road haulage—this high cost presumably existed until the war.
Limited Freedom
The freedom of the railways to cut rates to meet road competition was limited, said Prof. Williams, by the "General Railways Classification," and by their duties as statutory carriers, which left them with freight for which they were least suited. Power to cut rates was wielded in the class of traffics least affected by road competition.
The main explanation of the railways' failure to cut prices was to be found in the severe restriction of A and B licences. The railways were handed a limited monopoly by the restriction of road transport. It was often argued that, whilst the railways had to construct their own track, road transport had free use of the public highway. Directly, there was nothing in this contention. One of the great advantages of road transport was that it could use the public highway and after 1931 it made its fair contribution to the upkeep of the roads.
Criticiam had been levelled at the railway practice of assessing rates on the average cost of working over the whole railway system, subject to crfferentiation according to the value of the goods. In contrast, hauliers based their costs on individual tasks, and in consequence, they gained the traffic between the big industrial areas.
Whenever the road system was extended, the cost should fall on those who made necessary its extension. This would involve raising road charges, which would bring them closer to those of the railways on heavy traffic routes. In this way, a better distribution of traffic between road and rail would be encouraged.
Prof. Williams thought that the need for reorganization created a case for public ownership of therailways so long as that portion of their capital value accountable to the uneconomic restriction of road transport was written off. There was no case for placing a competitive road haulage industry under common ownership, still less under unitary control.
No Evidence of Economies
Nationalization of the railways presented possibilities of reorganization which would not otherwise exist, but there was no evidence that economies to be gained from a re-allocation of freight between road and rail could be achieved only by control of road transport by the British Transport Commission.
If it were not, or if road transport were to be restricted in the interests of rail, the country would be left with high transport costs and a further uneconomical expansion of C licensees.
Transport could be integrated only if the B.T.C. played a large part in managing the affairs handed over to the Executives. Failure to do so was the real danger of nationalization and could be removed only by changing the constitution of the Commission.
The difficulty of ensuring efficiency in such a large organization as the B.T.C. was great. Stress was laid upon integration, only after which major economies were to result. Emphasis was also placed upon the B.T.C. charges scheme as a means for effective integration, but although a charges scheme could determine which form of transport was cheapest, it need not reflect relative costs. Prof. Williams asserted that charees that reflected costs could be arrived at without common ownership.
With a proper imputation of cost, expenses of an expanding road transport industry would approach nearer to railway, costs, but would still involve the writing-off of much railway capital. Such measures the B.T.C. would be reluctant to adopt, as it would entail British Road Services in earning surpluses to pay interest on railway stock. .
The general principles of classification suggested by the B.T.C. looked sound and would bring road and rail practice closer. However, the wisdom of a common road-rail classification could not be judged apart friarn relative charges.
The crucial question was at what point railways became more efficient than road transport on long hauls. A charges scheme aimed at achieving the best use of existing resburces was extremely dangerous. The better the charges scheme, the more it would bring about the best use of a high-cost transport system. ,
Cause for Concern
There was cause here for serious concern; commented the speaker. It was obvious, from the B.T.C.'s evidence before the Transport Tribunal, that it was not. thinking in terms of funda
mental alterations. k.
Prof. Williams approached the B.T.C.'s rates proposals suspidously. It was suggested that the relative costs of road and rail could be reflected only in a broad way if schedules were to be designed which would influence traffic' to that form of transport which best served the policy of the Corninission.
The charges scheme, when prepared, would go to the Transport Tribunal, which he doubted could act as a sufficient guardian of the public interest. It was stated in the Transport Act that the Tribunal had no power to do anything in respect of charges which would prevent the Commission from paying its way, or prevent it from giving effect to Ministerial direction.
Tidy or Untidy
If the Tribunal had been given the responsibility for road and road transport costs policy and licensing, it would have been in a much stronger position. Its hand Would also have been stronger if the B.T.C. had more competition. At the time of the passing of the Act, said Prof. Williams, he would have favoured the deletion of the 25,-mile limit. He did not know whether this was appropriate at the present time. The most urgent job was not to make a tidy allocation of freight between road and rail, but to get an administratively untidy revolution in transport facilities and costs.