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Ah BUSMEN'S
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GUIDE TO MONEY
)ELEGATES to this week's annual onference of the Public Road Transport Usociation held at Brighton heard two irst-rate papers. Mr Guy Neely, the gational Bus Company's director of inance, took a wide-ranging look at 'Money" and Mr T. L Beagley, deputy .ecretary at the Department of the invironment, reviewed the effects of British :ntry to Europe on bus operation.
Mr Neely began by asking if bus indertakings handled cash and coin as ;fficiently as they might. The process should )e as efficient as those systems used to listribute fuel, schedule vehicles, maintain 'uses and pay bills. "My own view is that in :erms of efficiency cash and coin handling :orne low on the scale," he said. Mr Neely reminded the audience that, with an annual turnover of £400m for stage carriage buses, the industry could expect to handle more than 20 million actual coins each day. These were of six different denominations. Coinage was "heavy, bulky, dirty and inconvenient" said Mr Neely, and "is a highly perishable commodity demanding constant checking and reconciliation".
Bus to bank Mr Neely related the difficult course the money took from passengers' hands to the bank. Problems of change-giving on one-man buses were well known but Mr Neely questioned whether the process from bus to bank was any more efficient. But if the journey from passenger's pocket to bank was expensive "once at the bank it costs even dearer".
Mr Neely took time off from his main theme to mention the problems of fare evasion. Even a one per cent loss cost the industry LzIni a year. But -a total cure can be more expensive than the disease," said Mr Neely. What was more effective was to sell to the dishonest the idea that -one man's fare evasion is genuinely another 'man's fare rise". Also, offering. the possibility of a prize with every bus ticket could slightly lessen the loss, he said.
A large section of Mr Neely's paper was devoted to the evils of inflation. Although the bus industry had escaped some of the worst effects of inflation it was still liable to serious losses in the value of its reserves. Using an analogy from shooting, Mr Neely explained the need to look at money as a commodity in less static terms. "The old money man shot at fixed targets. More recently he had to shoot at moving targets. Last year, when inflation really started to let rip, I personally felt as though I were in a vehicle which was itself moving as well as the target".
Dealing with inflation Mr Neely went on to lay down three principles for dealing with inflation. First, one should draw up and read money statements with changing money values always in mind. Second, one should realize the unwisdom of having cash as a commodity available when one does not need it. Third, one should be yet more aware of the need to try to raise fares to meet increased costs immediately and not six months later and also to avoid taking on staff unnecessarily who might be a future liability in terms of redundancy pay and pension.
Mr Neely went on to consider the question of the use of money substitutes for bus fares. Both tokens and season tickets had been tried over the years with varying degrees of success but a new idea was that of third parties using money substitutes extensively to finance the passenger. "It is possible that the time is ripe for a new attack on this aspect, particularly in connection with travel to work," he said. In the past, Inland Revenue authorities had had a rigid rule that travel from home to work by public transport could not be financed at their expense. This had helped to give rise to a reluctance on the part of employers to assist employees with bus fares. "Yet a case can surely now be made out," said Mr Neely.
Supsidy by employers Employment in many towns would be helped if stage carriage bus fares could be subsidized by employers if they had an easy and readily available means of doing so. Unemployed people could be helped in their search for work by money substitutes to buy fares. "In short," said Mr Neely, "the whole range of concession fares, or fares to work on an expense account, need not and should not be limited in the future to the old, the blind and the disabled nor should any lack of success in the past in this area restrain us in the future."
The next point Mr Neely raised was related to the methods used by bus undertakings for ascertaining and allocating costs and revenue to operating and cost centres. He indicated that he firmly believed that, so long as bus travel was sold principally on a mileage basis for a particular service, there was nothing wrong in allocating individual revenue to it. However, with the increasing use of fare boxes and some forms of passes, there were practical problems and sometimes, dubious sampling methods had to be employed.
Mr Neely indicated the contradiction that existed between UK bus operating revenue . and costs. While the first was based on mileage, the second was linked to time. As an example he quoted the one-man single-deck bus on a rural route which averaged 18 mph and incurred very much less cost per mile than a two-man double-deck bus crawling through the city centre at 5 mph in the peak hour. It would be unfair to take off the rural service simply because passengers were fewer when it could be the urban peak hour service, however heavily loaded, which was losing the money.
In the past the need for allocating the costs of a depot or the undertaking as a whole to a particular service were not important. Mr Neely quoted a story to illustrate the dangers of being too specific in allocating costs. "Time was," said a manufacturer who had just installed a sophisticated costing system, "when there was just Lily and me doing the books and we made a profit, now we know where every pound comes from and goes to, but as a result of the overhead we make a hefty loss."
Accurate estimates Yet, said Mr Neely, with more and more organizations offering subsidies for individual services, or parts of services, there will be more and more demands for accurate estimates of costs and revenue. Such bodies were also likely to demand in the future for services to be altered, increased in frequency and comfort, redesigned for the disabled and so on — and they would want to know the costs of their requests.
After commenting on the progression from bus services fully paid for by fares to tax-relieved, subsidized services. Mr Neely went on to utterly reject free fares — "the ultimate shot in the Rake's Progress". The term "free travel" was itself an example of muddled thinking because bus travel could never be free; someone always had to pay, Free travel was wrong for two reasons: "First, because demand for buses, unlike, say, demand for emptying dustbins, is better met by paying, at least in part, on demand. Second, because, as studies in United States have shown, passengers often want a more efficient service in preference to a free service and it is more difficult to improve something that is free than something local people can pay for. If the bus passenger pays at least something he can demonstrate his approval of good service by heavier patronage. When the taxpayer is the paymaster it is far less easy to follow an expanionist policy".
There were three points on which an argument that people other than passengers should help pay for bus services could be based. First, it could be said that bus services needed a subsidy to offset the subsidy (like car parking, roads and road space in congested areas) paid to private motorists. Second, there was the "Robin Hood" approach that the wealthy who might not use buses should support the poorer who did. The problem, said Mr Neely, was in deciding how much of the cost would be borne by non-passengers. The third argument was that we would be worse off without buses than with them, however financed. This was particularly important in preventing depopulation and ensuring proper dispersal of people.
In conclusion, Mr Neely returned to the point of how much non-passengers should pay. From a study of published accounts he had deduced that some bus undertakings were currently obtaining less than 80 per cent of their costs from passengers. In the future this could fall in some undertakings to 50 per cent. As a result, asked Mr Neely, "can we honestly justify the continued existence of certain parts of the bus industry?"
DoE man gives Confederation concept a boost
SUPPORT for one of the main principles cited for the formation of a Confederation of British Road Passenger Transport — the need for a single, clear voice to speak on behalf of the industry — was voiced by Mr Beagley. In his paper, which detailed the effects of the passenger transport industry on the Common Market, he said that a unified voice was important in influencing the Government to fight for its interests within the EEC.
Mr Beagley started by reviewing the operation of the EEC's structure and reminded delegates that both the European Parliament and its economic and• social committee had transport committees. Mr James Hill, MP for Southampton (Test), was chairman of the first, and Mr Tony Gailey was a member of the second. Mr Beagley urged the industry to keep in touch with these two representatives because, although both committees were only advisory bodies, they could be effective in holding back proposals which were not realistic in transport terms.
He reminded delegates that it was governments who had the last word in the EEC — "so the most effective way of making your views known is through the DoE and the Minister for Transport Industries". Mr Beagley continued: "I cannot stress too much the importance of your letting us know as soon as possible what you think about proposals put to the Council of Ministers".
Confederation proposals
Underlining proposals for a Confederation of British Road Passenger Transport currently under discussion, Mr Beagley said: "I would suggest that you are more likely to achieve your objective if a single view is represented to Government on behalf of the industry".
Discussing the adoption of a Common Transport Policy, which member States were obliged to implement, Mr Beagley said this would have more bearing on the transport of goods than of passengers. But one of the aims of the Treaty was to remove restrictions on freedom of movement within the Community and to put an end to discrimination. However, in practice, member States had not yet been willing to remove restrictions until conditions of operation had been harmonized.
Mr Beagley went on to allay fears operators might have that harmonization might be used as an excuse to subordinate road transport to the overriding needs of railway policy. Although this had often been the case in the past, "it is not so much competition from the railways but anxieties about congestion, road safety and pollution created by road vehicles that are likely to limit road transport opportunities in the future," he said. He reminded delegates that countries like France and Germany had to carry far larger quantities of international traffic on their roads than we did.
Community measures
Mr Beagley then reviewed, pointby-point, Community measures relating to road passenger transport. Talking about moves to free individuals and firms to set up in business in other member States, Mr Beagley said that this was one of the basic principles of the Community. But little had yet come of it though the Commission was likely to press for early consideration of a draft regulation providing for a licensing system for passenger operators. First presented in 1968, this was similar in some respects to the system currently in operation in the UK. But several new features were likely to cause difficulty. Applicants would have to provide evidence of good character (no prison sentences), and adequate financial resources and competence (knowledge of regulations applying to passenger transport). Mr Beagley reported that the UK had told the Commission that it would not object to beginning discussions on this subject.
British. operators would no doubt be seeking their share of the increasing volume of international business likely to be generated by the EEC's three categories of regular, shuttle and occasional services, said Mr Beagley. He predicted that the
familiar distinctions between stage, expret and contract carriage might sometimes nee revision. There was no reason "in principle why the EEC categories should not b adopted if they proved more convenient.
Moving on to the "notorious" Regulatio 543 /69 which severely limited driver: hours, Mr Beagley said that there wa little hope that there would be any change in its basic provisions, like the eight-hou driving day. But, in time, it might b possible to introduce more flexibility tc the Regulation and make it both mor practical and capable of proper enforcement There was a general prohibition writtei into the Treaty on State aid "likely ti affect trade between member States" bu Mr Beagley could see nothing at presen that would disturb existing gran arrangements for road passenger transport Equally, a proposal to introduce a cortunot system for commercial vehicle taxatior had been amended to exclude passengel vehicles which would continue to be deal' with by national systems of taxation.
On vehicle construction and safety, Mi Beagley reported that the scheme for typc approval would apply to buses as well as goods vehicles and cars. Of the work of the EEC's GRSA organization (Group of Rapporteurs), Mr Beagley said that proposals aimed at harmonizing urban bus and inter-urban coach design were now well advanced.
Common regulations
Eventually this could lead to common regulations for all bus and coach designs throughout Europe. "The effect on UK requirements would be considerable", said Mr Beagley. Mr Beagley's paper concluded with an assertion that passenger transport in Britain is unlikely to be greatly affected by our entry to the European Economic Community. But this did not mean that we should not try to influence Community policy.
He listed the main aims that British operators should try to impress upon the EEC: to leave local passenger transport to the discretion of national Governments; to encourage closer relationships between the Commission and international and other bodies representing the transport industry; to work towards freedom of establishment rules that would enable our international operators to expand their opportunities in other member countries; to seek amendments to Regulation 543 /69 (drivers' hours) to relate it more realistically to the circumstances of the road transport industry.
Mr Beagley also urged the British operating industry to make full use of the common rules for international services to obtain further service opportunities on the Continent and to take full advantage of increased Community travel to attract Continental visitors by every possible means, including early booking arrangements in Europe and highly efficient service during their stay in the UK.