This is the way the money goes
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AN ANALYSIS OF THE ESTIMATED E1 50M ANNUAL COST OF THE TRANSPORT BILL'S PROVISIONS by Sam Buckley
• An increase in freight transport cost to British industry of £150m. annually throughout the 1970s-equivalent to an increase of 7 per cent in freight expenditure-is forecast by a team examining the effects of the Transport Bill. The findings of these economists and transport experts were, as reported on page 22, published last weekend by the Conservative Party.
The table published here indicates the extent to which their analysis was pursued. To allow for alternative views on forecasting, "low" and "high" forecasts have been recorded and it is by taking the middle point of these highs and lows that the £150m annual increase is arrived at. Of this, it is claimed, £843 m will be in the use of real resources of manpower and material.
The report forecasts that £1.23m will be added to Government spending on transport bureaucracy as a result of quantity control regulations and new taxes, representing an increase of 19 per cent. Correspondingly an extra 475 staff will be needed, an increase of 17 per cent.
Regarding revisions to drivers' hours regulations, the report records a TRTA estimate that wage bills will rise by 6.27 per cent if the proposals in the Transport Bill are implemented.
Also, since equipment will not be utilized so intensively as at present, overheads will rise by around 6.27 per cent, allowing for increased productivity, and the report claims that 2 per cent would be a reasonable estimate of the overhead costs increase.
The cost of tachographs (vehicle recorders)-which the Transport Bill proposes should be fitted to some 600,000 vehicles-will cost £50 each. Amortized over seven years the total annual cost to the industry would be £4.2m for this equipment. Additionally, the paper work associated with tachographs is expected to cost 12 a vehicle a year, amounting to £1.2m. This gives a combined capital and operating cost of £5.4m.
The report recognizes that the quality control regulations can be justified by improved safety and better environment; but they will add considerably to transport costs.
Thus a visit to a test centre would cost about £40, comprising a fee of £5 and loss of revenue, drivers' pay and so on adding £35. Assuming each vehicle has to attend every five years this amounts to £4.8m a year for the 600,000 vehicles involved. Moreover, this sum is for extra testing alone.
Also there will be an extra administrative cost to companies and the report estimates that even after deducting the saving by the removal of the present A, B and C licensing system, this extra cost will amount to £720,000.
The wear and tear tax, it is said, would have raised £38m in 1966. This sum is made up of £19.1m for vehicles in the 3 to 5 tons category, £114m for 5 to 8 tons and £6.5m for vehicles over 8 tons. In contrast, the estimated saving from abolition of A, B and C licence fees is a maximum of £1 lOs for each of 1.5m vehicles every two years at the most. This gives a total of £1.1m a year to be generous, say, £2m.
The total number of vehicles regularly used for abnormal loads is estimated to be a minimum of 2,000 with each vehicle averaging 180 miles a week. With an average abnormal loads fee proposed in the Bill of £90 the estimated additional tax per year on abnormal loads would amount to £18m.
Making use of the COMMERCIAL MOTOR Tables of Operating Costs, the report sets out in Appendix III the loss incurred by diversion of traffic from 32-ton lorries to 16-ton lorries as a result of the quantity control regulations. The total penalty from this switch is estimated to be £10m a year.
Based on the estimated transfer of traffic from road to rail equivalent to 4,500m ton miles by 1975 (as set out in the White Paper The Transport of Freight) this report claims this will cost £12m, while the price of rail disruption has a value of approx. £1.5m.
Detailing the cost "of the current licensing system, 3,678 staff are at present employed at an average cost of £2,400 or a total of £8.726m. Of this, £6.536m is attributable to goods vehicles.
The bureaucratic costs as a result of the proposed quality and quantity controls, together with the new taxes, falling on the private sector are estimated to be £3.09m, with a further £1.23m being met by the public sector.
The effect of the Transport Bill in the under-utilization of assets and increased unemployment is also commented on in this report. The quantity licensing measures, it records, will substantially decrease demands for heavy lorries. Several small firms relying substantially on heavy lorries for their sales will be severely hit if the measures are implemented.
The report then gives this warning: The most pernicious threat to road hauliers stems from the power which their monopolistic competitor, the NFC, will have over the profitability of their business.
Indeed, many small operators, the report concludes, are already in a state of panic because they feel that they will be put out of business. They would like to sell, but can find no buyers. Moreover, there is no provision for compensation to hauliers in the event of loss of licence and hence their livelihood.