Helping a Council to See the Light
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THIS week I will resume the arguments proving that the haulage rates offered by Durham County Council are inadequate. Table VI, included in the first article, in the issue of February 10, indicates that the operator's expenditure per hour is actually less than the rates offered by the council, which are as follow :—For a 20-30-cwt. vehicle, 3s. 9d. per hour; for a 2-tanner, 4s. Od. per hour; for a 3-tonner, 9s. 6d. per hour; for a 4-tonner, 5s. 3d. per hour; and for a 5-tanner, 6s. 3d.
There is, moreover, this point to be noted about the figures in Table VI: they apply only if the haulier concerned be operating under the most favourable conditions, i.e., that he is expected to pay wages only on the scale indicated by Grade II, and that he.is able to find work for his vehicle for 48 hours per week throughout the year.
A slight digression is necessary here, in respect of the item "wages." I have, in the previous article, drawn attention to the fact that there is a clause in the council's form of contract which insists that wages must be paid on a scale not less favourable than that laid down by the National Joint Conciliation Board. In some parts of the county of Durham the Board prescribes wages under the scale of Grade II and in others, those of Grade I. The haulier who works for the council is thus bound to pay on one scale or the other.
The same consideration applies as regards the conditions andhours of employment. in.particular-4 quote, from the conditions actually laid down by the board—
s38 The point that arises here is that, whilst the council does not guarantee the haulier a working week of 48 hours, he himself must give that guarantee to his drivers, and implement it to the letter under his contract.
Now, occasions on which hauliers obtain work for 48 hours per week, throughout the year, are rare, and particularly so in county council work—hence my statement that the figures in Table VI are those which apply only in most favourable circumstances. I would go farther, and venture the opinion that those favourable conditions occur so seldom that there is no point in taking them into account.
That being so, it is fair to put forward the figures embodied in Table VII, as being more directly applicable to the conditions which hauliers have to face. The individual items, in this table, are based on data given in the previous article, in Tables II to V.
It is of interest to note the details of the difference between Tables VI and VII. The running costs are unaffected : they are based on the reasonable assumption that, in this class of work, the vehicle is likely to do an average of 8 m.p.h. The details of these running costs, the cost per mile for petrol, oil, tyres, maintenance and depreciation were set out in Table II.
The other three items in Table VII are all greater than those corresponding to them in Table VI. They are greater in the proportion of 48 to 40, because the haulier is quite unable to diminish his expenditure in respect of standing charges (tax, insurance, garage rent and interest on capital outlay) simply because the vehicle works only 40 hours per week instead of 48. He is similarly compelled to incur the same total in respect of weekly e,xpenditure o.n„wages anti . , . overheads. .
It should be appreciated that the totals reached, . in _respect of the vehicles enumerated. in Table VII, are more close to reality than those of Table VI. Even these, however, assume that the wages paid are on the basis of Grade II scale.
When the haulier is so situated that he must pay wages in accordance with the Grade I scale, then his expenditure is as shown in Tables VIII and IX. In the former, figures are given on the favourable and ' impracticable assumption that the vehicle is regularly
employed for 48 hours per week. In the latter, the assumption is made that the number of hours is 40 per week. Now, in these tables are four scales of hauliers' actual expenditure, ranging from the most favourable, and, therefore, lowest, of Table VI, to the least favourable and highest, of Table IX.
For reasons which I think I have sufficiently explained, the data quoted in Tables VI and VIII, relating to. 48-hour weeks, may be ignored. Only those given in the other two tables are of practical application. The only difference between these two tables, VII and IX, is in respect of wages.
Those in the council may argue that there would be some difficulty, in the giving of contracts, in differentiating between hauliers who pay on the basis of Grade II and those who must pay in accordance with Grade I.
That argument is readily answered and the problem easily solved. The difference amounts to Id. per .hour. The solution is to alter the clause in the contract and insist that all hauliers who work for the council payOn the basis of Grade I. There is no economist but will endorse the view thatsuch a course is sound. That brings me to the logical. conclusion that Table IX is the proper one to take as a basis for assessing rates.
There still remains the question of a reasonable minimum profit for the haulier, for it is important to bear in mind that the figures in these four tables relate to expenditure only. They contain no provision for profit. In this connection, it is of interest to compare the totals of Table IX with the rates offered by the council and quoted earlier in this article. The haulier's actual expenditure is thus shown to be from 84d. to ls. 41d. per hour in excess of what the council is prepared to pay.
Now, I have from time to time dealt with the problem of assessing a reasonable percentage of profit in the roadhaulage industry and have shown that it may range from 15 per cent. on the total expenditure to 25 per cent., and more than that in exceptional circumstances. I have also agreed that, in contracts of haulage for public bodies, wherein the haulier is relieved of certain anxieties, notably as regards payment and reasonable assurance of regular employment for his vehicles, he may accept the minimum rate of 15 per cent.
Applying that rule in this instance, by adding 15 per cent. to the totals of Table IX, I reach the conclusion that the rates which the Durham County Council should pay are as follow :—For 20-30-cwt. vehicles, 5s. 104d. per hour (3s. 9d.); for 2-tanners, 6s. 5d. (4s. Od.); for S-tanners, 6s. 114d. (4s. 6d.); for 4-tonners, 7s. 64d.
(5s. 3d.); and for 5-tanners, 8s. ed. (6s. 3d.). The amounts in parantheses are what the council is offering.
In conclusion, it is of interest to indicate the net weekly profit which will accrue to the haulier if and when he gets the rates which I have shown to be just and fair. In the case of the 20-30-cwt vehicle the profit is El 10s. 10d. per week; for the 2-tanner, 21 13sr. 4d. ; for the 3-toriner, 21 16s. 8d.; for the 4-tanner, 22; for the 5-tonner, 22 is. 8d.