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New cost tables the principal changes

17th July 1970, Page 55
17th July 1970
Page 55
Page 55, 17th July 1970 — New cost tables the principal changes
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THE 1970 edition of the Commercial Motor Tables of Operating Costs is now available from IPC Business Press (S. and D.) Ltd, 40 Bowling Green Lane, London EC I, price lOs net, (50p) or 1 Is (55p) postage paid.

As announced last week the Tables in this new edition have been compiled in both the existing (£sd) currency and in the new decimal (£p) currency which becomes effective on February 15 1971—D-Day. As an example of this 'dual calculation Table 7 (Coaches) is reproduced here in both currencies.

This 54th edition constitutes a unique occasion in the long history of the publication of the Tables which began in 1911. The dual tables will help operators to deal with costs and charges in both currencies both before and after D-Day.

No shillings A few brief comments are appropriate here regarding decimal currency. In this the existing sterling pound remains the same. But from D-Day it will be divided into 100 new pence. There will then be only two units to measure money—the pound (£) and the new penny (p).

While the value of the pound remains the same in both currencies, the value of the new penny (p) is 2.4 old pennies (d). It is this latter difference which gives rise to the variation in the two sets of costs Tables as reproduced here.

In addition to the preparation for the advent of decimal currency in this new edition of the Tables there have been increases in several of the 10 items of operating costs. As an example the current costs involved in operating a 41-seater oil-engine coach averaging the equivalent of 400 miles a week throughout the year (with the 1969 figures in brackets) are as follows in the existing currency: Standing costs per week—Licences 16s Od (15s 9d), wages 464s Od (434s 6d), rent and rates 44s 6d (41s 6d), insurance 64s 6d (59si Od), interest 282s 3d (269s Od); total 871s 3d (819s 9d).

Running costs per mile: Fuel 5.35d (5.35d), lubricants 0.30d (0.30d), tyres 1.33d (1.27d), maintenance 4.77d (4.34d), depreciation 8.24d (7.85d); total 19.99d (19.11d).

The addition of the standing costs and running costs gives a total operating cost for this 41-seater coach when averaging 400 miles every week of 46.1 3d (43.70d) a mile or £76 18s(72 17s) a week.

As mentioned in the announcement of the publication of the new Tables last week a major increase has been the amount used as the total basic wage. This has been substantial in the goods vehicle sector. Previously the basic wage or minimum remuneration for a basic working week of 40 hours was comparatively low. Recent agreements have resulted in considerable increases.

It is emphasized, however, that the amount for wages shown in the Tables for both goods and passenger vehicles is not the actual wage a driver would receive if he worked only 40 hours in any one week. It is the amount of expenditure an employer has to meet in both actual wage payments and insurance contributions.

This total is then increased to allow for the equivalent of seven weeks in each year when the vehicle is not available for service. This period is made up of the driver's annual and national holidays together with the non-availability of the vehicle because of routine maintenance, repairs, preparation for, and undergoing of, official testing.

Rate poundages levied for 1970/71 show an increase of approximately seven per cent and this is incorporated in the item of rent and rates included in the standing costs.

In compiling this new edition of the Tables an analysis of current prices of commercial vehicle chassis, bodies and trailers showed increases in the products of a wide range of manufacturers. Overall the increases averaged five per Cent.

These increases in the initial prices of vehicles have affected two items of standing costs—interest and insurance when value excess applies. It has also affected one running cost—depreciation.

Some items of operating costs can be affected by more than one factor. The amount of interest paid is an example. As just stated it is affected by the amount of the initial outlay on the complete vehicle.

Loans remain high The rate of interest paid to obtain the capital outlay also has to be taken into account. Basically this is determined by the current Bank Rate. But although there has been some reduction in this recently, service charges on loans remain high to individual clients. A rate of 10 per cent therefore continues to be employed in compiling the Tables.

As regards the five items of running costs, there have been variations in the prices of fuels, including the margin between wholesale and retail prices. On balance it is reckoned that the prices at which commercial vehicle operators have purchased fuel have remained the same. There has been a slight increase in the cost of lubricating oil but not sufficient to alter appreciably the cost per mile.

Both the labour and materials elements of maintenance costs have continued to rise. Also more exacting operating conditions have increased the demands on maintenance facilities, resulting in an increase of 10 per cent in this item.

The mileage basis for calculating vehicle life and so the rate of depreciation remains the same. But, as already mentioned, the increase of five per cent in initial prices of vehicles is correspondingly reflected in the depreciation cost per mile.

Wages and fuel are two major items in total operating costs which can vary substantially as between one type of operator and another. Individual operators may therefore need to make appropriate adjustments to these two items or any other standing cost. Accordingly, two ready reckoners are provided in the Tables to facilitate such adjustments and these too are in both sterling and decimal currency.

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