STICK AND NO CARROT
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ANY road operator who is foolish enough to be conceited about his status in the national economy would be wise to avoid reading Government White Papers if he wishes to remain cheerful. They would soon show him that his place in the scheme of things
is humble, if not unwanted.
The opening section of the new report on investment incentives might tempt the operator into a feeling of modest pride and a determination to help the Government in the task of building a new Britain. The vital requirements, he would read, are to accelerate the process of modernization, to shift the labour force from old machines and old techniques to new ones and from declining industries to expanding ones.
OVERRIDING NEED
He would have read earlier, in the National Plan, that the overriding need during the next few years is to give priority to those sectors of industry which can make the greatest contribution to strengthening the balance of payments. Now the Government is proposing to say what financial encouragement it is proposing to give these "sectors of industry" and what additional incentives will be available for firms in development areas.
Not everyone will be lucky. The present initial and investment allowances and even the new corporation tax are not refined enough instruments to pick out the deserving unerringly. The benefits are too widely dispersed to be of maximum help in the balance of payments struggle. The White Paper gives one or two examples of misplaced benevolence. "Purchases of furniture, curtains and carpets in offices or cutlery in dining rooms or canteens qualify for investment allowances. Television sets rented by the public do so too, since the purchase of the set by the rental firm qualifies."
At this point the operator may feel disposed to cheer and even to submit with equanimity to the old tired metaphors about the Dunkirk spirit, pulling together as a team and putting one's shoulder to the wheel. Two out of three of the metaphors are drawn from the transport industry, and that industry must have an important part to play both in keeping down the price of goods for export and in providing proper and economic communications for the development areas. Naturally the operator would read on for the details of the incentives to which he is entitled. He would not be kept in suspense for very long. The White Paper soon makes it clear that the new scheme "would not in general cover service activities" and that "investment grants will not be paid for vehicles". Commercial vehicles and buses which have previously qualified for investment allowances will now receive only initial allowances, although at an increased rate of 30 per cent In other words the operator will be worse off than before. When the introduction of corporation tax in the Finance Act, 1965, is taken into account the tax relief to which he is entitled has been cut by about 40 per cent within the space of 12 months. This must be reflected as an increase in his Operating costs.
According to the White Paper the object of the new measures is to concentrate the substantial assistance provided by the Government where the need to increase investment is greatest. "The most direct method of achieving this is by providing cash grants." No satisfactory reasons are given for restricting these grants to manufacturing and extractive industries and for leaving road transport to carry heavier taxation.
AN HONOUR?
So many Ministers and other official spokesmen have stressed the importance of transport in the national economy that it is hard to believe on the strength of one White Paper that they have changed their minds. They may, of course, have such great faith in the growing efficiency of the industry that they expect it to meet higher costs without putting up charges. They may even regard the reduction of incentives in this single case as a spur to greater productivity. It may be an honour, in other words, that road transport alone should be selected for the stick rather than the carrot.
But the road operator is not likely to accept this as an explanation. He must reconcile himself to the fact that the praise which has been given to his industry in the past was largely hypocritical. He has still a long struggle before the work which he does will be recognized by the outside world at its true value.
What will be in effect an addition to the initial cost of his vehicles, his main physical assets, comes at an unfortunate time. New legislation will demand new standards of performance from goods vehicles. Although there will be some dispensation for existing vehicles which cannot match these standards, the best policy for the operator will often be to renew his fleet as quickly as is reasonable. One would suppose that this is what the Minister of Transport would prefer. If so she appears to be out of step with the Minister for Economic Affairs, the Chancellor of the Exchequer and the President of the Board of Trade, who were jointly responsible for the new White Paper.
ANOTHER REASON FOR CONCESSIONS
Unless he can easily afford to do without the incentives now granted to most other industries the operator may find it necessary to keep his vehicles in service a little longer than he would have wished. In principle, the older the vehicle the more maintenance it requires and the more likely is it to develop faults. If vehicle standards have an effect upon road safety, here is another reason for concessions which will facilitate rapid replacement The vehicle manufacturing industry, one of Britain's main exporters, will also benefit from a more buoyant home market The operator can hardly consider the Chancellor of the Exchequer as a warm friend. Since the Government came into power less than 18 months ago the tax on liquid fuel has increased by 6d. a gallon, vehicle licence duties have increased by 50 per cent and a large part of the road programme has been deferred for six months.
In this context the deliberate omission of commercial vehicles from the benefits outlined in the new White Paper seems just one more example of an established antagonistic trend. This is the time of the year when the organizations representing road users throng the steps of the Treasury with appeals for taxation reductions in the forthcoming Budget However brave a face they may put upon it there can be little hope in their hearts.