GOVERNMENT HIRING RATE \TO GOOD TO THE INDUSTRY
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• Solving the Problems of the Carrier
THE conditions and terms of payment for the hire of vehicles under the new Government Haulage Scheme were published in The Commercial Motor" dated April 2. I criticized them in two articles—in the issues dated April 30 and May 14. I showed that, if the Ministry used the hired vehicles at all, the haulier would suffer a loss.
I pointed out and, I hope, fully demonstrated, that the only hope he had was that his vehicles should be hired and, so soon as possible after that, he should have notice to lay up the whole of his fleet. He must then close up his establishment, pay off his staff and either retire or take up some other profitable employment.
He would, in those circumstances, be drawing a fairly substantial payment from the Ministry each week, on account of his laid-up vehicles and, at the same, time, be earning good money elsewhere.
There is another advantage in this course, which did not occur to me at the time, but which is of considerable importance, namely, that he would survive the war with a fleet and finances more or less intact, ready once more to engage in haulage at profitable rates.
The closing date for entering into these contracts of hire was the end of last month. By now, some hauliers should be operating vehicles under the scheme. To those who are, I recommend the following course.
Take the net receipts from the Ministry on account of hire, and to that item add what would have had to be paid for the following, during the period of hire : (a) wages of drivers and statutory attendants; (b) subsistence allowances and usual• driers' expenses; (c) insurance. contributions for National Health Insurance, National Unemployment Insurance
and insurance in connection with the Workmen's Compensation Acts; (d) Road Fund taxation and cost of Operating Permits, i.e., A or B licence; (e) insurance premiums on the vehicle : these should be fully comprehensive; and (f) the cost of the fuel used.
What a Comparison will Reveal Having completed this simple arithmetical calculation, compare the sum -with what would have been regarded as a reasonable revenue for the period when operating the fleet in the ordinary way, carrying commercial traffic at fair and reasonable rates.
If some of my friends will do this and let me know the outcome I shall be most interested. I have a fairly good idea as to the nature of the results which are likely to accrue, but would like to have confirmation —or refutation—of my views.
Needless to say, I had some criticism of the two articles mentioned above. Most of the communications I received, however, were congratu latory. One of those who wrote in that strain went so far as to state that my figures were almost exactly the same as his own. One of my friendly critics thought that I took too pessimistic a view of the situation. In his opinion the rates offered by the Ministry were not so bad and he opined that, in the long run, they would prove to be not unsatisfactory.
In support of his view he produced a sheet of figures which, he said, contairied actual data of operating costs. They purported to be the figures used by the Ministry when preparing the original hiring rates. They had been compiled by what is known as the Waldorf Group, which might reasonably be expected to know what was what in the way of operating costs and charges. The rates now offered by the Ministry would, he thought, show a fair profit if fudged by those figures.
Now, before we go any farther, let me make the main point clear. In this article I am not, at least in the first place, concerned with the accuracy of these figures; I am not at all concerned with the source.. What I am going to do at once is to disabuse my friend, and any others who may have the same opinions, about the fairness of the Ministry's rates, even taking these precious figures as a basis.
When I examined them, the first thing I noticed was that they were dated 1940. I took the liberty of assuming that even a Government Department would know better than to take three-years-old figures for operating costs as a basis for charges, and I proceeded to correct them and bring them up to date. In Tables I and IT, which accompany this article,. are both sets of data, the original in plain figures, and my own (bringing
these figures up to date) in italics. . investigation are shown in Table III. The average increase, it may be noted, is 22.7 per cent, and there is no great divergence from that, no matter what may be the size of vehicle. The figure is interesting, as comparing with the 7i per cent. which is all that the law allo*s unless the haulier can prove the contrary.
Ministry's Payments
for Hired Vehicles Next, I had to take into considcialion the fact that, in the case of hired vehicles, the Ministry is responsible for the payment of the following items of expenditure :-(i) Wages of drivers and statutory attendants, together with their statutory subsistence allowances, statutory additions to wages for Sundays and authorized holidays and overtime, and the cost of other personnel used in connection with the loading and unloading of the vehicles, together with all reasonable garage expenses (except where the carrier has garage accommodation for the purpose of his own business), toll and ferry charges; (ii) Fuel; (iii) Employers' National Insurance contributions; (iv) Road Fund tax and Operating Permits; (v) Insurance of vehicles under the tariff form of comprehensive policy.
then proceeded to make new calculations, taking into account the decrease in the carrier's expenditure broughtabout by these considerations; the results are given in Tables IV and V.
It should be noted that Table IV differs from Table I, its counterpart, in certain particulars. I have taken out altogether the items comprehensive insurance, Road Fund licences and N.T.A. licences, the last-named being what the Ministry prefers to call the cost of Operating Permits; spare car (I was in some doubt about this, but finally concluded that it . could not be a legitimate expense under the new conditions); also wages.
I also considered it fair to assume that the carrier's administration charges would be diminished to some extent, partly because the Ministry agrees to pay the wages of the personnel engaged in loading , and unloading vehicles (which may reasonably come under the heading of administrative costs) and, partly, because it is to be expected that the carrier's establishment expenses can be reduced, now that he is relieved from the necessity of finding loads for his vehicles. I decided that a reduction of about one-third in respect of this item was fair.
I altered the make-up of the Table, substituting, in Table IV, a weekly charge instead of, as in Table I, the charge per day. I did so because the Ministry hire rates are set out per week and not per day.
At the bottom of Table IV I gave the Government weekly payments, for comparison with the weekly charges arrived at by using the figures given to me by my friend as being the basis of these rates. The comparison shows that, in all except the smallest machines-which are not in any event of much account in connection with long-distance haulagethe amounts the carrier will receive from the Ministry are but half, or less. than half, what Jae might reasonably expect. That disposes of my critic's argument, in so far as the fixed charges are concerned.
Turning now to the running costs and charges, it was necessary, in compiling Table V, to delete, from Table II, only the item fuel, for the carrier is responsible for all the remaining items of expenditure.
Rates Operate Against the Haulier
Again, I set out, at the bottom of Table V, the Ministry rates of payment per mile, for purposes of comparison with what the carrier should receive. The difference is not so great as in the case of the weekly pay.: ments, but is, in all except one case, against the haulier. In that case the difference is so slight, a mere threehundredths-of-a-penny, as not to be worth any consideration at all.
It is reasonable to state that, in all cases, the carrier will be at a loss, in respect of both the weekly payments and of the payments per mile. In any event, the difference in respect of the weekly payments is so great as to make it impossible for the operator to recompense himself out of the mileage payments, even if they provided a profit which, as I have shown, they do not.
These new figures, therefore, far from persuading me to recant my views that the Ministry payments are insufficient, have quite the contrary effect-they confirm me in my. opinion. Actually, looking back to my own figures, as published in the Iwo articles referred to above, I find that these costs are higher than mine, and the case made out by the use of them is more strongly adverse to the Ministry's rates than was my own.
Now, it is known that the payments to controlled undertakings also fall far short of what is necessary to meet their outgoings, let alone show a profit, although the deficiency there is not so great as here.
What all hauliers want to know is this : why should this be? Not a man in the industry objects to having the scope of his enterprise limited, provided that he can be persuaded that the limitation is essential to the successful prosecution of the war. What he cannot understand is why he should not be paid a .reasonable sum, if and when his services and vehicles be employed.
As at present planned, the scheme must result in the bankruptcy of the industry-the small men will go first, to be followed by the larger concerns, as the outcome of a scheme which, we were plausibly informed, was designed to keep the ipdustry in _ being as a going concern ! The ultimate result is so obvious that it cannot be otherwise than intended; there is some sinister purpose behind it, and what it is there can be little doubt.
Industry Will Become "Easy Meat" If the war, or the pretext of saving rubber, whichever is the more prolonged, continues for any appreciable length of time-in other words, if it lasts longer than the most optimistic of wishful thinkers believes-the industry will become so weak, financially, as to be "easy meat" for someone. By then, presumably, the Ministry officials will, by picking the brains of the Unit Controllers, be in some shape for taking over the industry, and that is what it is intended that they should do.
In one word, nationalization is the objective, and if there be doubt in the mind of any that this is so, let him read once more The Editor's article on page 356 of " The C4:'-nnmercial Motor" dated June 18, wherein it is significantly stated that this scheme is not the child of the Ministry, but of the Cabinet, which contains at least one individual who is notoriously of opinion that road transport should_ be nationalized: Finally, what is the industry going to do about it? Surely it is not going to remain passive?