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Public service and transport cost
Page 112
Page 113
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With the widening scope of public services must inevitably be linked greater demands for road transport in many forms.
SERVICE industries have a fundamental distinction as compared with manufacturing industries in that the service or "product"
they provide is not always as readily quantifiable as is a tangible commodity. Service industries operating for a profit, however, do at least have the ultimate yardstick of profit or loss. But with many public services—hospitals are an obvious example—it is extremely difficult both to determine and then have commonly accepted some yardstick of efficiency.
Keeping to the example of hospitals, if one superimposes on an already intangible yardstick of efficiency yet another service— namely transport—to provide for the need of the parent hospital service then the interpretation of any transport costs resulting from such an exercise becomes little more than one of personal opinion.
While hospitals may represent an extreme example of urgency as regards the demands on transport services there are a whole range of activities undertaken by local government requiring road transport apart from municipal passenger undertakings. These include education, public health, housing, highways, fire services and police, among others, all of which would have their own level of efficiency reduced if transport was not available, in reason, when and where it was required.
But in the absence of the yardstick of profit and loss the nub of the exercise in ensuring the efficient use of road transport in all these services is first to determine what is a reasonable level of road transport service to be expected in any particular set of circumstances.
Alternative levels This basic decision as to the level of service would normally come within the province of the committee and/or the head of the department providing the parent service, e.g., hospital, fire service, police, etc. But in most cases there would be alternative levels of service which could reasonably be provided and it would be at this stage that the transport officer (or corresponding official) could give his professional advice on the practicalities and cost of alternative transport services.
It is a long-established practice to accept the procedure of comparisons of costs as a means to discovering pointers that might lead to greater efficiency. Once again using the example of the hospital service, the annual cost of, say, moving patients to and from their homes or possibly transferring them between hospitals providing specialist services would commonly be compared with the results of previous years by the administrative committee or officer concerned. Likewise comparisons will be made between the results obtained from various hospitals in the same region, and with the average for the region.
There is, however, in my opinion, a shortcoming in many annual reports dealing with the provision of such services: a common absence of any indication of what level of service is provided. Until that is given many of the comparisons may well be invalid. It is no doubt more difficult to indicate in simple terms the level of service provided, but nevertheless some attempt should be made.
Taking the simple example of the personnel carrier which is commonly used for a variety of purposes by public services of all kinds: if the passengers to be carried, whether they be employees, schoolchildren or patients, are provided with a less frequent service than before in the interest of full loading of the vehicle, then purely from the point of view of the efficient operation of the vehicle an improvement could have been claimed to have been achieved.
But in the process it might well be that the personnel carried by the vehicle received less benefit from the parent service—education, health, etc.—than they might otherwise have received if a more frequent road service had been available.
So stated this becomes relatively self evident but in practide, particularly during the urgency of day-to-day operation or the enthusiasm for yet another financial reappraisal, the simple facts of what the road transport service is being provided for can be lost sight of and first priorities relegated to, at best, second place.
A salient feature of the road transport industry is that a very high percentage of operators have five vehicles or less. As a result waste in any form is directly discernible and, moreover, the real reason for such waste, if and when it occurs.
Such a situation is in marked contrast to the approach to transport economy which is frequently met with in local government and other public undertakings. As a result of a combination of control through democratic procedure and the large scale of operation, the initial drive for economy starts at the point most remote from the actual occurrence of inefficiency, real or imaginary.
Because very large sums are now involved in public expenditure —£3,162m. in 1966 on local government expenditure alone— and proportional amounts on road transport inevitably required in such work, it is a reasonable and commonly made assertion that only a small percentage saving could in fact constitute a substantial amount.
Unfortunately to associate such an assertion with an allied intention of securing some notional economy in a committee discussion can, and probably will, result in an invalid assumption being made from the outset. This is because it has virtually been assumed already that economy can be effected which may well be true in a financial sense but not so if it is insisted upon that the existing level of transport service is not lowered to provide the alleged economy. In practice, if the person solely concerned with finance is senior to the man responsible for maintaining an acceptable level of service then the latter must obviously find himself in an invidious position.
An illusion Furthermore, where a large undertaking comprising several groups and organizations is concerned, any blanket demand for a percentage economy if not applied with intelligence, could, overall, have an adverse effect. In such circumstances inefficient groups would merely reduce their current inefficiency by the required "norm"—not necessarily a difficult exercise depending on the margin of inefficiency to start with. In contrast the existing efficient groups may well find no margin for improvement on purely financial criteria. And if headquarters insist that "economy" must be achieved, the only solution is to lower the standard of service.
Unfortunately where this takes place the illusion that an economy has been achieved with no corresponding loss elsewhere can go undetected. This is because, though the standard of service has been lowered the recipients of that service are often a temporary group of individuals with otherwise no connection or reason to organize disapproval.
However, as I said earlier, it is a first requirement, when dealing with this admittedly difficult problem of assessing the need and then providing an adequate transport service to one of the several parent services already named, to do so in its own right and not to have the level of service determined as a secondary reaction to successive financial or any other reappraisals.
Basic to transport operation are the two elements of time and mileage and the prime factor in determining the level of service is the time element, assuming an acceptable measure of comfort from a modern and well-maintained vehicle. Service in this sense can imply speedy conveyance but probably more important, particularly in public service, is availability for service coupled with regularity of service where the type of traffic •movement justifies such frequency.
A speedy service, .within reason, can be provided at practically standard operating costs when such an operation is considered in isolation. But obviously under modern operational conditions speed would largely be determined by external factors such as traffic congestion.
Service and efficiency can be diametrically opposed on the issue of vehicle availability. And nowhere is this likely to be more pronounced than when 'providing transport for hospital or fire services. It cou,ld be contended that a service has been provided in the public interest by the mere assurance that an ambulance or fire engine was ready for immediate use, even though not summoned.
Purely on financial considerations, however, that would represent non-productive use of valuable assets. Provided the financial implications of providing just such a service are examined and accepted beforehand then on the wider issue of overall public interest it could be contended that this was a justifiable decision.
Less dramatic, but probably a more continuing problem in endeavouring to determine what is reasonable in both the public interest and expense is obviously not the complete non-use of a vehicle such as a fire engine throughout the day, but rather the level of frequency of service. This, as suggested earlier, is closely allied to the loading factor of a vehicle.
Examples of costs Relative to frequency of service and loading factor, there must obviously be a significant distinction here between passenger and goods vehicles, including in the latter group the various special types of vehicle used by public utilities.
As an indication of the effect on operator's costs of frequency of service, I will now give figures relating to a 14-seater coach with a petrol engine. Just as there are two basic elements in transport operation—time and mileage—so this division is reflected in two groups of operating costs—standing costs and running costs. The five items of standing costs per week for this 14-seater are estimated to be: licences 8s. 6d., wages £14 19s. 6d., rent and rates £1 10s., insurance £1 6s. and interest £2 3s. 3d. Total: £20 7s. 3d.
Correspondingly, the five items of running cost per mile are: fuel 2.06d., lubricants 0.23d., tyres 0.35d., maintenance 3.13d., and depreciation 3.00d. Total: 8.77d.
The addition of these two totals gives an operating cost when averaging 200 miles a week of 33.21d. a mile or £2'7 14s. a week. With minor adjustments to the running costs already given the corresponding total operating cost when averaging twice this mileage (400 a week) is 19.45d. a mile or £32 8s. a week: In effect, therefore, it will be seen that if a particular frequency of service was provided on the basis of an average of 200 miles a week, that frequency can be doubled for the addition of £4 14s. a week in this particular case—the equivalent of a 17 per cent increase on the basic total operating cost.