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topic Something of a giggle

30th April 1971, Page 48
30th April 1971
Page 48
Page 48, 30th April 1971 — topic Something of a giggle
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Which of the following most accurately describes the problem?

by Janus

LOKING back on the uproar which surrounded the first report of the Prices and Incomes Board in the summer of 1965, it is hard to believe that the point at issue was a mere 5 per cent on road haulage rates. It may be wondered what the Board would have had to say about the 15 per cent or thereabouts which hauliers have more recently been seeking and in some cases getting.

This week the Board has delivered its last testament, its sixth and final annual report. Over the six years it produced 170 reports, of which 67 were specifically concerned with prices and a further 10 have covered both prices and incomes. Inevitably, it was the first report that attracted the most attention and possibly also gave the most initial satisfaction to the fledgling Board.

Whether it would still hold the same opinion is a matter of doubt. A member of the Board's staff has recently recalled the scene on the night before publication, when the final "nuances" were being put into the report and the three people concerned "burst into fits of helpless giggles as they tried to chisel things into shape". Bliss was it in that dawn to be alive. But to be young„

THE Board as a whole might prefer to forget this undergraduate phase. It has since done much better. That first report now seems almost pathetically naive, with portentous recommendations altogether lacking in significance. The one good effect was to stimulate the Road Haulage Association into undertaking or sponsoring research which goes considerably deeper than the former periodical rates recommendations.

As far as can be seen, the result is much the same. There is perhaps greater recognition of the areas in which economies can be achieved or productivity improved; but rising costs still have to be reflected in rising rates. The mirror image is so faithful that it is difficult to tell one from the other.

The practice of general rate recommendation, by the RHA, the Board pronounced, "is not in the interests of the industry or its customers and should be abandoned". It follows from this, the report went on, that thelatest recommendation for a 5 per cent increase "should, if not withdrawn, not be accepted by the industry's customers".

UNDER considerable pressure, the RHA agreed to give up the practice condemned by the Board. Whereupon, in its later report, the Board more or less accepted that 5 per cent was a reasonable estimate of the increases in costs. In the meantime, those hauliers who had no wish to see their profit margin vanish had already applied the appropriate rates increase.

The first report even had a word to say on this. It is for each haulier to judge, it pronounced magisterially, "in the light of his individual circumstances, and the increased efficiency which he individually can effect, the extent to which he should try to recover from his customers the increases he has borne in vehicle duty, and such increases as he will have to meet in wages".

The irrepressible giggles which I quoted earlier may have been in anticipation of the look of bewilderment on the face of the average haulier when he came to read this pronouncement. Behind the facade of the RHA recommendations there had always been a process of strenuous bargaining with customers. The Board appeared to be offering this established practice as an entirely new solution.

ONE of the "nuances" which may have been overlooked in the general hilarity is to be found in the phrase "the extent to which he should try to recover". It could be taken to mean that there should be degrees in the actual effort. Even if the Board could not condescend to be clear on the point, every operator knows that, once he has determined the increase required for survival, the effort to obtain it must be all out.

It was in this context that the RHA recommendations ought to have been examined. They were a useful aid particularly to the small haulier seeking an excuse for a discussion with a customer. In many cases a convention had been established whereby the haulier made no move until there had been a recommendation, which the customer in turn accepted as a starting point for negotiation.

In this way some sort of order had been established. It would have been found useful over the last two or three years when there have been rises, some of them substantial, in a wide range of costs. Without a firm recommendation, many hauliers or groups of hauliers have taken matters into their own hands and issued their own pronouncements at different times and often for different amounts. The confusion has sometimes been deafening.

SOME improvement is on its way. Among other things, the RHA cost and productivity scheme is helping to establish a rhythm by means of an annual

assessment of cost changes. This cc develop into a system of equally regi applications for rate increases, although situation will always be complicated heavy and sometimes unexpected rises costs in the middle of the year.

HAT must be difficult to deteci in fact it exists, is the differe between a careful analysis of cc and an equivalent recommendation on ra Whatever reservations and variations n be written into the text, the figure that St in the mind from the recent statement costs is that they rose last year by average of 15 per cent. It is assumed t the average increase in rates has been or be the same.

Productivity is not thereby forgotten. the Board itself admits, it is individual to haulier. If he has achieved an improvemi he ought strictly speaking to pass some the benefit on to his customers. If they sufficiently alert, they will demand it. Th seems no way in which the transaction be affected by legislation or by the threa excommunication from the Prices Incomes Board.

WHAT was obvious even at the t was that the newly elec Government, and especially Secretary of State for Economic Affa Mr George Brown, wanted a resound success for the first exercise by their r brainchild, the Board. They w determined to win at all costs. It 1 unfortunate for the hauliers that their c price recommendation happened to C011114 just that moment.

In some ways, the Government mi have wished for a better cause. The ri haulage industry is not one of the easier understand in a hurry, and road haul charges fluctuate much more than the p: of a specific commodity in a sh Moreover, the public know about price: the shops, but road haulage rates mean li or nothing to them.

EVERYTHING therefore had to done to dramatize this first report. have admitted that the cost incre justified a rates increase would not 1done at all. The better tactic was concentrate on the iniquity of mal blanket recommendations—and on the I of it they did seem to have some undesir; aspects—and to bend every effort persuade the RHA to give them up.

Mr Brown's reputation was certa enhanced at least on this occas Whether justice was done is another ma; The haulier may find some consolatioi that fact that it all took place at a time w the traffic situation was reasonable. ' Board's condemnation might have b disastrous if it had coincided with the n. cost increases of the past year or so, or s the present dearth of trade and consequent temptation to cut rates ra. than to increase them.

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