Transport 'cuts' save rates
Page 32
If you've noticed an error in this article please click here to report it so we can fix it.
Local councils need to re-examine vehicle use during this time Government-imposed spencing restraints, By Brian Chalmers-Hur
TRANSPORT RATIONALISATION can help local authorities in 1980 — a year when councils are being asked by Mrs Thatcher to submit budgets based on 1979 spending. With inflation approaching 20 per cent this is a sizeable "cut" and is giving civic leaders a headache.
However, it appears to me that most of them are taking up an unnecessary and defeatist attitude. Have they really no over-manning, no piece of equipment remaining relatively unused in their yards?
Over the past 15 years, CM has consistently advocated the formation of centralised transport departments in local government in order to save money. Now is the time to look into this, and if they have done so before to look again.
Instead of each officer organising transport for his department in isolation, a qualified transport manager is the responsible person.
This leads to these improvements: Reducing spare capacity; ri Improving vehicle productivity; 0 Allocating actual costs accurately.
There are no items of hidden or obscure expenditure.
A tipper working for the parks department can as easily work for the highways department.
There are officers who will argue that their vehicles are fully occupied and never run a dead mile. If they can achieve that as part-time transport managers, then they should set up their own haulage companies — a fortune awaits them.
A system of invoicing council departments for the transport they use on a weekly basis has a magical effect on reducing demand. It really "concentrates the mind."
It is similarly costly to own and operate vehicles which stand idle for more than ten weeks a year. An 8-ton tipper costs £200 in standing charges alone.
Eighty per cent utilisation — and that is high — costs £2,400 each vehicle yearly. Local authorities cannot, while justifying such waste, howl about spending cuts.
"Direct labour" is a popular term in socialist-led councils. It apparently reflects their abhorrence that private enterprise should make a profit from ratepayers.
This is all too often the reason for local councils owning vehicles despite their underutilisation instead of hiring-in as required.
Hiring in can be abused, but it is the role of the transport manager to ensure it is not.
The transport manager is best fitted to measure a job, and to hire the correct vehicle for the proper length of time.
Some vehicles are in fulltime use in local government service, owned and operated by the authority and efficiently as well, but why should they be owned?
Leasing has become a popular way to acquire an asset. Many prosperous companies lease their buildings, plant, office equipment and vehicles, so why not councils?
I can trace no legal constraints. But if any do crop up, with the Government assiduously pursuing its economy drive it could surely be persuaded to amend the law if this is then to the financial advantage of the local authorities.
Leasing means that the equipment belongs to the leasing company and is charged on a contracturel basis to the customer. There is no capital investments and the lease is charged at a constant figure each month.
This system requires careful planning to ensure that there are no idle vehicles standing around for three or four years. Breakdowns, servicing, repairs and maintenance do not interfere with the operational requirements.
The present local councils' financial advantage is their ability to budget transport costs accurately for the period of the lease.
While it is normal practice to lease vehicles when new it is also possible to negotiate a contract to sell the existing fleet to the leasing company and then lease it back at a regular payment. The final payment will amount to more than the capital cost, but it will be met out of "earned income" rather than borrowed money.
The astute treasurer will find that leasing cars is not necessarily the best way to finance the car fleet as some banks are able to offer money at low interest rates.
However, if workshop space and facilities are unable to meet the current demand then leasing with a full service contract will alleviate the problem.
Leasing companies prefer standard-bodied vehicles on their fleets and are prepared to offer very good terms for these. I found that rates did vary between companies, according to which optional extras were fitted. Typical costs for a threeyear contract, 300 miles per week, with full maintenance and replacement vehicle were: Ford Transit 190 petrol (retz price assumed to be £5,501 and taxed at £98 per year.
£65 per week.
Ford D0710 14ft dropsid body, 120in wheelbase (reta price assumed to be £9,10( and taxed at £182 per year.
£88 per week.
Ford D0710 16ft tipper bod) 134in wheelbase (retail pric assumed to be £10,000) an taxed at £82 per year.
£93 per week.
Local councillors are ser sitive about their industrial relE tions and don't like to lose votes but massive redundancies in th workforce make for bad publi relations.
Leasing does not necessaril' lend to redundancy since it i the vehicle not the driver that I. on contract. Proper plannin( could result in a marginal de gree of redundancies or reduc tion by natural wastage.
The biggest problem that council would have to overcom( would be the disposal of th( existing fleet. Vehicle leasinc companies do not like taking or board older vehicles but they ar in a position to arrange disposa by trade specialists or at corn mercial vehicle auctions.
Although multi-year con tracts are negotiated in man cases, because of the unpre dictable state of the econom rates can vary on a 12-mon basis within the total contrac period.
Municipal vehicle bod manufacturers are able to offe special lease facilities and i many cases offer a buy-bac facility. It is these companie that the local authority shoul approach for their leasin equipment.
There are many services ru by councils and it would be fa better if use was made o specialist firms and that the sub-contracted the total opera tion of various services such a refuse collection and waste dis posal, street cleaning, mainte nance of gardens, parks an grass verges, street lightin maintenance, school transport etc.