No Bed of Roses
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By Ernest Davies, M.P., Assoc.inst.T.
Mr. Ernest Davies, Socialist M.P. for Enfield East and chairman of the Parliamentary Labour Party's inland Transport Group since 1945, has taken a leading part in opposition to the new Transport Act. He has, on many occasions, spoken from the Despatch Box in forceful but thoughtful terms on the evils which he considered would attend the denationalization of long-distance road haulage and the splitting of the railways into regions.
Now that the Act is on the Statute Book, he regards it realistically and seeks to ascertain how it can best be administered to protect the transoort industry and serve the nation's interests. In this article, the first of a series, he objectively studies the problems that he believh will arise from the Act.
ALTHOUGH the Transport Act, 1953, has reached the Statute Book, the future of the transport industry must be uncertain for some time to come. There is a great number of imponderables, and many problems, irrespective of the merits or demerits of Government policy, must ultimately be solved.
All interested in transport, whether as operators or users, must now examinethe new situation objectively in an endeavour to assess the effect of the great changes on the structure of the industry and the service that it will be able to render, the conditions under which it will operate and the position of all engaged in it, employer and employee alike. Any such examination must necessarily involve much speculation. Much depends on the ease with which disposal of the nationalized road services takes place, the policy of the British Transport Commission in operating the residue of their undertakings and that of the Minister with regard to them—for in him resides considerable power.
One thing is certain. As the time for the first disposals of the Commission's road haulage undertaking approaches, the size of the job and the difficulties that it involves loom large. There are some 38,000 Road Haulage Executive vehicles still in service, carrying more than 3m. tons a month and with gross takings of about Obi. a month. The staff totals over 70,000, of whom about 50,000 are operating staff.
The Present Organization
The Executive's undertaking includes a national network of trunk services running on 270 routes and employing some 6,500 vehicles. Parcels and smalls services cover 13,000 places and carry 250,000 consignments a day. About 3,500 vehicles are employed on this work. Pickfords have 3,000 vehicles engaged in special traffics. The remaining vehicles are employed mainly on local and general haulage and miscellaneous business. Depots are linked by a teleprinter service which enables British Road Services to operate on a national basis, I am not concerned here with the efficiency or economy of B.R.S., but with the organization as it stands on the brink of disposal. Under the Act, the whole of this organization has to be sold, except for 4,875 vehicles, which represents 125 per cent. of the number taken over with the railways on January 1, .1948. The Commission can also retain certain property which they require for their other activities, but apart from these vehicles and the property attached, the rest must be sold.
The prospects of a complete sale, and the speed of its conduct, are problematical. There is no time limit. The Act says that the disposal of the existing road haulage undertaking must be as quick as is reasonably practicable; but, at the same time, the Commission are D6 to effect it "without delay and on the best terms available, and without avoidable disturbance of the transport system of the country."
Joint responsibility for sale is that of the Commission and the Disposals Board, with the Minister as umpire if they fall out. To facilitate the sale, the Commission are to break up the organization into transport units, or, where more expedient, to form companies, and to invite tenders for the units or shares. The complete unit and, in the case of the companies, all the shares must be sold off in one parcel. The Commission, therefore, will not be allowed to retain an interest in any of these companies.
Not More Than 50 Vehicles Units and companies cannot comprise more than 50 vehicles or vehicles of an aggregate unladen weight exceeding 200 tons, without the Minister's consent, and priority has to be given to those who want to re-enter the industry and to small operators. The Board have to approve the sales. The balance of the undertaking not sold through units or companies must be disposed of separately as chattels. So much for the machinery as it stands on paper.
Meanwhile, to the great credit of the R.H.E. staff, the business is being carried on as usual. No one dealing with British Road Services today would be aware that their disintegration was at hand. It does not appear that the process of splitting the undertaking into units before sale has begun or that the Commission have decided which of the vehicles they will retain. A nucleus will be left and some services will be carried on, some perhaps in co-operation with private hauliers, others possibly by sub-contracting or through clearing houses or otherwise.
Encouragement For Sales
It is useless to speculate on the extent to which buyers will be found. Certainly, the Government and the Road Haulage Association are doing what they can to facili
tate the sale. The Government have relaxed hirepurchase restrictions and eased credit facilities, and the R.H.A., in conjunction with the United Dominions Trust, have formed a special trust for financing the purchases. Further, the way is clear for former operators to re-enter the industry through relief from the obligation not to do so imposed by acquisition by the Commission.
On the other hand, many of those previously in road haulage are known to have no desire to re-enter the industry, and others who might otherwise do so may be deterred by the insecurity created by Labour's declared intention, when it returns to power, to restore a publicly owned haulage business.
There will, of course, be many difficulties in disposing of the existing road haulage undertaking in tote. In the provinces, where there are many compact units, sales might be comparatively easy, but the larger depots in London and other big cities, which are linked in the national network of trunk services and otherwise, are probably too large to find a single purchaser. Further, to buy one such depot without having the corresponding ones at the other end would necessitate several purchases or building up fresh organizations. Some large operators may do so, but the Minister's consent will be necessary if more than 50 vehicles are to be purchased.
In addition, it is unlikely that Pickfords could be sold as a unit, as their value is great and to break up the undertaking would be difficult.
R.H.E. Remnant
It can be assumed that a large proportion of vehicles will be sold, but that a substantial, although, diminishing, section of the industry will for the present remain to be operated by the Executive, which, incidentally, the Act does not specifically abolish. The R.H.E. services will in course of time become less and less comprehensive, with, no doubt, the best being sold first and the unremunerative dropped as they can no longer be supported by the more profitable.
The private haulier will face competition from the remaining services of B.R.S. Both the private haulier and the State undertaking will be subject to the same conditions, but the latter will, for the present at least, have the advantage of a national organization, whereas the private sector, in accordance with the Act, will be spread over a large number of small units. The conditions under which the industry will be operating are now well known.
The Commission's vehicles, and those which have been sold in units or companies, will be operating under fiveyear A licences. They will be free from restriction to the 25-mile radius, which will continue until the end of next year, for all now subject to it. The only exception to this rule is provided by the few undertakings on which acquisition notices have been served but not executed.
No Change of Base
Purchasers will be under a geographical imposition, inasmuch as they cannot change the base from which they operate and which they have declared to the Licensing Authorities was their intended base at the time of purchase. Section 9 (4) of the Act specifically lays down that a licence can be revoked if the declared intention of the applicant for the licence has not been carried out.
The words of the Act are far-reaching and during the debates on the Bill the Minister stressed that this provision was intended to cover the carrying on of comparable services to the extent required. It is difficult to see, however, hov7' this will work out, because if the same base is used, services can be varied and an operator, accused of non-fulfilment of his declared intention or expectation, would always be able to claim that conditions had changed.
Restricted in this way, the private haulier is going to be faced with triple competition—from the, private sector, the public sector and the railways. The Government's objective was to return the industry to competitive conditions of operation, both within the industry itself and between road and rail. It looks as though it will succeed.
Within the private sector of the industry, competition could be fierce, and as British Road Services are likely to remain in operation for some while, they also will be powerful competitors. Further, entrance into the
industry is made somewhat more flexible with alterations in the licensing provisions of the 1933 Road and Rail Traffic Act. This may prove hard on those operators subject to the 25-mile restriction, who will be faced with competition from the unrestricted operator who may have obtained one or more lorries at a low figure.
A somewhat complicated legal argument took place in Parliament over the exact intention of the licensing changes and their likely effect, but the Minister made it clear that the purpose was to facilitate entrance into the industry by making it easier to obtain A and B licences. The needs of users, rather than those of providers of transport, are to come first, and by introducing charges as a matter to which the Licensing Authorities shalt give consideration, the door is certainly opened wide.
Reduced Power of Objection
The fact that the objector will now have to prove his case may make the sustaining of objections far more difficult. In the past, the weight of objection from the railways and large operators has often been overwhelming. It must inevitably be less so under the new provisions.
In this connection it is important not to overlook the Commission's right to apply for new licences. That they could do so the Minister made quite clear during the debates. He was unequivocal.
The Commission will be on a parity with all other hauliers and applicants for licences, and the Licensing Authorities will have to consider the B.T.C.'s applications on precisely the same basis as the rest. As the Licensing Authorities are to have regard to the relative efficiency, reliability and adequacy of the existing facilities, the Commission should be in a favourable position.
This is a most important loophole in the Act, which makes it possible for the Commission to build up their road hablage business: They may well be able to justify themselves for doing so on the grounds that it is necessary to extend commercial road haulage in conjunction with their other undertakings, notably the railways. Justification of some kind will be necessary, as the Act specifically states that the Commission can carry on road haulage, so long as it is not part of the existing road haulage undertaking.
Extension by B.T.C.
Private hauliers will therefore be faced with competition not only from the Commission's retained vehicles, but from further vehicles for which fresh licences may be granted. To protect himself against such extension of the B.T.C.'s road haulage activities, the private haulier may find it necessary to continue services that he would otherwise discard.
At the same time, he will face competition from the railways, which, freed from many restrictions on charges, undue preference and the publication of rates, will have greatly increased power. The railways appear to have every intention of "going to town" in the matter of rates and are satisfied that they will be batting on a favourable wicket.
The fact that the Commission retain some road haulage and can extend it if they obtain the necessary licences means that the B.T.C. will have the advantage of road-rail integration.
From all this there emerges a picture of a highly competitive road haulage industry, with conditions perhaps not quite so easy and happy for the private haulier as at first appeared.