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Wrong side of the blanket
Page 74
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Janus comments
THE ROT may have set in when Mr. Aubrey Jones first placed his embargo on blanket recommendations. The fear of making too positive a statement on costs and charges and the future has spread like an infection which only the weather forecasters and the Prices and Incomes Board appear to have escaped.
Last week the Monopolies Commission published a report on recommended resale prices. It seemed over anxious that even its own recommendations, let alone those of the manufacturers, should not emerge on the wrong side of the blanket. A survey carried out in some detail led to the not surprising conclusion that where a recommended price is followed the resulting price level may be either higher or lower than would obtain without a recommendation.
"We think," said the Commission in a tone that hardly carried wholehearted conviction, "that the number of cases in which prices will be higher is likely to be significant."
Provisional assessment The Government which may now be expected to act on this kind of tentative hunch is no more confident in its own diagnoses. The new Green Paper The Task Ahead, which aims to give a provisional assessment of the economic prospect up to 1972 "as a basis for consultation," can do no better than guess that the average annual rate of growth of output will be anything from "something under 3 per cent to something in the region of 4 per cent". In case even this should seem too specific the proviso is added that "the actual outcome could be outside these limits".
Never glad confident morning again! No doubt the Government was thinking back to the National Plan of 1965 and its numerous prophecies that have not been borne out by events.
Not that the cautious approach is always wrong. At least the Monopolies Commission tried to find evidence on which to base a conclusion. The Prices and Incomes Board did not probe even as far as this in its inquiries into road haulage rates. It made a number of assumptions, mostly critical of rate recommendations, and arrived at the opinion that the practice ought to cease. Neither before nor since has it tried to establish whether the recommendations in any case led to an operator getting a rates increase that would not otherwise have been granted.
The Monopolies Commission has agreed that for some goods it is of some assistance to consumers if manufacturers give an indication of resale price. At least the buyer has a clue to what he ought to pay. He can compare cut-price offers and make his choice. He has a firm basis for argument if he is asked to pay more than the stated amount..
Recommended rates increases often served the same purpose. In spite of optimistic hints that they struck an average they were usually taken by the customer as the maximum and any haulier who wanted more had a hard fight ahead of him. Many operators and perhaps the majority were satisfied with less. Increases in road haulage charges have been necessary over the past few years and few customers have disagreed. They have even asked for a specific estimate on which to work and have shared the public reaction to a well-defined rise in costs such as the Chancellor of the Exchequer provides at rather too frequent intervals.
People know without being told that, for example, an increase in the fuel tax means an increase in transport charges. What they are curious about is the extent of the increase. Since every operator's fuel bill is different it is not easy to give an estimate but even a statistic which may not be completely accurate is preferred to none at all.
Deprived of the right to make general statements on rates the Road Haulage Association is finding it more important than ever to keep members advised on the subject. Members on long-distance work place considerable value on the detailed rates guide produced some years ago and kept up to date with frequent amendments. It would be possible although unlikely that not a single figure in the guide corresponded exactly with the rate actually charged by any operator. This would in no way minimize the importance of the publication.
Guides are also prepared for specific types of traffic. In some cases they are more than a guide in that they state precisely what the customer has to pay. The usual pattern shows a single customer or a small group of customers served by, a large number of hauliers. Where a satisfactory agreement can be reached it assures the haulier of a reasonable return on his costs and saves the customer from an exhausting round of bargaining and a complicated accounting system.
Schedules of agreed rates have been woven into the structure of the present licensing system. The involvement dates from the time when Licensing Authorities refused to grant contract licences without evidence of a firm contract which would assure the operator a proper return on his expenditure. More recently the practice has been extended to deal with applications by tipper operators seeking work, in particular from quarries.
The immediate intention has been to protect operators already licensed to do the work. The basic consideration, however, has been road safety. If rates are too low an operator cannot earn enough to stay in business without neglecting vehicle maintenance and disregarding the law covering such things as drivers' hours and speeding.
Safety emphasis The new licensing system takes from established operators their right of protection and redoubles the emphasis on safety. On this point Licensing Authorities are bound to continue to regard adequate rates as crucial_ It seems likely that they will do all they can to carry over this belief into the changed situation and keep what control is necessary over minimum rates.
In road transport it is often the seller rather than the buyer who ought to beware. It would be unreasonable to expect the representatives of hauliers to keep silent. In a message to members this week the chairman of the Road Haulage Association has given a detailed although by no means exhaustive list of items where the cost has increased over the past 12 months.
There is no hint of the cumulative effect. Members are advised to consider their costs and their rates "very carefully and urgently". Mr. Noel Wynn reveals that he is already negotiating increases with his customers "except in the very rare cases where all the higher costs can be absorbed by truly increased productivity".
Most operators who follow this advice will think it advisable when they approach a customer to have a specific proposal at least in mind. One advantage even if a little frail is that the letter they have received does not prevent them from setting their sights as high as they like. The customer will not accept the figure without question but many operators will reason that a rate increase which is cut to 5 per cent from a requested 10 per cent is better than an increase of 2+ per cent which is granted without argument.
The RHA letter shows to what a degree the combined pressure of the Government and the Prices and Incomes Board has hampered specific statements on rates. Even The Task Ahead in a somewhat hesitant attempt to say what is likely to happen dares to give an upper and a lower figure. Hauliers who are dealing with what has already come to pass are supposed to make do without a general estimate. It is ironical that where they do not decide of their own free will to ignore this injunction they will be forced to do so by the customers whom the injunction is supposed to protect.
The situation grows more and more obscure. Instead of fixing a price in public the seller has taken to haggling with the buyer in a dark corner as if he were peddling drugs. The result will still be much the same as before. Profit margins in road haulage have never been so great that operators can absorb more than a very small increase in costs and the higher general standards of )peration now becoming compulsory will lessen the possibilities even more.