Examination of Witnesses (Questions 180
- 194)
WEDNESDAY 1 NOVEMBER 2000
MR R KING,
MRS K LEEMING
AND PROFESSOR
D MCWILLIAMS
180. We have some big operators in the UK as
well.
(Mr King) Yes, but not so big as some of the major
continental operators. They need to get that truck back out of
the country and they need a load to put on it. Some of the rates
charged are exceptionally low. Nobody is suggesting that there
are not going to be some tears in an international industry like
this. We do have to compete and nobody is going to come along
and give you enormous concessions to help you. The industry has
to help itself and has to operate efficiently and effectively.
What it wants, in order to compete that way, is a more level playing
field on its operating costs. It is very difficult to compete
with continental operators when you are paying so much more for
fuel, so much more for vehicle excise duty and these operators
are allowed to roam UK roads without contributing a brass farthing
to the running of those roads. What we have to do is make sure
they do pay some of those costs, begin to level that playing field
so that we can hold our own. For the moment the competition is
unfair.
Helen Southworth
181. What I am having difficulty comprehending
from some of the things you have been saying is if 2.9 per cent
of the cabotage operations are carried out in the UK and UK hauliers
are responsible for three per cent, a slightly positive figure
there, why are we not benefiting from return journeys in the same
sort of way you were describing that other European hauliers were
in Britain? That looks like us not taking opportunity. Two point
nine per cent and three per cent are indistinguishable figures
so they should equalise out.
(Professor McWilliams) The issue is essentially an
issue of the number of return journeys. For the latest year the
figures we have on this show that 562,000 UK vehicles went abroad
and 884,000 continental vehicles came into the UK. Obviously the
UK vehicles will have done their best to get return journeys and
in fact the figures show that they got about eight billion tonnes/kilometres
of business from a mixture of the business they were doing on
the continent, the return journeys, and the cabotage they benefited
from. The problem is that you have one and a half times as many
vehicles coming into the UK as going out of the UK and the one
and a half times is the thing which actually creates the extra
business for the continental lorries. No-one is denying that UK
hauliers do business on the continent.
182. It should not matter how many vehicles
there are, it is actually the percentage of business they do that
matters and the percentages are equal.
(Professor McWilliams) With respect, it depends what
you are trying to measure which statistic is the relevant one
for it. What we have been trying to measure is the amount of economic
activity driven by certain factors and in trying to measure the
amount of economic activity driven by these factors what we have
done is looked at the total number of tonnes/kilometres and percentages
are interesting but in the end it is the total number of tonnes/kilometres
which drives the number of jobs, drives the tax collection, drives
the amount of fuel which is used, drives the tax revenue for that
matter and drives that mixture of things. That is really what
we have been focusing on and that is the element we think is sensitive
to differential taxation.
Chairman
183. You did make reference to the fact that
there were more bigger players on the continent. Give us an idea
of the size of the fleets which are coming into the UK. Is it
small companies from abroad coming in, competing at the edge,
or is it major players in the European market coming into Britain
using their weight, using their economies of scale? Equally, what
is the position regarding the UK vehicles leaving the UK and driving
around Europe and picking up work there? Do you have any indication
what the profile of the players is?
(Mr King) There is one very big operator by the name
of Willi Betz which is an Austrian company which straddles Europe
with a very extensive operation who now has a distribution centre
in the UK, in the South East. Some have suggested that anything
up to 800 of his trucks are in the UK at any one time. They are
recognisable because they are blue tractor units and yellow trailers
with Willi Betz written down the side. He is very efficient and
very effective and knows how to get his costs down to a very low
level. He looks upon his business as a European business. In other
words in some areas of Europe he will probably not charge such
an economic rate as he would in other areas because he is obviously
interested in developing and expanding. It does seem that he uses
East European drivers to cut costs down and operates in an effective
way, armed with cheaper fuel than you can get in the UK.
184. This is one company. If we are going to
talk sensibly we have to have a reasonable spread of examples,
we have to have reasonable numbers. To concentrate on one rather
sexy operation is a bit misleading. Do you have broader information
than this?
(Mr King) Up to a point but as you will know there
are market leaders which do tend to set the rates for everybody
else and even bearing in mind their size do have an undue influence
upon the development of a market. You get it in airlines on certain
routes, you get it with ferry companies, you get it even in the
High Street and the supermarkets. Willy Betz is probably the prime
example of that. As far as the UK goes, obviously the one which
springs to mind is Eddie Stobart who has several thousand trucks
some of which are operating now in Holland, having been what might
be described as "flagged out". He is a major player
within Europe but he has taken the view presumably that operating
costs and his efficiency are going to be best served by looking
at his operation within Europe rather than within the UK and has
taken steps to adjust accordingly. There is no doubt that apart
from the handful of really big operators—I guess you could
put them on one hand—the industry throughout Europe is based
on owner-drivers and very much smaller operators with maybe no
more than 20 or so trucks. To ask what the trend is in the marketplace,
we believe that the Working Time Directive looming up on mobile
workers, where the self-employed will not be expected to comply
with the Working Time Directive for mobile workers, have been
exempted, that trend will—
185. Are you happy about that? Surely there
is a safety issue.
(Mr King) No, we are not happy about that because
it opens up the opportunity for the self-employed drivers to be
able to take business from company drivers who are obliged to
work with the Working Time Directive. That is a few years away
yet but the impact upon the industry is going to be equally traumatic
as high fuel prices are at the moment. It does actually apply
throughout Europe but it is interesting to note that 70 per cent
of haulage operators in Spain are owner-drivers and one can expect
the influence of Spanish drivers and freight companies to be rather
substantial in years to come.
Mr Morgan
186. Mrs Leeming said earlier that a vehicle
can come in from the continent legally with 1,500 litres.
(Mrs Leeming) Yes.
187. Were you implying that there were any significant
numbers of vehicles coming in illegally with a greater amount
of fuel on, with extra tanks for example?
(Mrs Leeming) There is certain anecdotal evidence
about that and the customs authorities do prosecute that sort
of thing. You quite regularly see belly tanks coming in but that
is the legal amount. I do not have a figure for what level of
illegal operation there is.
188. What radius would a truck coming in with
one of these other tanks on it have once it has landed at Dover?
(Mrs Leeming) It depends on the size of the belly
tank but if you have a tank double the size of your normal running
tank, the 1,500 litres, then you have double the range.
189. So it could land at Dover and go up and
down to Edinburgh, two return journeys at least, 2,000 miles.
(Mrs Leeming) Yes. It would be illegal of course,
but yes.
Mr Chope
190. You described how there are one point five
million trucks coming into the country each year and some of them
are UK trucks coming back, some of them continental trucks coming
in. I presume each one of those one point five million comes in
with a full tank of diesel on which no UK tax has been paid. Do
the figures you have include those trucks which are UK based which
go either to Southern Ireland to fill their tanks? We have heard
that is a standard practice for the post office in Northern Ireland;
they send all their trucks to Southern Ireland to fill up even
if it means going extra miles to do so. A lot of UK operators
are doing the same, going over to the continent to fill up. Do
the figures of one and a half million trucks coming in include
those ones as well or not?
(Professor McWilliams) Yes. Table 1 which has been
quoted before shows an estimate of the losses in UK tax revenue
at the tax rates which existed a year ago and shows that from
Northern Ireland the losses were £85 million a year, which
is consistent with other estimates which have been produced, and
from purchases on the continent the loss is £82 million a
year. Yes, the figures do take that into account explicitly and
make estimates which I do not think anyone would seriously challenge.
191. So you are saying that we are now reaching
the stage when the law of diminishing return is applying because
of these penal rates of tax on diesel.
(Mr King) It is exactly like tobacco and alcohol,
is it not? Who would want to get into a situation we presently
face at the moment where the exchequer is losing huge amounts
of revenue but cannot do much about it because of the enormous
levy of tax on alcohol and tobacco. It has to accept the high
rate of smuggling; it is a major, major problem. Here we have
the same this year with fuel. Fuel has got so expensive now in
the UK that the Government is losing a huge sum of money; it certainly
is in Northern Ireland where 50 per cent of fuel purchases are
now purchased south of the border, a level which is likely to
rise as operators develop new systems. I would not want to hazard
a guess at how much is actually being smuggled into Northern Ireland
and then into the UK through Liverpool or elsewhere but our views
are that trucks come in with 1,400 litres of fuel legally. They
should not tranship that fuel into other vehicles but you can
fill an awful lot of Transit vans with one tractor unit with 1,400
litres in for deliveries round the Merseyside area or Birmingham
or anywhere else.
192. Can you help us about this? Apparently
there is a Comos card scheme operating whereby UK hauliers can
buy cheaper French and Belgian fuel and at the same time get up
to 30 days free credit. Is that right?
(Mr King) Within the UK?
193. I imagine they have to go across to the
continent to get this fuel.
(Mr King) Yes; I do not think it is available in the
UK. Many many ingenious schemes are being proposed so UK hauliers
can access cheap fuel; I have even heard someone wondering what
happened to Pluto, the pipe laid under for the Second World War
and whether it could not be reversed.
194. They are getting a subsidy. They are getting
30 days free credit as well. Have you heard concerns, as I have,
that the fuel card schemes which were being operated in this country
for many of the small hauliers have become totally uneconomic
over the last month because whereas they used to provide a discount
against the pump price of diesel, they are now charging a premium
against the pump price of diesel and that is as a result of structural
price changes made by the petrol companies. Is that right?
(Mr King) Quite incredibly, after the fuel protest,
two weeks later, diesel on the forecourt was seven pence per litre
cheaper than you could buy in bulk for your own haulage operation.
No-one has yet appreciated or understood why there was that substantial
disparity between prices where you could charge so much less on
the forecourt; indeed haulage companies were getting their vehicles
filled at filling stations rather than using their own stocks
because it was so much cheaper. As we understand it, that is not
a legitimate act under EU law. You should be offered a discount
off the main price if you are buying in bulk. Oil companies have
not given us a satisfactory answer to that. In the Road Haulage
Forum we have reported it to the Transport Ministers and I understand
the Department are looking into it and will report back at the
next Road Haulage Forum in November. It is a very interesting
situation. As to the credit card, yes, what is the point of having
a credit card from a fuel company which entitles you to fuel at
a certain price when it is being offered at a cheaper price at
a supermarket. It does not make any sense. I have to say the market
is adjusting now and the fuel cards are generally coming into
line so they are actually probably not worth using now as the
market has adjusted. It has been quite extraordinary over the
last four weeks. May I leave this Internet Trading Manual with
you? It demonstrates how the industry is going to develop its
structure through the website, back loads, solving some of the
problems of identifying where opportunities lie.
Chairman: Thank you. If we have not had all
the answers we are looking for, we shall be in touch with you
again. Thank you very much for the fullness of your replies this
morning. We are very grateful.
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