Examination of Witnesses (Questions 363
WEDNESDAY 1 NOVEMBER 2000
363. Good afternoon, Mr Bryan. Perhaps you could
introduce your colleagues. I am sorry, Mr Elsby. I am getting
the structure wrong here. You are the AGS, Mr Elsby. It is Mr
Bryan from the Transport Group and Mr Sealey.
(Mr Elsby) We are all from the Transport and General
Workers' Union. I am the Assistant General Secretary. Danny Bryan
is our National Secretary, Transport, RTC as we call it. Mr Sealey
is a Transport Researcher.
364. As you are aware we have been looking at
specific sectors of British industry and we are coming to you
as representatives of the transport sector so we get the picture
in the round. We are not the Transport Committee but as so much
of our industry depends upon distribution, just-in-time deliveries
and the like, we recognise that you have a unique insight into
the working of the system. If there is a loss of competitiveness
that is often reflected in the numbers employed. What has been
your experience in relation to your members? Have they been getting
paid off in increasing numbers? Have there been job losses in
the transport industry over the last few years as a result of
this increase in duty and in particular in the last few months
with the combined increase in the duty and the fuel price?
(Mr Elsby) I have to say that the transport industry
is a very competitive industry. It consists of, on the one hand,
very highly organised haulage companies with many employees who
can respond very rapidly and quickly to change in the marketplace
and, on the other hand, small companies with sometimes less than
ten employees who work for them. Because of that sensitivity in
the industry, and particularly you mentioned just-in-time, as
the British public begins to demand seven day shopping and 24
hour shopping, then obviously that impacts on the industry that
we represent. I have to say that we represent not just the transport
industry, we represent almost every section of industry throughout
the UK. When something like the fuel blockade happens it does
not just affect our transport members, it affects all our members
through every one of the industries that they supply or they are
a customer for. In terms of job losses or job prospects, I think
it would be right to say that the industry in terms of jobs is
a very volatile industry, people come and go. Particularly in
relation to recent events there were occasions when people no
doubt suffered as a result of the fuel crisis because there was
no fuel available and they could not get on the road and, therefore,
drivers were laid off on some occasions. It also impacted on factories
where deliveries could not be made and there were instances where
people were laid off or the company had to react to the ongoing
fuel crisis. There were problems, there is no doubt about it.
In so far as how it affects our membership, I have just listened
to the harrowing tale from the National Farmers' Union in terms
of farming. We represent people at the lower end of the scale,
the workers who drive the vehicles, and who, quite frankly, were
intimidated during the whole crisis and felt very vulnerable as
a result of that. I can tell this Committee that in the industry,
particularly in the fuel tanker industry, they are no longer employed
by the oil companies, they are third party contracts. They are
put out to contract and these contracts are subject to competitive
tender and it is usually about driving down the price from the
customer which impacts on cost saving exercises in terms of workers'
pay and conditions of employment. Whereas I can empathise with
my colleague from the National Farmers' Union in terms of the
despair on some of the farms, I think it has got to be understood
as well that there is a lot of despair among workers out there
in the transport industry who from one day to the next do not
know who their next employer is going to be. We have instances
where drivers work for a transport contract company one day and
then the following day are working for someone else because the
contract has come up for renewal and it has been lost because
the other company tendered at a lower price, which usually means
cuts in the wages and conditions of employment. Therefore, it
is very sensitive to those circumstances.
365. We heard, for example, 22,000 people have
left the farming industry in the last 12 months. Have you got
evidence over the last two or three years of a reduction in the
number of people who are in your membership who have been driving
in the transport industry? Has there been any sizeable drop in
(Mr Bryan) I do not think there is any evidence that
there has been a substantial reduction in the numbers employed
in the industry. The first thing to understand is the industry
is not a single entity. In a recent meeting with the Road Haulage
Association in the last nine months I heard them report that the
average size of their member organisation operated four and a
half vehicles. That end of the market is very much a cottage industry.
The economics of that make it very vulnerable to volatile changes
in costs. It is clear that any dramatic increases in costs, like
fuel, would have a direct and immediate impact. The situation,
however, is that we must not believe that there have been masses
of losses in the industry. There is a very interesting question
asked about what happens to the truck that is no longer needed.
The answer is someone else usually buys it or takes over the licence
and sets themselves up again as a transport operator and then
becomes part of that competitive pressure. There is no doubt that
many companies in the transport sector at all levels, but particularly
at the lower end of the transport chain, are more vulnerable to
dramatic increases in costs over which they have no control, many
of them cannot automatically pass them on to their clients, they
are affected directly by these pressures. I know the point you
want to make but there is another issue that is crucially as important.
Faced with economic pressure the industry will seek to reduce
costs and the way in which it does that is to attack terms and
conditions of employment. The oil industry has been in the headlines
in the recent past and they have had a history over the last 12
or 15 years of savagely cutting the terms and conditions of employment.
Their contracting out programme has been driven almost exclusively
by cost reduction. Oil companies merge and the headline is "we
expect to save £500 million as a result of the process of
this merger" and what that means bottom line is that terms
and conditions and jobs are under pressure. Yes, there is a direct
impact on jobs although it would be unreasonable to quote figures
because in every other industry in the UK at the moment, especially
old style industries like the haulage industry, labour intensive,
there has been a dramatic effect in terms of the numbers they
have employed over a number of years. The evidence shows there
are more people employed in the industry now than there were in
1990 because of the rapid growth of transportation.
366. Would you say there is overcapacity? There
is a letter we have been quoting that Gus Macdonald sent out,
the Minister for Transport, which suggests that there is something
of the order of 20 per cent overcapacity. These businesses go
out of business and sell on the lorries to people who believe
that they have got the answer as to how they can make money in
the transport industry. Do you think that there is a degree of
(Mr Elsby) The industry is subject to people who obviously
want to do better and buy a vehicle and try and build up. It is
subject to entrepreneurism, if I can put it that way. Whether
there is overcapacity I would question quite frankly. Can I just
say, to quote some kind of figure, that the volume of road freight
since 1980-98 has increased by 72 per cent. So from that period
a 72 per cent increase in road freight whereas the rail industry
has declined by 5.6 per cent over the same period. The demand
is getting greater and greater and, as I said earlier, as the
demand for seven day working, 24 hour cover continues then there
will always be an increasing demand for more vehicles because
there is more freight getting transported up and down the length
of the country. Danny is right in this sense, that where the company
has to make cost savings it is usually at the sharp end, cutting
wages and conditions of employment. What you have is a very volatile
industry in terms of jobs, people move from one employer to the
other. When somebody gets into the industry as a driver they are
usually a driver for most of their life because they like driving,
but they shift from one employer to the other based on managing
to get jobs particularly related to terms and conditions of employment.
It is not reflected in job losses but in terms and conditions
of employment. I can tell this Committee, for example, that the
tanker drivers over that period, some of them lost wages in excess
of £7,000 by the continual drive down to meet costs and the
demands of a very competitive industry.
367. Can I question you for a moment about cabotage.
Some of the figures that we have got from the DTI and the European
Commission talk about it within Europe as being at a very, very
low level, something like 0.06 per cent. We have got some other
figures that I think off the top of my head were something like
68 per cent in Germany, 2.9 per cent in the UK and almost in some
respects a greater occurrence of it within Europe from UK hauliers
rather than the reverse. We have also had in written evidence
to us the comment that thousands of jobs are in jeopardy, or will
be in jeopardy, as a result of this. What is your stance on the
issue of cabotage? Do you think it is a real problem or is it
people flying kites trying to make more of it than there really
is there in any real substance?
(Mr Elsby) Danny will answer that more specifically
but can I say I agree with your figure of 0.6 per cent. I completely
agree with that. That is a fairly infinitesimal figure. We do
not see that as a major problem.
(Mr Bryan) I think that is true. Could I reinforce
the view that the road transport industry is facing difficulties
which need to be addressed. The Road Haulage Forum was established
partly to address those issues, whether it has done enough, quickly
enough is a different matter altogether. On the issue of cabotage,
the statistics that we have got are that the intensity of cabotage
went up by 78 per cent. Following the removal of the regulation
to licence on cabotage it went up from 0.4 to 0.6 of gross trade.
368. That was what, July 1998?
(Mr Bryan) Yes. Although it is a very small proportion
of the market, it actually exacerbates an already difficult situation.
I would not want to under-estimate the importance of cabotage
but it is wrong to assume that dealing with that as a single item
would actually resolve the problems of the fuel industry. I have
to sayjust while I am speakingthe Union has been
sympathetic with the view of the industry that there needs to
be a recognition of the problem the industry faces. We are supportive
of the concept of the fuel rebate but not without qualificationnot
without qualificationand that qualification is that the
industry accepts also its responsibility for ensuring that the
terms and conditions of employment of the industry are properly
represented. Could I just give you an example? I listened to the
NFU talk about anger, frustration and desperation. Can I give
you an example from an oil tanker driver's point of view which
perhaps explains some of the difficulties we have had recently.
Under the current Government's legislation on recognition, our
unions, subject to satisfying certain conditions, have the right
to negotiate with employers. In Shell and Esso, two major oil
companies, we were de-recognised many years ago. We would have
been able to satisfy any test set by the new law on recognition.
Before we were able to use the opportunity the new law provided
for us, those two companies contracted out their entire labour
force. Now how do you believe those workers felt about frustration,
about anger and about helplessness? Had those workers gone and
picked fuel terminals, had they taken secondary action in support
of their objectives, we would have been acting illegally and dealt
with it accordingly. There are lots of angry people in the frame
as far as the recent fuel protests are concerned and all of their
interests obviously need to be addressed by whoever is dealing
with it rather than just those who are able to act with impunity,
apparently, and bring the country to its knees.
369. Can I just follow that up. You are saying
cabotage is not a significant issue but another factor which is
similar, which the Road Haulage Association mentioned, is the
ability of foreign hauliers to come across here, bring in goods
to pick up return loads which are within the UK. Would you agree
that is a significant problem?
(Mr Elsby) That is a problem, that is part of the
difficulty with cabotage. That is the issue rather than the percentage.
That is an issue which is a major problem in the industry and
it is another difficulty that the industry has to face in relation
to the supply chain. If there is a blip in the supply chain it
just permeates the whole industry. It is not just the transport
industry but the fuel blockage showed within a very short space
of time that began to impinge into other areas of the economy
like manufacturing, which obviously is very disconcerting to us
that in such a short space of time that can happen. Therefore,
whereas Danny is right, we support the view that fuel prices are
too high and that the industry has got a case for arguing that
should be recognised in relation to their particular industrywith
the caveat that Danny has mentionedthere is also the need
to understand the difficulty that those who work in the industry
face. It is important to make that point on behalf of the industry.
370. Are you confirming that you believe that
fuel taxes are too high because you avoid reaching that conclusion
in your written submission. By how much do you think fuel taxes
are too high and can you also, at the same time, let us know what
percentage of oil tanker drivers actually belong to your union?
(Mr Elsby) Could you repeat the first part of your
371. You have just confirmed you support the
view fuel taxes are too high, which is something you did not say
in your submission, you talked around it. You have now crystallised
your policy in one sentence which is very helpful. I wondered
if you could tell me by how much you think fuel tax is too high?
(Mr Elsby) We have a series of options within the
written documentation. It is not for us to say the Government
should reduce it one way or the other. What we are saying is there
is a case to be made in the industry which is suffering in relation
to competition in other areas for a reduction in fuel costs. We
are not prepared to say how much, that is in relation to the Chancellor
in terms ofI would imaginehow he manages his Budget.
One man's tax cut is another man's tax increase so, therefore,
it is not for us to propose the Government should cut it by X
or by Y, it is for the Government to weigh up its tax responsibilities
and its responsibility to providing services throughout the UK.
I am sure the Chancellor is quite capable of doing that without
me imposing my will on him. What we are saying in our very complex
and comprehensive written submission is that there is a caseand
maybe through each part of it making the case for the industry
that our members work infor recognising that fuel prices
are too high because that is then imposed on to the customer,
etc.. Then it drives down wages and conditions as far as we are
concerned. Whereas we are saying, in order to respond to that,
the Chancellor should consider in some measure reducing it, based
on his responsibilities to the economy. It is a convoluted way
of saying no, we do not put a price on it but we believe in the
372. What is the answer to the question what
percentage of tanker drivers are members of your Union?
(Mr Bryan) Can I respond to that by saying that I
have already indicated the industry is not a single entity. We
represent about 90 per cent of the tanker drivers employed by
the major contractors responsible for delivering 90 per cent of
the products in the UK. A very large proportion of the tanker
drivers belong to the Transport & General Workers Union.
373. We have heard a lot of them are self-employed?
(Mr Bryan) That is not true. Well, my apologies, I
have indicated already that we have a supply chain within the
oil supply industry. We have the major oil companies who, with
the exception of one, do not employ their own labour in the main.
Then we have a number of major contractors, and I will not mention
them but if you want me to mention them I will mention them, four
or five major contractors who employ the vast bulk of the labour
force. They occupy about 90 per cent of the delivery programme,
four or five major contractors. There is then an army of small
operators who then subcontract into that industry. That is what
people refer to as self-employed. Could I tell you that there
are very few self-employed tanker drivers in the fuel supply industry,
what you do is have a large number of small operators who may
well be the owner and the driver along with a smaller number of
groups of people. It is not an industry that employs a large army
of self-employed drivers as the media presents it, it does employ
a lot of small contractors but they only carry about ten per cent
of the total quantity. That is the information I get from the
industry and I can bear that out from my own knowledge.
374. Can I ask you a slightly different question
before we move on. What proportion of the people who work in this
armysmall, large, bits and pieceshave their wages
and conditions determined by negotiations in which you represent
(Mr Bryan) I would say that about 80/90 per cent of
them, of the group I have just spoken about, have their pay and
conditions determined by collective bargaining arrangements, a
very large proportion of them.
375. One of the consequences of out sourcing
has been that you have been able to retain representational rights
on their behalf?
(Mr Bryan) Yes, that is true, but that is not the
376. No, I am not saying that. I realise the
argument you are advancing.
(Mr Bryan) That is true.
377. The implication of tax is there needs to
be a reduction in costs and a downward reduction in costs is reflected
in a deterioration of the conditions both financial and working
of your members. This is the nub of your argument.
(Mr Bryan) That is the case.
378. In your submission you mentioned this Comos
card which enables you to buy cheaper French and Belgium fuel
because you get up to 30 days' free credit before you get billed
back in the UK. Can you tell us more about that? How widespread
is its use?
(Mr Sealey) It is widespread by those people who have
got access to it. This is another thing which distorts the market,
if you have a haulier who goes abroad, takes a load abroad say
for a week, that would be a week's fuel here, he will be at a
cost disadvantage abroad. When they come back in, if they buy
a tank full of diesel in France or Belgium, they can come back
here and undercut the existing hauliers in this country because
they can run for a week on a lower cost base. It is something
which started off fairly recently but it is something which will
grow, it will be used by those people who have access to it to
undercut other people in this country who only operate domestically.
379. Have you any idea about how widespread
the use is? You say the use will increase.
(Mr Sealey) I could attempt to get figures for you
and supply those. We highlighted that as an issue in terms of
another distortion within the market which had not come within
the debate that has been going on.