Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 363 - 379)




  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 transport employment?
  (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 overcapacity?
  (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.

Mr Laxton

  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 say—just while I am speaking—the 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 qualification—not without qualification—and 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.

Mr Morgan

  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 industry—with the caveat that Danny has mentioned—there 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.

Mr Chope

  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 question?

  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 of—I would imagine—how 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 case—and maybe through each part of it making the case for the industry that our members work in—for 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 principle.

  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 army—small, large, bits and pieces—have their wages and conditions determined by negotiations in which you represent them?
  (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 answer.

  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.

Ms Perham

  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.

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