Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 380 - 396)



  380. Could I just ask another question? You were talking in answer to Mr Chope about the points you had made, there are seven points you make about how things could change, including the interesting point about the blue diesel, a scheme for hauliers and taxis. I represent a lot of taxi drivers in my constituency so I am sure they will be interested in that. I wondered, with these points, have you submitted them to the Chancellor or costed these proposals?
  (Mr Sealey) No, we have not. At the moment, partly we are responding to the terms of reference of this Committee. There is a wider argument especially in regard to taxis and the ten year transport strategy about where they fit within the transport infrastructure, where you fill gaps that public transport generally does not meet. We represent also a large number of taxi drivers, both within London and the UK, and it is something they have been arguing for quite strongly for a number of years. It was something we wanted to highlight that if any scheme was going to be applied to road transport there was an equally valid case for taxis because of their role. As we indicated, although we have not put a figure on it, I think you could take some indication from the rebates that are given to the passenger transport industry, that might be an area similar to what we would be looking at.

Mr Morgan

  381. You say in your submission that before the fuel crisis in certain parts of the country hauliers were able to buy derv cheaper at the pump than they were able to get it from their own bulk supplies. You quite rightly say perhaps the Competition Commission should investigate this. Is this the first time this has happened or is this something that has happened before? Does it happen on a regular basis or was it a one off?
  (Mr Elsby) As I understand it, it is a regular basis. It is in part indicative of the way the industry has gone, particularly in relation to the overall position in relation to the supply chain. I find it amazing for example that you can go to a pump and pay lower than you can when you go and buy bulk because I was always brought up in the belief that if you go and buy bulk you get it cheaper but that is not the case. It is defined on the basis of how much fuel is held in a particular area and that is part of the problem. It has been an ongoing issue for some considerable time and that is why we have drawn it to the attention of this particular Committee because we feel that it is an issue which should be looked at by the Competition Commission. This an area which needs to be examined.


  382. We have a list which seems to be getting longer as the suggested agenda for the new Director-General of the OFT.
  (Mr Elsby) One thing about trade unions they will never surprise you by a long list of demands.

Mr Chope

  383. Can I ask if you have some figures for the percentage of the cost of haulage which is attributed to the cost of employing the driver? We have heard various figures about the percentage of the costs attributable to the cost of fuel. What percentage is attributable to the cost of the driver?
  (Mr Bryan) We have to rely on the employers' evidence on this and they tell us it is an enormous percentage. Off the top of my head I do not have that figure but it is in our written submission I believe.
  (Mr Sealey) If you look at table six we actually give an example of wages and national insurance.

  384. Table six?
  (Mr Sealey) It could be you could take it from that.

  385. The reason I asked that question was because I wanted to ask about foreign drivers, drivers who are of foreign nationality who are apparently being employed in much larger numbers, is that correct?
  (Mr Bryan) It is not possible to answer the questions on the particular crisis without understanding the discussion that has been taking place in the industry for a long time. One of the views expressed by the Government is that you cannot just look at fuel costs in making a European comparison, you have to look at the total costs and the social costs of employing in the UK and in Europe. Then, of course, they will argue, and there seems to be a body of evidence that supports this contention, that the gap reduces quite considerably. A European wide issue that I think is important is the increasing use of non-European Union drivers rather than East European drivers, but it is a useful handle to use that term, where it is not illegal for companies in Europe to employ drivers from outside of the European Union for limited periods of time on terms and conditions substantially below those, and legal regulations below those, that apply in the European Union. You may or may not be familiar with the term the Willy Betts phenomenon. Willy Betts is a company that operates in Germany and other places that has specialised in exploiting the loophole that exists within the law, and of course where one goes others follow. The loophole is that he can, or they can as a company, set up in a place like France, operate 300 trucks from France and employ 30 drivers and do so legally. The drivers that they will employ will often be paid terms and conditions of employment substantially below those of European Union drivers, who are covered by collective agreements and state regulations. That is a problem for the whole of Europe and, in fact, the European Commission is attempting to draft views on how that matter can be controlled. There is a growing body of evidence that that will continue to develop throughout the whole of Europe and impact upon the UK too. Irrespective of the issue of fuel prices my experience is that will occur.

  386. How widespread is it at the moment?
  (Mr Bryan) It is not widespread. It is similar to the situation with regard to cabotage. Incidentally, I do not underestimate the importance of cabotage because if the UK is losing one per cent of its freight transport to overseas competition, it is one per cent that is not carried by UK operators. I would not underestimate it. The point I am making is that it is a large growth in a small figure to start with.

  387. UK based hauliers can do the same thing, they can employ East European labour, can they?
  (Mr Bryan) The answer is that they have not been as adept and I would not want to encourage them to do so.


  388. That will put the idea in their heads.
  (Mr Bryan) They have not been as adept. I apologise for repeating this but there is not a simple solution. We have seen the UK haulage industry think that flagging out was the answer, so set up a company in Luxembourg, register your company in Luxembourg, employ your drivers in Luxembourg and save your VED and save your fuel costs, until the Luxembourg authorities knock on your door and say "oh, by the way, there is a 30 per cent social cost of employing labour in Europe" and then they find another convenient bolt hole. There is not a simple answer. Anybody who thinks that a simple palliative of addressing the issue of fuel will resolve the problems of the industry, and it may temporarily relieve the pressure off the auctioneers who will say "15 off a litre, now let us have 25, let us push it up further and further", it will not address the inherent problems in the industry.

  389. Can I just get this right, that a Willy Betts vehicle driving across Britain could be driven by someone who is earning less than £3.70 an hour and could do so legally?
  (Mr Bryan) Yes, it could be a Rumanian driver working for £2 an hour.

  390. And could do so legally?
  (Mr Bryan) Yes.

  391. Because their wages are being paid in a country other than Britain and, therefore, are not obliged to follow the act, the national minimum?
  (Mr Bryan) Yes.

Mr Chope

  392. And any legislation brought in dealing with drivers' hours would be susceptible to the same avoidance procedure?
  (Mr Bryan) Yes. Rumanian drivers are not covered by the European Drivers' Hours Regulations, there are loose arrangements. The answer to your question is a very categoric yes and that is a serious problem. That is driven by competitive constraints aggravated by the costs of the industry that will not disappear when the costs of the industry are remedied.

  393. So immediately there is a big loophole in any extension of the Working Time Directive to cover transport operators' hours?
  (Mr Bryan) The daftest loophole in the implementation of the Working Time Directive is the exclusion of the self-employed driver. That would open up the whole industry to shifting the emphasis from employers to encouraging their drivers to become self-employed. We are already a cottage industry and we have a number of household name companies now moving towards the concept of self-employment in a number of sectors. The parcels delivery sector is a good example of a growing industry and we have a number of parcels companies encouraging their drivers to become self-employed. If that were the case and if we were to exclude the self-employed from the Working Time Directive that would seriously damage the competitiveness of the UK road haulage industry.


  394. To say nothing of the health and safety implications of people driving for far too long hours.
  (Mr Bryan) Absolutely right.
  (Mr Elsby) You only need to look to France to see what happens there.

Mr Morgan

  395. The fact that they are excluded from the Working Time Directive does not exclude them from the tachograph regulations, does it?
  (Mr Bryan) The answer is true but the tachograph regulations only apply to vehicles over and above three and a half tonnes. Many of the white van syndrome are vehicles below the three and a half tonnes figure. My colleague has already said there has been a 70-odd per cent increase in road traffic in a number of years and the growth of e-commerce will mean there are more and more of those small vehicles on the road and they will be excluded, if they are self-employed, from the Working Time Directive and they will be excluded from the Drivers' Hours Regulations because they are below the threshold. I am just trying to give you a flavour of the complexity of the problems of the industry and there is no simple palliative solution.
  (Mr Elsby) I would say that part of the industry is actually burgeoning to cope with the demands that are there, the white van syndrome, the less than three and a half tonnes. That is the area of growth, and will continue to be the area of growth as time goes on.


  396. Can I ask you one final question. In the events of September the T&G backed the Government rather than the protesters, some would say a strange role reversal that you were on the other side of the picket line for a change perhaps. Are you confident that the MoU that has been signed with the Government will prevent any further fuel crisis in the sense that there may well be protests but there will not be the extent of dislocation that was threatened the last time?
  (Mr Elsby) Danny commented on part of that but can I just correct you on one thing. We did not agree with the Government in that sense. We supported our members. What we agreed was that there was a case for a fuel reduction. We categorically said, and still maintain this to this day, that the tactics that were used by the people involved in the blockade were something that we could never, and would never, accept. I have been involved with the trade unions and I have come through many a dispute and if I had behaved like that in any disputes that I was involved in with the cognisance and understanding of the police, I would have been thrown in jail and the keys thrown away. We were very critical of the tactics used by the so-called blockaders. Although it was denied by people, we have evidence to show that was the case. Just for the record, we have enclosed in our documentation a whole number of intimidations that took place. Some very, very serious threats were made against drivers and their families. This was obviously very disconcerting. That was where we were supporting the Government because the Government were saying those tactics were wrong and we agreed with the Government, those tactics were wrong.

  Chairman: We did take up some of the points that you made yesterday with the oil companies and some of them had a rather disarming lack of awareness that such events had taken place within spitting distance of their premises. We will not go down the picket line any further in detail but can I just thank you for your information and your evidence today. If there are any points we need to get back to you on we will drop you a line. It is our intention to have the evidence in the library of the House of Commons as soon as possible so that people who were not here are able to read it. This will be across the whole board, so everybody's evidence, including your written stuff, will be available fairly soon. It will be in a rough form but it will be there in time for the post-Budget Statement and the like. Thank you very much.

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