Examination of Witnesses (Questions 380
WEDNESDAY 1 NOVEMBER 2000
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.
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
(Mr Elsby) One thing about trade unions they will
never surprise you by a long list of demands.
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
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.
392. And any legislation brought in dealing
with drivers' hours would be susceptible to the same avoidance
(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
(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.
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
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.