Examination of Witnesses (Questions 420
WEDNESDAY 1 NOVEMBER 2000
420. The tenor of your responses seems to be
that high fuel prices are passed on to customers.
(Mrs Palmer) Yes.
421. What about competitiveness, about paring
down the costs? We do have a degree of competition between bus
companies, particularly in the urban areas outside of London where
most of us live, so we do see these different coloured buses competing
with each other and there is not much difference in fares. Is
that because you are all equally competitive?
(Mrs Palmer) Can I just talk generally and then perhaps
Mr Clayton can talk about his own company. Over the last ten years
the industry has pared down its costs to the bone right across
the board in terms of labour, in fact some would argue in some
cases too much, and it is still a fiercely competitive industry.
The cost of employing a driver is much the same whether you are
in company A or company B, the cost of buying the vehicle is very
much the same. People tend to have similar overheads. The fact
that some companies charge one fare that is more or less the same
is not an indication that they are in collusion at all, in fact
it is anti-competitive to do so. Although the Government would
like to see us all having the same fares, you are not allowed
to do so by the law.
422. I am not suggesting that you should all
be the same but I wonder why there does not seem to be that much
(Mrs Palmer) There is a lot of competition.
(Mr Clayton) I wonder if I could address the cost
issue first of all. I think Mrs Palmer is right to say that we
have at times perhaps pared our costs too far. We should remember
that 60 per cent of our total cost is staff related. With the
economy the way it is now there is not insignificant pressure
on staff costs. The fact that we are operating services over a
longer day than we used to means the unsocial hours staff work
are more adverse than they used to be, particularly outside London
where in many instances until a few years ago many services finished
by eight o'clock in the evening and they are now being extended,
and rightly so, but that puts pressure on the staff, it does not
suit all of them. The other big significant cost we have had over
the last three years has been the cessation of profit related
pay. That has added more to my costs than the increase in fuel
423. Just on this last point, the ending of
profit related pay means that you have just consolidated pay rates,
is that right?
(Mr Clayton) There is a variety of ways in which it
has been used. In some cases the staff received all the benefit,
in other cases the staff received half and the company received
half, it depended on the bargaining position. Essentially where
a driver has lost profit related pay, and that has had a direct
effect on his pay packet, we have had to make up the difference,
as you would expect.
Chairman: Thank you very much, that is very
helpful. We needed this extra dimension. If we have to get any
extra information we will be in touch with you. Thank you.