Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 420 - 423)




  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 competition.
  (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 costs.

  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.

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