Prepare for new O-licence rules

On 4 December there will be a significant change to the rules regarding operator licencing, with new regulations on admission to the occupation of road transport operator coming into force.

This major development in the industry will be covered in detail at the RHA Roadshows which are running from September to November (see page 9 for details) and members should attend these events to hear how their licences will be affected. We are grateful to transport lawyer Lucy Wood, of Rothera Dowson, who has assisted the RHA in preparing for these events.

The regulations replace the European directive that brought the transport managers’ CPC, rules on financial standing, and the concept of good repute to the UK: the original directive was one of the first pieces of legislation that the UK adopted after joining the Common Market.

As far as professional competence is concerned, the National CPC examination ends and all entrants will sit a combined National and International examination. Existing CPC holders who gained their qualification by examination will retain their certificate but holders of ‘Grandfather Rights’ certificates will have to demonstrate they have either been a transport manager on the same O-licence continuously for 10 years prior to 4 December 2009, or provide signed declarations from previous operators that they have worked for and been a named transport manager during the required 10-year period. Exemptions for holders of certain other professional qualifications will continue.

The new rules for financial standing will require operators to demonstrate that they meet the specified conditions in one of three ways, including annual accounts certified by a properly qualified person. The accounts must follow a specified form and content, including a balance sheet, profit and loss account, and notes on the accounts.

A new business without access to accounts will require a statement by a properly qualified person setting out assets and liabilities or an opening balance also certified by a properly qualified person.

The third type of evidence that will be acceptable is a financial guarantee of some sort, ranging from an overdraft facility to an invoice finance agreement. Please note that the ‘properly qualified person’ will need to include a statement giving personal details and their qualifications.

As far as good repute is concerned, the new regulations allow the Traffic Commissioner (TC) to take direct regulatory action against transport managers who no longer meet the requirement of good repute or professional competence and the TC must declare the transport manager ‘unfit’.

Such a declaration would remain in place until the TC determined good repute or professional competence was restored and the TC would establish what rehabilitation is required for the transport manager to regain his good repute or professional competence.

This could affect companies who use external transport managers because the loss of good repute due to an issue with one company would prevent them from being the transport manager for any others with whom they have a contract.

Too wrapped up in red tape?

I met Transport Minister Mike Penning recently and discussed a wide range of issues that affect our members and an email update was sent out after the meeting. One way or another the issues all boiled down to legislation, so it was encouraging to hear that he is keen to get rid of bureaucracy by removing as much of the red tape that surrounds us as possible.

We have had similar initiatives before and it can be difficult to identify areas where life could be simplified without jeopardising the purpose of the legislation. This might be health and safety, employees’ rights, the environment or fair competition – the four main objectives of much of the legislation which applies to RHA members. So where can we see opportunities for simplification?

One obvious issue is the overlap between the Working Time Regulations and the Drivers’ Hours Regulations, which can appear to conflict with each other at best, and contradict each other at worst. But, sadly, the potential to tackle this nonsense is limited because the government is not in full control here. These are pieces of European legislation, so Westminster’s options are limited. Indeed, it may fall to the RHA, through its network of fellow associations across Europe, to get the process going and we know how long that can take.

We will be pursuing this and updating members if and when any progress is made. On the purely domestic front there are quite a few pieces of legislation we believe could be removed altogether or simplified to the benefit of RHA members. Take employment law for example. This is a field well known for its complexity, with many employers falling into legal ‘traps’ because they fail to follow complicated and – with justice in mind – unnecessary procedures that are well intentioned but contribute nothing to the fairness of the process overall. Why can’t we make dismissing someone guilty of gross misconduct much simpler? We have seen cases lost against people who have assaulted colleagues or clients because of procedural failures.

That cannot be right and the employer must have some protection in law just as much as the employee. The other area of law which is particularly – many would say ridiculously – complex is health and safety (H&S). However, I must qualify this by saying that much of the needless difficulty could well be caused by external H&S consultants or in-house managers who have become so risk-averse that they impose totally unreasonable demands on the poor visiting haulier. How many members carry a full wardrobe of PPE kit because the demands of consignors and consignees are different? The Health and Safety Executive is often unfairly blamed for the more ridiculous examples – the so-called ban on ladders being one example – but it can help by giving guidance along the lines of “please do not use H&S as a smokescreen for your own stupidity” as well as by simplifying the regulations themselves.

Turnover is vanity – profit is sanity…

… I suspect that many people have heard that saying – it’s been around for years. I also suspect that many might think that profit is difficult if not impossible in the current climate, with fuel prices at record levels and customers very reluctant to accept rate increases that pay the higher diesel bills or, for that matter, other cost increases such as wages and insurance.

Having said that, the published accounts for some firms in the industry make interesting reading, with decent levels of profit being reported in quite a few cases. The trade press also publicises success stories as well as the spectacular failure of some high-profile and well-known names. We are now something like 30 months into recession, with no clear and substantial evidence of recovery, so demand for our members’ services is probably at an all-time low, but the number of vehicles available, and the number of businesses competing for the work, have both declined.

We eagerly anticipate the publication of the Traffic Commissioners’ annual reports, as they will show how much of a decline there has been. We know there was a drop of some 3.6% in vehicle numbers from 2009 to 2010, although the drop in restricted licensed vehicles was higher than in standard licences. But how big has the drop been in the past 12 months? In the last six months, my visits to RHA council meetings suggest we are reaching a stage where there are real shortages of certain types of vehicle and, in some markets, bringing supply and demand for haulage into a better balance than has been the case for some years.

Perhaps we are now in the situation where real negotiation can take place rather than customers offering work to operators desperate for business on the basis of ‘that’s the rate, take it or leave it’. Perhaps we are even in the situation where RHA members are able to ‘leave it’, because they know there is enough work out there, and there is no need to accept whatever a customer might be willing to offer.

But, despite being in a stronger position, it is no use getting plenty of work at rates that might seem very attractive if the customers pay when they feel like it. A member once said to me that things were so bad that even the customers that don’t pay had stopped giving him work!

We are not in that position now, but it goes without saying that getting paid is absolutely central to making a profit. It is clear that some members are better at this than others. Get the basics right: agree terms in writing, invoice promptly, chase up overdue payments and check the credit rating of every customer regularly so you get fewer nasty surprises. This is common sense, but is it common practice?

The All Party Parliamentary Road Freight Group

This meeting, Chaired by Rob Flello MP, considered a number of current issues, starting with a proposal for the insurance industry to make the Motor Insurance Database available to the Police at the site of crashes. The Police could then contact the insurer who would ensure that an operator’s preferred recovery company is called out whenever possible, and would deal with such issues as special loads including livestock or dangerous goods. The insurer would also be able to contact the insured – if not at the site – allowing a claim to be opened much quicker than normally. The insurance company would then be better place to limit any additional costs that would inevitably be passed on to the operator. This could have real benefits for hauliers, as it may reduce the cost of recoveries and storage.

The meeting then went on to discuss the issue of foreign vehicles and steps that might be taken to address the imbalance between the UK and other EU countries’ vehicle operating costs. It is clear that the Government are keen to make some progress with the Coalition’s aim to tackle the issue of unfair competition from foreign hauliers, but that the scope for action is limited. Previous efforts to design an effective Lorry Road User Charging Scheme proved unsuccessful so the DfT is now looking at a time-based scheme that will impose charges on a daily, weekly, monthly and annual basis. The RHA has always maintained that any scheme must be simple to operate and cost neutral as far as UK companies are concerned. We expect formal consultation on the Government’s proposals to start this summer.

Finally, the meeting discussed the challenges that result from the Olympics next year. This massive event – and the associated events such as the Queens Diamond Jubilee and the Paralympic Games – will bring significant disruption to the streets of London for several months next year and trade and industry must start planning now to deal with it. A large number of issues were addressed, including the limited road space that will be available because of the Olympic Route Network, the substantial number of temporary and amended loading and access restrictions that will apply, the need for consignees to be aware of limits that the delivery industry will be subject to and the difficulties that recovery companies will face in getting to incidents. Transport for London, who are now responsible to making the transport network work during this period, have assured RHA that they are aware of the concerns being expressed and will be working very hard to resolve them as soon as possible.

Road Haulage and Distribution Training Council

A meeting of RHDTC Trustees recently discussed the ongoing schools project that is being funded by the residuary funds held by that body.

So far, the programme has produced:

• Careers brochures for Scotland and the East Midlands
• Careers brochures have been circulated and used extensively by 800 schools and colleges within those areas
• The first comprehensive and independent review of UK careers materials related to the logistics sector
• The Delivering your future brand and brand guidelines
• Delivering your future careers website, which has the functionality to become a fully bilingual resource.
• 40,000 flyers to promote the website.  30,000 printed in English and 10,000 bilingual (English / Welsh)

• The Made in Chinamaterials, which consist of 3 separate and distinct resources for teachers and students:
  • a Maths resource for 14-16 year olds
  • an Enterprise activity for 14-16 year olds and
  • a careers resource, featuring case studies from the industry.

• Direct involvement of 79 schools and over 90 teachers.
• The establishment of a supportive steering group comprised of 9 employers, CILT UK and educationalists
• The creation of an advisory group consisting of over 70 stakeholders from across the UK
• Involvement of over 50 logistics companies in the work of the programme

This work is now being taken forward through the development of new case studies and other material, and the promotion of the two websites. The project is being managed by Skills for Logistics (SfL) and has produced some very good material that is being used in schools and the focus has now shifted on to ensuring that the benefits of the programme are carried forward.

VOSA Chief Executives’ Meeting

This meeting concentrated on VOSA’s Business Plan for 2011/2012. This is based on four “pillars” – Testing and Inspection, Licensing and Authorisation, Enforcement and Supporting Industry. RHA is pleased to see strong emphasis on VOSA’s three main roles: we are keen to see improvements to the HGV Testing scheme and proper consideration being given to operators’ needs when taking forward the plan to open more Private Testing facilities whilst at the same time closing their Test Stations.

The RHA strongly supports the Operator Licensing system in the UK, believing that it has produced one of the safest haulage industries in the world. A central element of O’ Licensing is the independent Traffic Commissioners (TCs), and, whilst we recognise the need to ensure efficiency and good service from the administrative support that VOSA provides, it is essential that there is ‘clear blue water’ between VOSA and TCs. The plan also includes a reference to a Service Level Agreement with the Traffic Commissioners, which has not yet been signed off and is a cause of some concern because of the potential for a clash of interests within the TCs’ system. The third ‘pillar’- Enforcement – is an absolutely essential part of VOSA’s work, so the emphasis that the Business Plan puts on this area is welcome. The Plan sets out to identify “…drivers, operators…” against whom it may be appropriate to take action for non-compliance, describes how they will do that and what sanctions might result for those who are found to be offending.

The fourth ‘pillar’ – Supporting Industry – includes five work streams, each of which has some significance for the industry. The first is enforcement and this complements the enforcement issues mentioned above by seeking to identify trends in non-compliance in order to produce a plan to educate those most likely to fail to comply. VOSA are looking into some form of accreditation for the many and varied quality assurance systems that are used across the industry, the trade bodies, including RHA are exploring with VOSA how we might promote higher compliance standards in those areas identified as above and a communication plan is being developed to encourage higher compliance standards. Finally, work is being done to ensure that the statistics that are produced by VOSA are relevant and can be used to identify why some operators are less inclined to comply with the vast range of regulation that affect us all.

The meeting concluded with a brief discussion about the potential for a Compliance Forum that would bring together the full range of bodies involved in maintaining and improving standards in the industry. This is in the early stages of development and RHA was asked to come forward with affirm proposal as to how it might work.

Department for Transport – Logistics Sounding Board

The DfT’s Logistics Sounding Board meeting featured a presentation on a Freight Modal Switch Centre designed to give information and advice to freight consignors on the issues that should be considered when looking at alternative modes. We also received a report on a trial known as the “Quiet Deliveries Demonstration Study”, which looked at the problems associated with overnight deliveries in urban areas. This work was targeted initially at delivery sites that are restricted by curfews, which impose restrictions on the time that deliveries can be made, and explored a number of approaches that can result in those restrictions being lifted or relaxed. This can bring benefits to delivery companies including reduced trip times, quicker turnaround of vehicles and reduced fuel consumption. Included in the trial was a drivers’ charter produced specifically for each operator that covers driving behaving when approaching and leaving the area, avoiding long periods of idling and switching off radios. This sort of approach, which includes advice about contacting and negotiation with neighbours, could well be of use to members who have time limits on their operating centres.

The meeting also received an update on the Government’s position on lorry charging. It is clear that the Government are keen to make some progress with the Coalition’s aim to tackle the issue of unfair competition from foreign hauliers, but that the scope for action is limited. Previous efforts to design an effective Lorry Road User Charging Scheme proved unsuccessful so the DfT is now looking at a time-based scheme that will impose charges on a daily, weekly, monthly and annual basis. The RHA has always maintained that any scheme must be simple to operate and cost neutral as far as UK companies are concerned. We expect formal consultation on the Government’s proposals to start this summer.

Trade Association Forum – Chief Executives’ Lunch

RHA Chief Executive, Geoff Dunning recently attended a private lunch for some 12 people with the Minister of State, Department for Energy and Climate Change (DECC), Charles Hendry.

DECC lead on this area, but RHA also works closely with DfT. Interestingly, the DECC’s wide ranging carbon study makes quite a lot of reference to transport in general and freight in particular, mention is made of “eco-driving”, but there is no reference to modal shift, with long distance freight being referred to as a potentially significant user of bio-fuels as a way of reducing CO2 emissions.

Deliver UK: long list of concerns

The price of oil and the high level of duty continue to cause high fuel prices in the UK, which bring many challenges for RHA members. With RHA support FairFuel UK will continue to campaign, building on the substantial foundations established in the first three months of this year.

A key element of the success of that campaign was the significant number of MPs (over 140) who signed up to support our aims and it was very encouraging to hear that quite a few RHA members had written, e-mailed or met their MP. The next step is to build on that by consolidating the contact made and widening the agenda to cover the many other issues that the road haulage industry wants to see addressed.

In broad outline, and in no particular order, our campaigning is being taken forward in respect of standards and enforcement, vehicle utilisation and efficiency, roads and congestion, customer and modal choice, parking and security, carbon measurement and reporting and reducing red tape. The detail takes up many pages, but these are all issues that must be addressed if the commercial and regulatory environment in which we operate is to be improved.

One encouraging point is the sympathetic hearing we are receiving from the government. Across departments, particularly the Departments for Transport and Business Innovation and Skills, we are gathering clear evidence of the problems and explaining practical solutions that address concerns in both industry and government. We are not going to get our own way in every case, but well constructed arguments supported by established facts can and will win the day.

With that in mind, it was a pleasure to welcome Mike Penning, the Minister for Freight, who accepted an RHA invitation to attend the recent Commercial Vehicle Show at the NEC and to visit a number of exhibitors. The show was a great success, with a substantial increase in exhibition space and visitor numbers compared with last year’s CV Operators’ Show.

It was also a real pleasure to see so many members on our stand and to chat with them about their concerns and views. We also welcomed a wide range of people, including a small delegation from Australia, including the chief executive of the Victorian Trucking Association and the organiser of the International Truck Trailer and Equipment Show, which takes place in Melbourne. They were very impressed by everything they saw and heard: a real compliment from genuinely independent observers. It was a great three days and we really look forward to next year.

Five pence relief – the war on fuel duty goes on

The price of fuel you are buying today is five pence per litre lower than it might have been due to the campaigning work of the RHA and its partners through FairFuel UK.

This saving is because of the cancellation of the ‘escalator’ of one pence, the postponement of an inflation rise of three pence and the reduction in duty level of one pence. It is a great victory for the industry.

It has to be said, though, that the price of fuel is still high and might go higher, and the rate of duty in the UK is still much higher than most of Europe, so this represents the winning of a battle – the war on fuel duty goes on.

One central feature of the FairFuel UK campaign was the number of MPs who signed up to support us (more than 140) and that was largely as a result of individuals contacting their MPs demanding action. The government clearly felt enormous pressure which led them to act. Having built this firm foundation of support in Parliament, we must build on it and keep the momentum going. RHA members are rightly sceptical about letters to MPs, but I have an excellent example of why this is so important. At the height of the campaign to canvas MP support, I wrote to an MP who I know has an interest in the road haulage industry setting out the RHA’s concerns. His reply was: “I’d be happy to reply in detail about my views on this (or any other issue for that matter) to any member of the RHA who lives in [the constituency]. The best way to get answers from MPs is not for us to receive emails like the attached but to hear directly from our constituents.” Needless to say, we have arranged for a number of his constituents to write to him.

It is also important to stress that any members willing to put pressure on their MPs will get full support from the RHA. Our staff will help members, including attending meetings and preparing briefing papers. You are not alone and the combined strength of the RHA and its members can become a powerful political voice in Whitehall and Westminster.

Yes, the price of fuel is still high and causing problems for many members and their customers. Yes, the level of fuel duty is still too high, and is the primary cause of the high price of diesel in the UK. And yes, the price of fuel is not the only issue the RHA must tackle, but at long last we have implemented a concerted and effective, industry-wide campaign and ensured that the government doesn’t just listen, it acts. The fight goes on!

April 2011  RHA Chief Executive – Geoff Dunning