Examination of Witnesses (Questions 220
WEDNESDAY 17 JANUARY 2001
220. When I asked the question about capital
investment you said buildings assets.
(Ms Manley) Our balance sheet of 31st March 2000 was
221. I think Mr Austin said that the only way
that you can meet these financial targets is to increase the fee,
the test fee.
(Mr Austin) I was trying to explain the difference
between 1990 and now and to take into account the various things
that have happened, yes. We have no direct funding as such from
government. We are entirely self-sustained in terms of whatever
we spend must come from the people who use that service.
222. Do you have any efficiency targets? As
a non-economist I assume that there are a number of ways in which
you can, if you like, show a return, one is to increase your charges,
the other is to be more efficient.
(Mr Austin) There is a whole series of targets. In
terms of the two financial ones, one is the return on the capital
invested, the second is that fees should not increase by whatever
percentage, below the rate of inflation.
223. I understand that but what about efficiency?
Some organisations have a two per cent annual efficiency target,
some have three per cent. Do you have any of these at all?
(Mr Austin) We had those some time ago but since then
we have moved into a much more complex system, some of which we
reported in the paper sent to you, which examined the examiner
utilisation figures, how many calls are answered within certain
224. I understand that. If I may repeat my question.
I can understand it is complicated, not too complicated for me,
I hope. In fact the return that is expected is going to come in
the main, if not entirely, from the income you derive, which is
mainly, if not entirely, the test fee.
(Mr Austin) Almost exclusively the various fees.
225. You have no external, ie government, efficiency
targets. You have a complicated system but no internal or external
(Mr Austin) Not that I can express in those terms,
226. You either have or you have not. I am just
confused as to why you feel it might be difficult to say yes or
(Mr Austin) We have a whole series of targets that
we design around customer services in terms of our utilisation
of resources. They do not come in as efficiency targets as such.
They are designed around that.
227. If they are not efficiency targets they
are not, presumably, included in the answer to my question. Have
you, yes or no, either external or internal efficiency targets
on an annual basis?
(Mr Austin) Not expressed in a simple way.
Chairman: Mr Bennett wanted to ask some questions.
228. If you were running a market stall you
would have gone out of business. If we go back to 1990 the fee
was £19. How much were you losing in 1990?
(Mr Austin) About £3 million.
229. How much would you have to put up the fee
in 1990 to cover that £3 million?
(Ms Manley) About £1.75.
230. About £1.75. That was all you needed
to put it up by but you put it up by a huge amount.
(Mr Austin) What I am also trying to argue for the
stall holder is what they are trying to sell now is a different
product. Because of the change in the test itself we now have
a much longer process of testing people, it is 40 minutes now,
it was not before, so from that point of view it is a fair price.
231. You put your prices up far more than was
necessary to cover your deficit and far more than was necessary
to cover the fact that the testers did only seven rather than
eight, and you also put on the fee for the written test, and a
very substantial number of people have stopped taking the test;
is that right?
(Mr Austin) I cannot confirm whether people have stopped
232. Let us put it the other way around, how
many people were taking the test in 1990 and how many are taking
(Mr Austin) Just under two million in 1990.
233. How many now?
(Mr Austin) Just under 1.2 million.
234. That is a very substantial number of people
who appear not to be taking the test. You told us, just a few
minutes ago, you do not have a clue why they stopped taking it.
The department is actually doing an inquiry. Do you not think
you should have started to ask the question why people appear
not to be taking the test?
(Mr Austin) There are two reasons really why those
figures would have dropped. The first one is the demographic change.
235. How many should have dropped because of
(Mr Austin) That is very hard to know. What I have
is the demography of the country over that time period but what
I do not know is how many people in certain groups have a desire
to want to drive but do not have a licence. That is the key.
236. Do you think the desire to drive has changed
dramatically between 1990 and now?
(Mr Austin) I think there is more acceptance that
people will expect to drive and have to get a licence.
237. You would have thought more people would
be taking the test. Actually it is worse than you told us in those
(Mr Austin) No. What I would have said is there was
quite a backlog of people who had not got a licence who would
have required it over the last ten years. I think we have more
or less finished with the people who are 25 years and above who
had not got a licence first time round, as it were.
238. You are planning for 1.2 million people
taking the test each year. Do you think that is the right figure?
(Mr Austin) In terms of our forecasts, what we have
is a slight increase in 17 and 18 year olds in the next two years,
but if we look five years ahead I think we will find that the
numbers coming up for test will probably stay at about 1.3 million
for the first two years and then it will decline to 1.2 again.
It is fairly static.
239. Your figure does not really matter because
the driving schools charge so much. Everyone does not have to
go the driving school, do they?
(Mr Austin) No, they do not. It is no more than one
or two per cent who actually present themselves at a test having
not had any instructions from a professional at all. One of the
key things in terms of this is that in terms of why the fees are
so low is that it is a very competitive market for the instructors.
If you look at it, there were about 35,000 instructors in the
year 1990 dealing with about two million tests per year. Now we
are down to 1.2 million and there are still just under 30,000
instructors on the register. The market force, sadly, is holding
down the cost of their fees.