Coronavirus & the need for flexible road transport law

These are not normal times and may remain so for some time. If not already abundantly clear the critical role of the goods and passenger transport sectors for the UK will become even more obvious to us all. Supply chain. Last Mile. Home to work – indeed, every aspect of our lives, writes Tim Ridyard.

There will have to be a review of how well existing law serves us and to what extent temporary changes or suspensions of current approaches will need to take place. We know already that relaxation of some drivers’ hours to support the supply of goods may occur, though not yet. Further, there is to be guidance issued by Traffic Commissioners as to any varied approach to operator licensing.

Businesses in the road transport sector will be hit in the same way as those in other sectors: temporary loss of non-drivers and drivers (at a time when there is already a huge shortage), a downturn in work and financial problems as customers’ work levels drop and/or they cannot pay for the services the transport operators have provided (often because they themselves will have not been paid). This process could be – will be – rapid. The domino-effect may be hugely disruptive.

How this could play out can already be seen now which is why a radical approach may need to be taken: to ensure as many operators can hang in there to preserve their businesses, to be able to emerge at the other end for the sake of their livelihoods and for the country, in respect of which their role is vital. Many of these businesses represent a life’s work or that of many generations, creating employment upon which households are dependent. Unsung but vital cogs.

Before the current emergency, it was already the case that operators run on the finest of margins. A single customer experiencing own financial difficulties can ‘flip’ a business into ceasing to trade. If containers are not entering a certain port because of the downturn of exports from China due to lockdown every related business is affected. We know already this impact is starting to be experienced.

Financial standing

Some aspects of the way operator licensing are regulated will need to be overhauled and we will see the approach taken once this is published soon.

The UK is going to need every goods and passenger link with the fullest capacity possible. But, how is this going to be managed if operators are hit financially through what is force majeure – no fault of their own – and do not have ‘available’ financial resources to hold an operator’s licence. These will be operators who manage their businesses utterly responsibly but are hit by this extraordinary event – no different to a theatre, shop or café affected similarly.

The requirement to have the requisite financial standing is a mandatory one set out in the statute. It is an ongoing requirement throughout the life of the licence, without which the business simply cannot operate vehicles. A failure to notify a material change is a licence breach, though it is highly likely that countless operators do not fulfil the requirements and this is often only ever picked up if this comes to the attention of the Traffic Commissioner e.g. at a 5-year review when called to a public inquiry and on variation applications.

The correct approach for an operator unable to fulfil the financial requirements is to apply for a ‘period of grace’ within which to demonstrate it can satisfy them. The maximum period of grace is 6 months. Periods of grace are not granted where they amount to nothing other than putting off the dreaded day when action against the licence has to be taken by a Traffic Commissioner.

But what happens if there is a prolonged period of time when an operator still cannot satisfy the finance requirements – but is still able to operate safely, providing a vital service in times of emergency? Conceivably there could be hundreds of operators trapped in this situation. So, just when the UK needs every vehicle it can keep operating in every part of the GB and NI, numerous licences might be at risk of being revoked. Application of the law, whilst correct in law, would be directly contrary to the best interests of the economy and communities.

These are not and will continue not to be normal times and so the greatest flexibility, pragmatism and common sense to the application of the law need to be exercised.

Normally one avenue open to an operator is simply to reduce the fleet size – and thereby the number of financial resources required. This would tie fleet sizes to available funds but those operators may need to re-deploy more vehicles quickly as the need arises but will have not the time nor the funding to increase the licences back to the previous level.

Whilst some businesses will sadly cease trading or cease to exist (and hence the licences must fall) Traffic Commissioners should develop and apply a policy that recognises wholly exceptional circumstances currently exist and will continue to exist for a considerable time.

In short, the approach should be not to apply the normal rigid rules to financial standing where it is clear adverse events have taken place arising out of the current crisis. It may be necessary to adopt a pragmatic approach by suspending or deferring action against operators who cannot fulfil the financial rules. This would involve difficulties in juggling the mandatory requirement for an operator to have available finances but at the same time doing everything possible to keep UK PLC’s fleets operating to the maximum capacity possible in strange times. It would be a wholly unacceptable and avoidable state of affairs if, say, food, hospital supplies and medical equipment could not be supplied by commercial vehicles, the availability of which was compromised through the revocation of licences caused by financial hardship in such wholly exceptional times.

Finding a legal path through this may not be easy but it is vital a pragmatic one is found.

We Can Help You

Please contact Tim Ridyard for individual advice for your business.

Alternatively, if you or your business require advice or need assistance for any road transport matters, please get in touch with our specialist Road Transport team through this website or by calling 0330 404 0778.

This information is correct at 9.30am on 17 March 2020.