In his introduction to Vosa’s recently published 2012/13 business plan, chief executive Alastair Peoples promises the agency’s focus will be “on balancing ‘regulatory’ enforcement interventions with education initiatives to empower the industry to increasingly manage [its] own compliance”.
To the glass half empty contingent, this could sound like an alarming budget-driven reduction in enforcement effort just at a time when wafer thin margins must be tempting some cash-strapped operators to cut maintenance budgets and put pressure on drivers to bend or break the hours rules. But with a glass half full view, this is a welcome and long overdue recognition that the vast majority of LGV operators strive to be compliant and Vosa should leave them well alone to get on the job, just occasionally nudging them in the right direction.
This is the third year in Vosa’s financial recovery plan, which is on track to achieve “financial stability” and pay off its retained deficit by 2015. Cost savings and efficiencies turned a deficit of £15m in 2009/10 into surpluses of £8m in 2010/11 and £14.5m in 2011/12 despite lower income, and it forecasts a surplus of £7m next year. This will reduce Vosa’s deficit from nearly £37m in 2009/10 to just £1.2m by 2012/13.
“I have been very pleased that the recovery plan has been brought about by savings and efficiencies within Vosa and not through increases in fees,” says Peoples. “We have been really good at controlling our costs, though this has meant losing nearly 500 people in the last two years – and that is nearly 20% of the workforce. We are possibly slightly ahead of where I had anticipated we would be and we are certainly on track to break even by the five year time plan.”
Does this deficit reduction programme leave enough money and staff to fulfil Vosa’s vital enforcement function? “One can always use more money!” laughs Peoples. “Most of the money Vosa gets comes from test fees and licence fees so the vast majority of what we do is funded by the people who use our services. We have to get better and more efficient at what we do. We have set up a business excellence team looking at lean, eliminating waste and to trying to get better.”
This is where the balancing act between regulatory enforcement and enabling the industry to manage its own compliance hits home.
“The enforcement strategy will look where we get the biggest bang for our buck - do we need to do all these things and which are the ones where we get the best benefit?” says Peoples. “The budgets are set based on the income we have and we recognise it’s not a bottomless pit for the industry. There is very tight legislation that says if I lift a fee for ‘x’ I can only spend it on ‘x’ so things like foreign vehicle enforcement and other work not covered by the test fee are funded separately by the Department [for Transport]. There are pressures on that from central government and we work closely with the department to make sure they can see we get best value for money and we target that very closely to see where we get the best effect.”
Targeting has been vastly improved in recent years with the development of Operator Compliance Risk Score (OCRS), a traffic light system indicating an operator’s compliance level based on encounters with the authorities.
“OCRS is a fantastic tool – it is by no means perfect but it allows us to target those who need to be targeted and let the compliant remain largely unaffected,” Peoples enthuses. “It also fits nicely with the compliance strategy we have because I believe everything Vosa does has to be about achieving better compliance. We can go out and target a red-rated operator every day and my staff will come in with prohibitions and graduated fixed penalties, and on one hand that is very successful. But on the other hand it is a wasted resource and a failure because that operator is not getting better and we not removing them from the industry.”
As a result, Peoples wants to tell operators how and why they should comply with the regulations rather than just catch out repeat offenders.
“My strategy for Vosa, working closely with the industry, is that we need to educate people that compliance is good and move as many people as possible towards compliance. Those that are left are the ones we should be targeting at the roadside and if they can’t getter we should be preparing cases for the traffic commissioner with a view to removing them from the industry. Then we can use the fees we get from the industry much better and demonstrate we are getting better on enforcement.”
To measure the success of this strategy, Vosa has set up a fleet compliance survey – a random sample of the UK LGV fleet to determine level of serious non-compliances. The “litmus test” according to Peoples will be that prohibition levels generally are falling, not that Vosa is catching more rogue operators.
Vosa was planning to introduce changes to OCRS in April, but these have now been put back to later this year due to “technical reasons”. Two of the changes are especially significant – the introduction of a grey rating instead of a predictive score based on industry averages for operators on whom Vosa has insufficient data, and a “straight to red” move for operators with previously green scores who are caught with just one very serious non-compliance.
“We are hoping that this summer we can starting bringing out the new OCRS and we have had some good indications from industry that this is what they have been looking for,” says Peoples. “The most interesting change is the introduction of the grey domain where we are looking at doing away with the predictive scores. That was clearly was an issue for a lot of the industry who said ’you are just assuming that because I am from this particular industry I should be stopped’.”
While the changes to the OCRS have been broadly welcomed, some have suggested that “straight to red” should be matched by a “straight back to green” route if the offence was indeed found to be a one-off.
“If you go straight to red, or progressively get to red, it is all about the encounters,” explains Peoples. “You will be targeted and you will be stopped. If those encounters immediately start to find positive information, that will feed into the score and start to move you towards amber and green.”
One area where operators have asked Vosa for more help is to identify the best – and more importantly the worst – third party R&M contractors. According to the FTA, 80% of operators now use third party maintenance providers, and in a recent survey it found that, of 500 vehicles checked after service by a main dealer or independent garage, 27% would have failed the annual test.
“One of the interesting elements of discussions with industry on ATFs was that there was this gap of information on the record of those companies presenting vehicles for annual test,” says Peoples. “It’s fair to say this has been overlooked for some time. We have got the repairer ID which is increasingly a success and is driving the market in terms of who is being used as a third party presenter.”
The Society of Operations Engineers has relaunched the voluntary Irtec qualification for LGV maintenance technicians, and while Vosa fights shy of endorsing the scheme, Peoples is happy to support it.
“I fully support the principles of what Irtec is trying to do – they are trying to raise the bar,” he says. “In terms of compliance having fitters who are accredited and understand what good maintenance looks like doesn’t need Vosa interference. If we can get industry raising the bar themselves that is much better for compliance; people are doing it because they can see the benefits as opposed to having Vosa as the regulator coming in to enforce it.”
Peoples adds: “As a regulator we have to sure there is clear blue water between what we endorse and what we regulate. We want to talk to industry about what ‘good’ looks like and we don’t need to tell anyone in the industry what is effective maintenance. It is always a challenge in government to bring in more regulation as we are trying to reduce the burden on industry and I see no reason why – and Vosa would be happy to help – the industry can’t have a look at how they can self-regulate this.”
One huge area of largely self regulation – other than the statutory MOT test – is light CVs below 3.5t, as these currently require no O-licence or tachograph. There have been calls for this limit to be cut to bring thousands more operators and vehicles within scope of O-licensing, increasing Vosa’s workload – and cost for industry - considerably.
“When it comes to managing red tape there is a balance between making more onerous legislation and the degree of self-regulation,” says Peoples. “They don’t come under O-licensing so any enforcement we do comes directly from the department. I am aware that their MOT pass rate isn’t particularly good and so Vosa is looking at what value we can add and what advice we can give. But ultimately it is not funded by anything we do and any policy decision would be for the minister. As a delivery agency we are here to deliver and not set the policy.”
The LGV sector’s first time annual test pass rate, while improving, still lags behind that achieved by the passenger (PCV) sector, though Peoples believes there are good reasons for this.
“Many people would say the ATF is an iteration of the DP [Designated Premises] model, and the DP model was set up around 1960 to cope with the PCV industry,” he says. “You could say the PCV industry has already seen the benefits of linking maintenance and testing on the same equipment. It is a much different industry as well. There are fewer, big players who are dealing with the majority of the fleet. In the four years up to 2008, the first time pass rate for LGVs increased 2%, and from 2008 to 2010, it increased by 9%. So whatever we are doing, it is helping that first time pass rate.”
Softly softly approach on Driver CPC
Vosa has contracted with the Driving Standards Agency (DSA) to enforce the Driver CPC legislation which came into force in September 2009. While existing drivers have until September 2014 to complete their mandatory 35 hours periodic training, new drivers passing their first LGV test since September 2009 should have also acquired their Initial Driver CPC . Figures from the DSA indicate there are thousands of drivers who have taken their test since then but have not acquired their Driver CPC , but so far not one driver has been prosecuted.
“We always have a look at the compliance element of Driver CPC when we stop a vehicle at the side of the road,” says Peoples. “Sometimes it is just a matter of reminding somebody that your grandfather period is running out and you need to get it done. We also encounter some of those newer drivers and we do apply fixed penalties when it is appropriate, so it is not always necessary to prosecute someone. Ultimately do we want to prosecute someone or get them to take the Driver CPC? We have tried to take a more educational approach than a rush to straight enforcement, because it is all about compliance. If we stop people and find they are non-compliant is that a success of targeting or a failure? I would say it is far better to move people towards compliance than constantly prosecute them.”
Big push to come on ATFs
The move towards annual testing of LGVs in private Authorised Testing Facilities (ATFs) rather Vosa test stations has been one of the most controversial periods in agency’s recent history.
With well over 200 ATFs now in place, the furore surrounding early closure of Vosa stations before ATFs were in place when the programme began two years ago now seems a distant memory – partly thanks to a joint Motor Transport/Commercial Motor campaign to put pressure on Vosa to slow the closure of test stations until suitable private alternatives were available.
But Peoples explains that Vosa had little alternative to close under-utilised test stations that were in poor condition and needed upgrades the agency could not afford.
“I am very pleased with where we are now, and I know my reputation at chief executive of Vosa was at risk in setting this up,” he says. “We now have over 200 ATFs, but many of those are working part-time. The focus now is on increasing their market share by sweating those assets, and that is much more important than just getting more ATFs.”
But with 10 more Vosa sites due to close by March 2013, Peoples is not ignoring the need for more private testing facilities to open in 2012/13: “We will be bringing a different marketing strategy to bear this year, looking at where we would like sites to be and what incentives we can bring to create the ATF market where there currently aren’t any.”
As at March 2012, 42% of annual tests were carried out by ATFs, and Vosa expects this figure to rise to “at least” 51% by March 2013. It has been said that when the figure rises above 50%, full privatisation of the testing service along the lines of car MOTs - where inspectors are employed by a Vosa-accredited test centre rather than by Vosa - would be inevitable, but Peoples refuses to be drawn on this.
“Any decision on privatisation is a matter of policy for the minister and one can speculate on this and be wrong most of the time,” he says. “What is important for Vosa is to deliver on what we said and not to change tack halfway through the strategy. For every one person who says ‘it would better if these people worked for me’ there are at least two who value their independence.”
But if ATFs are to work longer hours can a unionised Vosa workforce deliver the flexibility needed?
“My staff do work very flexibly,” insists Peoples. “We work both on testing and enforcement, and a number of enforcement teams are on 24/7 working. When we started the ATF contract we went to industry and said ‘what hours would you like us to work’ and they said 8am to 6pm Monday to Friday and that is what the contract was set up on. But Saturday morning working is not uncommon and if the industry is now telling us the ATF market does not fit the current model we are happy to talk to them.”
The uncertainty about the future of LGV testing within the civil service could be a deterrent to potential recruits, making it harder to fill the high number of vacancies Vosa has suffered recently.
“At the minute we have enough inspectors and all credit to our workforce because this [flexible working] is all done on a voluntary basis – it suits some people and not others but they have been fantastic in rising to the challenge,” says Peoples. “Not everybody in the organisation gets it. There is concern over privatisation and many staff see that as a threat. Others see it as a real opportunity.”
One opportunity presented by ATFs and possible future full privatisation is the chance to move out of dilapidated Vosa sites.
“Some of our sites are not the most illustrious premises,” Peoples admits “We have 16 sites that we have used previous test fees to improve but the remainder are in a very poor state. The image I want to represent as the regulator is not represented by the premises we have. We now have staff going round to ATFs at franchised dealers, some of the big brand names, and the conditions there are much better than I can offer - so those staff who do this on a regular basis get it. As we move to more than 50% we need to formalise that arrangement and we need to recruit more staff as well, so those terms and conditions will be in the mix later on this year to look at what offer we can make to bring in some new staff.”
While Peoples clearly does not have a crystal ball, Vosa has been doing some scenario planning.
“We have been marrying this up not just with testing but also with enforcement,” he says. “We have an enforcement strategy that has been passed by the board and will soon be discussed with the industry, which is about supporting compliance. What we will be looking at is what will the overall estate need to look like to furnish testing and enforcement, and that is raising some interesting questions. We will have less estate and we need a different model for doing this. We are increasingly looking at a mobile workforce and we are working through some proposals internally at the moment.
For many operators and dealers with existing workshops, finding the money to upgrade to an ATF to carry out LGV testing can be difficult, and there must be a danger the rate of ATF openings will plateau.
“It is difficult to know in these straitened economic times where it will end up,” agrees Peoples. “Our aspiration at the start was to be further along than where we are. But all credit to the industry – they are clearly investing their own money and the fact we have over 200 speaks for itself. We haven’t been going out and marketing this as widely as we probably could have done. The early adopters have seen a real market opportunity but it will plateau. I don’t know yet where that is – things like the differential fee are one of the few levers that I can pull.”
The issue of the fees operators pay for tests in Vosa stations and in ATFs remains a thorny one, but Peoples points out that Vosa test fees have been frozen for several years.
“We have taken the decision with the minister this year that we have a 4% increase in the Vosa test fee and a 4% reduction in the ATF fees. It is fair to say that hasn’t gone far enough so we will be working to see how we can accelerate that to get the true cost of the overheads spread equally,” he says. “In the short term it looks as though fees are going up on both sides. But we haven’t put our test fees up for three years and with inflation running at 3% or above that is a 10% reduction in fees from where they could have been. Had we been keeping our estate we would also have been investing in those sites and that could have been another 10% on top of that.”