DIA Response - Fees etc.

Response to DSA Consultation of 30 August 2007 on Improved Services for Customers and General Fee Increases for 2008

After initial comments on the DSA consultation as a whole, the DIA response refers specifically to the key questions (printed in italic) as set out in the consultation document.

General comments

The general DIA view is that this consultation document is deficient with regard to DSA’s obligation to make ‘a reasonable business case’ to justify any increase in fees. DSA fully understands that DSA is entitled to raise its fees to ensure that they cover DSA’s actual costs.
DIA does not agree or accept that DSA is entitled to raise its fees so as to generate surpluses or excess revenues. We believe that to do so would breach the financial ground rules [HM Treasury Fees and Charges Guide (March 2004) and the Department of Transport (Fees) Order 1988, as amended] laid down by HM Treasury for Government Departments and Executive Agencies to operate under, even where Trading Fund status has been granted by Parliament. DIA would like to draw DSA’s attention to the following request made in DIA’s response to DSA’s previous consultation on fees dated 19 October 2006:
“DIA requests that appropriate levels of financial analysis (historical and forecast) should be included in all future DSA consultations which request industry responses to proposals to increase fees, perhaps in a separate Financial Annex.”
DIA notes that no specific financial annex has been provided, but is indeed grateful for the increased co-operation in obtaining copies of financial analyses submitted to HM Treasury.

Of course, this consultation also covers other issues that are not fee-increase related. We have commented in detail on these matters so far as we are able, but only in relation to the quality and depth of the information provided, which in some cases is insufficient.
DIA notes that on this occasion no request has been made for comment on the three initial RIAs and no EIA had been included, despite there being a relevant section concerning the new Cardington procedure for ECCs.

Improved Services for Customers Proposal 1

Modernising standards assurance arrangements for delegated examiners including introducing fairer cost-recovery arrangements.
Response: Slightly agree, but with strong reservations concerning lack of information.DIA has received no contrary comments or suggestions from members for variation or amendment to these proposals. DIA has reservations about the proposal to change the charging structure for delegated examiners from charging for test pass certificates for practical tests to an annual registration fee of £950.00 per examiner. Based on the stated number of 266 delegated examiners, this registration fee would raise £252,700 as compared to £119,700 generated in the current year from the issue of 7,980 pass certificates. No satisfactory explanation has been offered in the Initial RIA as to why DSA needs to more than double its revenue (a surplus of £77,140 will be generated) from this source and there has been no indication of any need to increase the number or frequency of check tests or QA visits. Clearly an explanation should have been provided in the consultation document.

Proposal 2

Proposal 3

It is clear to DIA that no final legal ruling has ever been achieved on these matters, since no test case has yet been ruled upon by judgement in any court of law in England, Wales or Scotland. It seems to DIA that there has been ample opportunity for DSA to bring a test case to court for a ruling on these matters. DIA must protest in the strongest possible terms to the bald statement at 3.17 (of the initial RIA) that ‘drivers holding C1/D1 by virtue of implied rights who continue to act as an accompanying driver in these vehicles after 1 October 2008 will be committing an offence’. This statement of intent by DSA makes absolutely crystal clear that DSA has already prejudged the outcome of consultation on this issue and thus is guilty of open prejudice and thereby demonstrates total prior rejection of any views (as yet unexpressed at the date of issue of the consultation document) that might be opposed to or differ from the implementation of the DSA’s proposal.

Furthermore, DIA has requested and received an abstract of a statement purporting to be ‘Treasury solicitors’ advice’ on this matter. Concerning C1, this statement states that ‘currently the holder of a pre-1997 C1 entitlement would (sic) be able to supervise a provisional licence holder with a C1 entitlement as there is no difference between the two entitlements’. However, use of the word ‘currently’ clearly indicates that this situation ‘might’ be changed in the future. But, there remains a major practical obstacle in the case of those who hold C1 entitlement (and we suspect C1+E) and might wish to regularise their eligibility to supervise post October 2008.

A senior DSA official has advised us that, whenever an application to take a driving test is received by the DSA booking service (or by Pearson Vue), an entitlement check is done online against DVLA driver licensing files. We are informed that a person with an existing full entitlement on their record would not be eligible to take a test in that category, therefore C1 grandfathers would not be able to regularise their ability to supervise unless DVLA acted to ‘restrict’ their current entitlement. Such action would be contrary to all the accepted principles on ‘grandfather rights’ and precedents ruled on to date by the European Commission. DIA must point out that whereas D1, D1+E and C1+E are indeed listed in Part 2 of Schedule 2 to the Motor Vehicles (Driving Licences) Regulations 1999 (as amended), there is no mention in the same Part of a restricted C1 licence! DIA makes the point that it will be very difficult (and totally illogical) to argue a case for D1, D1+E and C1+E being merely ‘restricted entitlements’ because they are held by ‘grandfather rights’, while making a distinction in favour of category C1 entitlement held by the same ‘rights’.

Again DIA objects to the reference, at point 3.8 (of the initial RIA), that although a category C1 licence obtained via grandfather rights does not carry any restriction, ‘those people have been allowed to accompany and provide tuition to learner drivers’. Since it is already established and agreed that there is no restriction, DIA must point out that no ‘permission’ at all is required for such a licence holder to supervise a learner or even teach for money (since there is no statutory register yet for LGV instructors). In summary, DIA takes very strong issue with this DSA proposal and will continue to oppose it most forcefully, in the interest of those DIA members affected. DIA believes that those who have taken issue with the DSA/DVLA line on this matter are few in number and are all properly qualified ADIs, who are registered and regulated. It is a fact that the proposed ruling will inevitably have a real adverse effect on the small businesses of these instructors, contrary to the statement at 3.15 (of the initial RIA). The same statement is quite incorrect concerning bus and coach instructors, who predominantly work for bus and coach operating companies not driving schools!

DIA must also point out that the ‘professional vocational driver trainers’, referred to in 3.13 (of the initial RIA), are at present not regulated in any way, nor are they required to pass any qualifying exams concerning their instructional ability or submit to regular check testing. This is not to say that they are in any respect less experienced or even less qualified (other non-mandatory qualifications clearly exist), but it is fair to argue that they remain unregulated. Obviously, in due course statutory registers will be set up for instructors in categories C and D under Schedule 6 of the Road Safety Act 2006.

The DIA proposal to regularise this issue is simple and could be brought into effect with little difficulty. Firstly, the real issue for ADIs who teach using such grandfather rights is not at all that they are inexperienced in driving vehicles in these categories and therefore ‘unsafe’, but rather that they have not (since January 1997) been required to conform to the minimum medical requirements for Group 2 (vocational) drivers. Those ADIs, who wish to teach in these categories should therefore be required to prove to the satisfaction of DSA that they have regularly been driving such vehicles since 1997 and should be given a short ‘window of opportunity’ to satisfy the more demanding vocational licence medical requirements. For those who can satisfy DSA and DVLA on these points, the 3-year ‘experience’ requirement should be taken as satisfied. All those who have C1/D1 grandfather rights entitlements but do not choose to satisfy the mandatory vocational medical standard should have their entitlements removed. This presents a viable and sensible alternative to the Draconian DSA proposal and we ask DSA to evaluate this proposal seriously and objectively. In the event that our proposal is dismissed, we will require a full written explanation.

Proposal 4

Introduce a scheme for Approved Test Assistants for all theory tests.
Response: Totally agree, but must include CRB checking. DIA members are in agreement that such interpreters should be properly regulated and their names should be made available on an official list available from the DSA. This service should be widely publicised through Job Centres, Citizens Advice Bureau and via DSA and relevant Government web sites. DIA notes that DSA does not at this stage propose to charge for this service, but points out that extended CRB checks to confirm ‘fit and proper’ status should be carried out on all applicants to become Approved Test Assistants, in the same way as for ADIs. This will most probably incur a charge equivalent to the £50 cost quoted by DSA for administering ADI CRB checks.

Proposal 5

General Fee IncreasesProposal 6

Increase the fees for the theory tests taken by learner car drivers and motorcycle/moped riders.
Response: Totally disagree. DIA members can see no possible justification in this DSA move to increase theory test fees by a further 5.3%.
DIA members are fully aware that DSA’s own published Annual Accounts have shown that DSA has accumulated a total of over £21,586,00 in surplus fees over the past ten years and the largest annual surplus (of £3,096,000) was reported in the most recent DSA Accounts for 2006/07!
To require a further increase, on top of the most recent 2.5% increase effective as recently as 3 September 2007, is simply outrageous and makes a complete mockery of the requirement in current HM Treasury guidance [HM Treasury Fees and Charges Guide (March 2004) and the Department of Transport (Fees) Order 1988, as amended]. Paragraph 2.3.3 (of this Fees and Charges Guide) states that ‘A statutory power to charge is presumed to be conferred solely for the purpose of enabling the costs of providing the service to be recovered.

Any excess over the full costs is presumed to be taxation (subject to the limited flexibility referred to in paragraph 2.4.1)’. Paragraph 2.4.1 adds ‘although paragraph 2.3.3 notes that it is not normally legitimate for a statutory service to recover more than full costs, it is legitimate in the interests of administrative efficiency to apply a degree of tolerance to this principle.
For example, a fee may be rounded even though this may produce a small surplus or deficit.’
The accuracy of the statement, at paragraph 3 of Appendix C of this consultation, that ‘the changes to individual fees are intended to move the charges for the particular services closer to the unit cost of delivering them, in line with HM Treasury guidance’ must be strongly disputed regarding theory test fees.
We believe that DSA may well be exceeding its authority (acting ultra vires) in imposing fee increases in the full knowledge that they will generate surpluses. Despite DSA regularly exceeding its 3.5% return ROCE targets (average of 14.8% since 2004) and liable for an annual dividend to HM Treasury, DSA has no legal authority to impose taxation.
DIA does not agree or accept that DSA is entitled or authorised to raise its fees in such a way as to openly generate surpluses or excess revenues. We believe that to do so is clearly in breach the financial ground rules laid down by HM Treasury for Government Departments and Executive Agencies to operate under, even where Trading Fund status has been granted by Parliament.

Proposal 7

Proposal 8

Proposal 9

Proposal 10

Proposal 11

Proposal 12

Increase the four-yearly ADI registration fee.
Response: Totally disagree. The proposed 50% increase in the regular four-yearly cost of ADI registration comes as the biggest shock of all to DIA members and very many have complained bitterly that they receive so little by way of value for the large fee currently charged (a plastic badge costing £3 and possibly one check test in the four year period). The single word consistently used by DIA members to describe this proposal is OUTRAGEOUS!

Historically, DSA has accumulated surpluses of over £2.3 million from the ADI account alone over the last ten years. To this can be added substantial bank interest. The cost at £50 of providing an initial CRB check for each of the 41,500 ADIs on the DSA register amounts to just over £2 million and DIA are satisfied that DSA has agreed to fund this in the first instance. However, half (£50) of the proposed increase is now required to fund the regular CRB checking of all ADIs on re-registration every four years. The other £50 per ADI will be insufficient, according to the financial analysis provided, to prevent deficits of £1,787,000 in 2007/08 (i.e. DSA had already spent the accumulated £2.3 million on other things!) and £275,000 in 2008/09.

To put the ‘cherry on the top of the cake’ in terms of insult, DSA’s Press Office has issued a statement saying: ‘the other half - £50 - is around the cost of a couple of driving lessons and should be seen in the context of a four-year registration period as a modest sum’! This is plain arrogance and distain on a grand scale! It demonstrates that some at DSA are actually trying to justify half of this massive increase by saying it is simply ‘affordable’ – this is in clear breach of all HM Treasury guidance that fee increases can only be justified to recover actual unit cost of supplying the service! Even if DSA could charge whatever they thought was affordable, they fail to realise that ADIs only take home the profit element on each lesson, after their normal fuel and business costs.
DIA’s general argument against all DSA fee increases calculated to generate surpluses has been stated above in response to proposal 6.

Proposal 13

Proposal 14

Increase the charges for the theory and practical tests taken as part of the qualification process for the non-statutory instructor registration schemes operated by DSA.
Response: Totally disagree. DIA members find it distasteful that the DSA is again seeking to impose further increases for the LGV and Fleet Trainer registers after imposing a 100% increase in registration fees for the three registers, two of which are now both incorporated into the DSA’s new Integrated Register of Driver Trainers (IRDT). We believe that these increased fees may drive LGV instructors away from the register and we find it totally unbelievable that DSA estimates that 750 such trainers will seek to join the voluntary register in 2008/09, since this would represent a 78% increased uptake in just one year. DIA members fail to comprehend ‘the principle’ that more will join if you put the fees up substantially!

DIA is of course aware that DSA will have Ministerial powers to set up mandatory registers for LGV, PCV, motorcycle and ADI trainers as well as driving school operators following implementation at some future time of the relevant sections of Schedule 6 of the Road Safety Act 2006.
The financial analyses provided by DSA shows that the fee increase for the vocational register theory tests will generate surpluses of £259,000 in 2007/08 and a massive £623,000 in 2008/09 and the new practical test fees will generate a surplus of £230,000 in 2008/09. We believe that either the DSA is totally wild in its forecast of uptake for these voluntary registers, or this is again a case of sheer opportunism on the part of DSA! DIA’s general argument against all DSA fee increases calculated to generate surpluses has been stated above in response to proposal 6. We accept that in this case these increases do not relate to statutory fees.

Proposal 15