GreenFleet

Getting to grips with grey fleet

Far from being ‘out of sight, out of mind’, grey fleet carries the same management responsibilities as company owned fleet

Written by Julie Jenner, ACFO chairman

Cost control, occupational road risk management and vehicle emission reduction are three agenda-topping but inextricably linked issues that should be focusing the minds of fleet decision-makers. However, too often organisations do not recognise that the three issues must be treated collectively and not individually. This is especially the case where vehicle management is not the responsibility of a fleet expert.

Their complexity is further muddied by many employers allowing staff to drive their own cars on work-related trips – the so-called ‘grey’ fleet.

The move to grey fleet
Fleet cost management has always been under the microscope, but almost a decade ago occupational road risk management became a fundamental issue, as the government grew concerned at the number of company vehicles involved in road crashes.

Amid fears of prosecution if a company-provided vehicle was involved in a road crash – coupled with pending company car benefit-in-kind tax changes – many employers decided it might be an option to enable employees to drive their own cars on business trips. And so the use of grey fleet accelerated.

However, amid talk of financial efficiencies for both employers and employees and apparent administrative savings for organisations, lawyers pointed out that a car driven on business – irrespective of the owner – was legally the responsibility of the employer.

Under the Health and Safety at Work Act 1974, employers have a statutory duty to ensure, so far as is reasonably practicable, the health, safety and welfare at work of their employees. This is relevant in relation to the grey fleet as this duty applies when employees are undertaking driving for work.

As a result, it has become very clear that far from the grey fleet being an ‘out-of-sight out-of-mind issue’ as some employers thought, exactly the same management responsibilities apply.

For example, checks must be made to ensure that employees have the correct business use insurance in place that vehicles are serviced and maintained in accordance with manufacturer recommendations, a valid MoT certificate is in place on vehicles over three-years-old and vehicles are roadworthy. In short, an auditable trail of vehicle documentation must be in place.

Some employers have found such checks and the recording of information to be extremely difficult for a variety of reasons, including shortage of expertise, a lack of resource and the difficulty of monitoring vehicles not directly owned or managed by an organisation.

Additionally, some employers discovered that staff were driving ‘old’ cars on business that were not equipped with the very latest safety features, such as electronic stability control and ABS brakes – which have been a mandatory standard feature on all new cars sold in Europe since 2003. They realised that many cars did not offer the best protection in the event of a crash as determined by the European New Car Assessment Programme ratings.

Simultaneously, climate change concerns were gathering momentum with vehicle emissions firmly in the spotlight. As a result, employers across the public and private sectors have become increasingly focused on reducing their carbon footprint and that has turned minds to the effective management of vehicle use.

Compromising the green agenda
ACFO completed a survey of members, which highlighted that the government’s environmentally-friendly vehicle objectives as highlighted by its CO2 -based motoring tax regimes, was being undermined by the majority of employees who had decided to opt out of a company car in favour of some kind of cash alternative.

Our survey of 750 members found that almost 75 per cent of staff had chosen to drive cars that were no more environmentally friendly than if they had stayed loyal to the company-provided vehicle. The survey found that:

39 per cent of staff had stayed in roughly the same type of car as they were entitled to under their company car scheme
21 per cent of staff had traded up to a new but larger and less fuel efficient car with higher CO2 emissions
12 per cent of staff had traded up to an older, larger and less fuel efficient car with higher CO2 emissions
16 per cent of staff had traded down to a new, smaller and ‘cleaner’ car
Five per cent of staff had traded down to an older, smaller car, which was probably less fuel efficient with higher CO2 emissions
Seven per cent of staff had traded down to an older car of roughly the same body/engine size

Our survey showed that in many cases where employees were giving up their company cars they were opting for older, larger and less fuel-efficient cars and almost certainly not equipped with the very latest safety features, which would be standard equipment on the newest company cars.

ACFO evidence, and that from other studies, suggests that where employees have given up a company car and now drive their own car on business, emission levels could be around 20 g/km of CO2 higher than the car they gave up.

Financial concerns
As the UK’s grey fleet grew in size, forward-thinking employers became aware not only of the safety and environmental concerns around the driving of privately-owned cars on business, but of the financial costs associated with their use.

Suddenly employers found that mileage reimbursement costs were rocketing as employees discovered that they could ‘make money’ from business travel.

With few vehicle use controls in place, employers found that mileage being travelled was rising – if they were recording it effectively – and so were costs. With the number of miles travelled on business rising, emission levels associated with vehicle use were also on the increase and, as a result, so was the risk of staff being injured in a road crash.

Taking action
Pro-active fleet decision-makers have been quick to spot the link between cost, safety and the environment and have taken swift action. Some of our members have introduced a cap on ‘grey’ fleet mileage. For example, if an employee travels more than 5,000 business miles a year then they must drive a company car. This is particularly happening in the case of employees who have opted for a cash allowance instead of a company car.

Similarly, some of our members have introduced CO2 emissions and MPG caps thereby allowing staff to drive their own cars on business only if they meet the predetermined levels. Some of our members have also introduced an age-related cap to grey fleet use.

And, in some cases, ACFO is aware of organisations that have banned grey fleet use or made it abundantly clear that own car use is a last resort for a business trip with permission having to be obtained. Instead, these organisations are promoting the cost-effective, safety-focused and environmental benefits of alternatives such as public transport, audio or video conferencing, car hire and, in some cases, have reintroduced pool cars. Additionally, anecdotal evidence suggests that demand for company cars is rising for the first time in many years.

Failure to manage
While it is becoming apparent that some organisations are getting to grips with the policing and management of staff who use their own cars on business, it is equally clear that many employers continue to take a laissez faire attitude.

Numerous surveys by fleet industry publications as well as risk management providers, show that fleet management organisations, contract hire and leasing companies and other suppliers continue to highlight shortcomings in grey fleet management.

It seems that most concern is focused around the failure of many small and medium-sized fleets and the public sector to manage grey fleet use.

In the SME sector it seems that many organisations are turning a blind eye to the plethora of advice, information and case studies that are available from fleet experts such as ACFO as well as independent organisations including the Energy Saving Trust and the government-backed ‘Driving for Better Business’ campaign, which is delivered by RoadSafe (see below for contact details).

Indeed, the Office of Government Commerce, an independent office of HM Treasury, remains so concerned about grey fleet use in the public sector that at the end of October it announced a major new campaign aimed at raising the profile of the issues and opportunities presented by managing the grey fleet, as well as helping organisations and employees adopt safer, more cost effective and sustainable forms of travel.

In launching the campaign, the government’s chief sustainability officer William Jordan, said: “Small, simple improvements in ‘grey’ fleet management can collectively make big differences. I would urge all managers responsible for this particular area of public sector expenditure to ensure effective measures are in place to maximise efficiencies, and safeguard staffs’ wellbeing.”

Understandably, the OGC is focused on grey fleet management within the public sector because its remit is to help government deliver best value within the segment. However, the OGC’s grey fleet management toolkit is equally applicable to the private sector.

The need to manage
While it is clearly possible to manage grey fleets effectively, there is a vast wealth of evidence that suggests many organisations in both the public and private sectors struggle to do so. This can be for a variety of reasons but they include a shortage of expertise, a lack of resource and the difficulty of monitoring vehicles not directly owned or managed by an organisation.

Nevertheless, it is equally clear that employers that pro-actively manage their ‘grey’ fleet see a reduction in their carbon footprint, are reducing their risk exposure and almost certainly are cutting costs by reducing unnecessary business journeys.

Effective management of those who drive for work whether in a company or privately-owned vehicle is an important element of general management – if it isn’t addressed properly, the negative impact on profit, safety and the environment can be very significant.

For more information
ACFO: www.acfo.org
E-mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Energy Saving Trust:
www.energysavingtrust.org.uk/travel
Driving for Better Business:
www.drivingforbetterbusiness.com
OGC: www.ogc.gov.uk