Thursday 27 October 2011

Raising the speed limit – a faster future?

Will a raised speed limit make any difference?
Image Creds: LeasePlan
Earlier this month, former transport minister Philip Hammond announced government plans to raise the upper UK speed limit from 70mph to 80mph. After a period of consultation, the new limit could be introduced as soon as 2013.

But what (if any) impact will this change have upon fleet managers and drivers? The new limit is designed to reduce journey times and, for drivers that cover thousands of business miles each year, any reduction should come as a welcome relief. Despite this, the extent to which this increase in maximum speed will reduce journey times is up for debate; some of Britain’s most congested roads can be at near-standstill for almost 12 hours per day.

Fleet drivers should also consider the cost of driving faster. As highlighted in a previous post, travelling at 80mph uses around 10% more petrol than travelling at 70mph. With petrol prices remaining high, the increased usage could put further strain on already tight budgets.

Despite these concerns, it currently looks likely that this new limit will be introduced. As a result, driver training will become ever more important as business drivers will require the ability to handle both the increased speeds of their own vehicle, whilst compensating for the reaction times and high-speed manoeuvres of those on the roads around them.

Wednesday 26 October 2011

Business drivers should be concerned by the demise of the filling station

Are drivers facing increasing rural fuel challenges?
National newspapers have long carried articles about the declining presence of various institutions around the UK, particularly focusing on those that serve rural communities. In years gone by, the Post Office was the most frequent recipient of this concern, with hundreds of column inches being dedicated to the closure of yet another village outlet.

Now, there is another threat to many rural communities. While perhaps they are not seen as central to communities or indeed as emotive, the growing rate of closure for rural petrol stations should be a cause for concern. The number of forecourts in the UK has halved in under 20 years. There are now 11,000 fewer filling stations across the country, and the squeeze is being most acutely felt in rural areas furthest from major thoroughfares.

Petrol station closures are, in part, the result of greater fuel efficiency in modern vehicles – a positive development for business drivers and the environment. Nonetheless, with fuel prices still at exceptionally high levels, the knock on effect of forecourt closures is driving prices even higher in rural communities. Business drivers are also likely to be affected by the closures. They often have to drive in unfamiliar rural areas, where the chance of being caught between stations is becoming ever more acute.

Journey Times Affected

GPS systems have gone some way to alleviate the problem of finding the nearest filling station, but the continuing decline is likely to result in less price competition and lengthy detours to refuel. Fleet managers and business drivers alike should be concerned about the potential additional miles, time and cost this could add to journeys.

It remains to be seen if the government will act on the problem. While there have already been several discussions in parliament about some sort of rural fuel rebate, nothing has yet been agreed and the UK’s crucial network of filling stations is set to shrink further. Maintaining this infrastructure remains important when trying to ensure that business is still practical across the length of the country and to stimulate economic growth outside of major cities.

Wednesday 19 October 2011

Local councils should use electric cars

One of Dumfries & Galloway's Nissan Leafs being recharged
Image Creds: D&G Council
They reduce carbon emissions, keep the environment pristine and are also financially viable – what is there to not like about green cars?

Writing in the Guardian, Dumfries & Galloway Council and Automotive Leasing explain how electric vehicles can be a viable option for public sector fleet – if targeted funding schemes are used effectively.

The Council leased four all-electric Nissan Leafs and a sweeper from Automotive Leasing, becoming the first Council in Scotland to add electric vehicles (EVs) to its fleet. Special funding arrangements agreed with Automotive Leasing and Transport Scotland made it possible, allowing the Council to lease EVs at no extra cost and with no additional risk compared to petrol or diesel vehicles.

Monday 3 October 2011

Tribunal ruling on NICs for business motoring allowances

Image Creds: HMRC
Fleet managers who oversee ‘grey’ fleets on behalf of their employers should be aware of a recent tribunal ruling concerning NICs (National Insurance Contributions) for motoring allowances paid to business drivers.

Employees who are paid this allowance for the use of their private vehicles for business purposes will now need to demonstrate a clear link between the actual business use of the vehicle and any lump sum payments. This is to ensure that any payments for these private ‘grey’ fleet vehicles are classed as “relevant motoring expenditure” (RME) and exempt from NICs.

A key point arising from the tribunal was that an allowance linked directly to the acquisition or ownership of a vehicle would not be sufficient, on its own, to classify the payment as RME.

While this decision is subject to an appeals process, in its current form, the ruling would mean that where the link between the business and the usage of the vehicle cannot be established, the employer will be liable for Class 1 NICs on the motoring allowance payment.

Due to the complexities of managing ‘grey’ fleets, employers may wish to consider taking specialist advice on restructuring their car allowance provisions to ensure future NIC exemptions are secured. As demonstrated by the recent benefit in kind (BiK) taxation changes, this area of business motoring continues to be a focus for the government. Expert support can help businesses take advantage of available benefits, even as the tax regime evolves.

Further information on this tribunal and its wider implications for business car drivers can be found on the HMRC website.

Thursday 1 September 2011

Understanding Speed Cameras

Do speed cameras deserve to be criticised?
Image Creds: Stock.xchng
Speed cameras rarely garner much positive press. There have been ongoing debates into the effectiveness and the real motivations for their placement. Advocates cite lower accident figures, while anti-speed camera campaigners often highlight the level of revenue generated by fixed-camera sites.

Speed cameras featured heavily in the headlines last year when Oxfordshire council announced that cameras in the region would be switched off due to budgetary constraints. These measures led to one road safety group claiming that speeding had increased by 88% in their absence.

To help justify the ongoing placement of cameras, 75 English local authorities have published some or all of their information showing accident and casualty rates as well as speeds at camera sites before and after the introduction of speed cameras.

Increased Transparency 

This level of transparency should be welcomed, helping motorists understand the reasoning behind the placement of cameras. However, it should be noted that speed cameras should not be seen as the only solution to speeding. For fleet managers, effective training and awareness campaigns could be the most effective way of ensuring that their drivers remain safe and on the right side of the law.

Another welcome side effect of controlling speed is an effective reduction in costs – travelling at 80mph (10 mph above the legal motorway speed limit) uses around 10% more petrol than travelling at 70mph. Therefore, drivers can save money by obeying the law, both by avoiding costly speeding tickets and reducing overall fuel consumption.

Wednesday 10 August 2011

Care workers and community drivers benefit from red tape cut

Announcement set to benefit community-minded drivers
Image Creds: LeasePlan
After we highlighted the Department for Transport’s pledge to cut red tape in a previous blog post, we were interested to see a further announcement from transport minister Norman Baker which looks set to continue this trend.

His statement, released on the government news distribution service offered new guidelines to end confusion created by minicab laws that were implemented in 2006. Under these laws many parents and carers were being classified as minicab drivers, and as a result had to register as such before the council could allow them to provide lifts.

Norman Baker said; “Clearly parents helping out at a play group, or carers getting people to the doctor are not minicab drivers. I hope that by publishing this new guidance today these people will be able to get on with their vital activities, without the hassle or cost of getting a minicab licence.”

The government guidelines outline that the following groups should be exempt from having to license their vehicle:

•    Private ambulances, including emergency vehicles and vehicles which operate as part of a formal patient transport service;
•    Volunteers who share their car or provide lifts as part of their voluntary duties;
•    Care and support worker services, including those who care for adults in their own homes, in community settings or in residential or nursing care homes;
•    Childminders who carry children as passengers as part of their duties;
•    Rental car companies and garages offering ‘courtesy lift’ services for customers, for example whilst their car is in for repair.

For fleet drivers, the continued government focus on cutting the red tape associated with motoring should come as a welcome process, and we look forward to further developments as a result of this initiative in the coming months. 

Thursday 14 July 2011

Drivers Remain Key to Accident Prevention

Can less serious accidents be prevented?
Image Creds: LeasePlan

At the end of last month  the Department for Transport  announced that road deaths in the UK have dropped below 2,000. Based on the figures for 2010, the figure of 1,857 fatalities over the course of the year represents the lowest total since records began in 1926.

This is a remarkable statistic given that there are now over 31,000,000 cars on the UK’s roads, compared with just over a million in 1930. The steadily declining fatality rate owes much to technology; the introduction of simple measures such as ‘cat’s eyes’ and compulsory seatbelts were key developments in ensuring a steady drop in fatalities throughout the latter years of the 20th century.

Technological Progress

Continuing advances in the field of safety is something that manufacturers often pride themselves on, and with the developments of airbags and electronic stability programmes, cars are certainly safer than ever before. Interestingly, despite these developments, there has been relatively little research into whether drivers themselves are safer than in years gone by.

Human error still accounts for between 90-95% of all car accidents, and it would seem that in-car innovations are not necessarily preventing accidents from happening, but instead are reducing the after-effects. For this reason, it would seem logical that drivers are trained to higher standards.

Over the past few years there have been various suggestions that the driving age should be raised to 18, that older drivers should be retested or that speed limits should be changed. Any one of these measures would have proved contentious, but with regard to safer driving, fleet managers have an opportunity to ensure that their staff are amongst the best educated on the roads, without attracting such controversy.

With around 10% of UK traffic being made up of company cars, and approximately 1 in 3 involved in an accident annually, increased training could help to lower these statistics further and help to re-define business drivers as the safest and greenest drivers on the roads today.

Monday 27 June 2011

Can offering a company car save costs and at the same time improve employee benefits?

In our previous communications we have sought to highlight the risks and opportunities associated with running a traditional company car benefit programme: - We focussed on the key cost drivers and looked at strategic changes that could be made to place downward pressure on rising costs. 
Critical in our focus was the increasing burden of National Insurance & Benefit in Kind charges combined with rising fuel costs - and how these impact fleet costs. 

How to Save with Salary Sacrifice/Exchange 

In this, our final communication prior to the CFO forum we review an option that will allow you to take advantage of these increasing costs.  We consider how employers can produce substantial savings on the PAYE bill and at the same time improve the overall benefits package to your employee base through the introduction of a company car salary exchange programme for your wider employee base – not just those who currently receive a company car benefit.

Salary Sacrifice/Exchange schemes have been available in the market for several years now and have become of increasing interest to companies looking to provide flexible benefits to their employees.

A sacrifice/exchange happens when an employee gives up the right to receive part of cash pay and, in return, receives a non-cash benefit: in this case a Company Car. The sacrifice is achieved by varying employee terms and conditions relating to pay.

The schemes work on the basis that the employee exchanges gross salary in return for a company car which leads to savings of tax and NI contributions on the salary sacrificed. However, this is off-set by benefit in kind tax on the company car. Overall the Company will secure savings as the cost of providing the employee with a company car is less costly than the alternative cost of providing the pre-sacrificed salary.


Recent changes in tax and the introduction of more premium vehicles under the 120g/km BIK threshold have assured that benefits available now are far greater than has previously been the case. 

Benefit for Employees     

The benefit for employees is evident.  For the employer it will depend upon the level of take up across your employee base - typically 3-10%.  With a minimum employer saving of £391 per vehicle the level of savings achievable are set out as follows.

Evidently these values and outcomes will vary between employers and will be affected by the approach to risk and benefits that each employer would adopt.  It is also a fact that not all organisations are suitable for such schemes.  Any decision to offer a company car salary exchange scheme must be preceded by rigorous feasibility & scheme design activities and the production of a robust business case.  LeasePlan is well placed to undertake such activity on your behalf based on our past experience.
A Salary Sacrifice scheme is one of the few genuine triple win solutions you might provide in your organisation:

•    Profit – with the right design you will reduce your PAYE costs year on year.
•    People – every employee can secure a valuable added benefit that saves them tax and NIC
•    Planet – with the right design you will see older polluting vehicles replaced with new, CO2 efficient alternatives.

As this is our last publication leading up to the CFO forum we would like to thank you for reviewing the information we have provided so far: There are many opportunities to make significant inroads into reducing fleet costs and enhancing employee benefits.  Careful policy design which best leverages the effects of the UK taxation regime – both at the corporate level and for the individual employee – is at the heart of the matter.  
We have only been able to provide a ‘flavour’ of the many opportunities within these communications. 
Our consulting team will be attending forum and look forward to meeting you person.  We hope to discuss your current strategy, to offer an insight into measures to enhance it and to show how LeasePlan will be able to support your plans. 

Lesley Slater: Brand Director LeasePlan

Monday 20 June 2011

Gridlock Britain

Motorway travel is getting ever more expensive
Image Creds: Stock.xchng
The Daily Express has reported that the UK’s roads are some of the most gridlocked in Europe. This news will be unsurprising but worrying for fleet managers, as delays can be costly to business, both in terms of time, and petrol used.
 
Unsurprisingly London came out as the worst UK City in terms of congestion, with 34.5 per cent of main roads at a crawl during the day. Perhaps one of the more surreal comparisons afforded to the speed of London’s traffic has been the assertion, from Thisislocallondon, that the average speed of traffic in the Capital was the same as a running chicken.
 
Interestingly, the problems seen in London come despite ONS statistics that suggest 43 per cent of Londoners do not have any access to a car.
 
UK Wide Problems   
 
As well as the problems suffered by London, several other UK cities were placed in the top 20 for jams. Surprisingly Edinburgh, despite its relatively small population of less than half a million, was the second most congested UK city at number seven. Manchester took third, in tenth place overall.
 
Outside of the UK, only Brussels and Warsaw were more congested, however it should be noted that France had four cities inside the top ten, with Toulouse, Lyon, Marseille and Paris all scoring poorly.
 
This research makes worrying reading, and LeasePlan would always advise planning routes before travel to help avoid traffic hotspots. To a degree, traffic jams are an inevitable part of a business driver’s day, but efficient driving and better vehicle choice can help mitigate the increased fuel expenditure that is associated with long periods in slow-moving traffic.

Friday 10 June 2011

What Strategic Changes Can be Made to Mitigate Rising Operational Fleet Costs?

There is an alarming increase in operational fleet expenditure, and as our recent publication highlighted, taxation and fuel costs are set to rise substantially in the foreseeable future painting a very disconcerting forecast for decision makers.
 
Yet, there are various examples and substantiated case studies that have proven that by adopting a strategic approach to managing fleet, companies can indeed mitigate and in most instances reduce their overall fleet expenditure without reducing the benefit level.

Traditional procurement & management models focus predominantly on the finance and maintenance elements of fleet, but as the above breakdown indicates – there needs to be concerted focus on all cost aspects when formalising a fleet procurement strategy.
 
With fuel, national insurance, VAT  and Corporation tax recovery rates all directly related to the carbon efficiency of your fleet  – surely then the procurement model should at the very least incorporate all factors when deciding what is being offered to employees.
 
Working with our portfolio of clients, we have developed a costing/procurement methodology which incorporates all knows cost factors. The benefit of this approach has not only been proven in terms of cost reduction, but due to the positive CO2 enhancements made by premium manufacturer brands it is allowing our clients to also improve the selection of vehicles offered.

The net effect from adopting the aforementioned methodology has been as follows:-
•    Since 2008 our clients’ average fuel costs have only increased by 1.11%, even though fuel has increased by more than 15% in the past year alone. This was done by introducing more fuel efficient vehicles and working with clients to manage driving behaviour. The average vehicle ordered in 2011 delivers >55miles per gallon, whereas in 2008 the average was below 44miles per gallon
•    Since 2008 our clients have managed to contain Class 1 A National Insurance Increases by reducing their average fleet emissions from 154g/km down to 125g/km
•    In the same token we have managed to reduce finance costs by motivating more client’s/drivers to drive sub 110g/km vehicles, resulting in 100% writing down allowance in the first year of depreciation
 
The above are but a portion of the considerations that need to be incorporated in your fleet strategy and there are various other proven methods to manage operational expenditure.
 
In our last publication leading up to the CFO forum we will focus on other solutions that could be considered, including the introduction of  company car salary sacrifice programmes to reduce employer national insurance costs, improve your company’s environmental credentials and enhance your employee benefit package.
We look forward to speaking with you at the forum and reiterate our commitment made in terms of a free high-level fleet review to interested companies.

Lesley Slater
LeasePlan Brand Director


This post first appeared on the CFO Forum Blog on 02.06.11

Monday 6 June 2011

Council Reclassifies Pot-Holes to Cut Costs

Pitted roads affect motorists UK-wide
Pic: Channel4.com
Lambeth council in London recently announced that potholes under 40mm in depth will no longer be filled in, according to a report in The Telegraph.  This marks a significant shift, as previously holes as shallow as 25mm were classed as potholes requiring action. The new measure is designed to cut costs, and coincides with parliamentary research that suggested the cost of repairing every pothole on Britain’s roads has soared to over £13 billion.
 
Repair costs have been exacerbated by last winter’s record low temperatures which contributed to the overall decay of road surfaces around the UK.  The worst roads for potholes in the UK have been revealed, with Northumberland’s B6343 and Holme’s Fieldhead Lane in West Yorkshire achieving the dubious honour.
The Telegraph goes on to report that there are now estimated to be 10 potholes for every mile of road, which totals around 1.6 million across England.

Concern
 
This is an increasing concern to business drivers, who are likely to come across hundreds of potholes in their daily travel. If more councils follow Lambeth’s example in restricting repairs, fleet managers may see an increase in the amount of damage done to vehicles by these deeper holes.
 
LeasePlan UK’s CEO, David Brennan, has been vocal in advocating greater investment in Britain’s roads.   Following the budgetary allocation of an additional £100 million for pothole repair in March, he commented this was likely to be nothing more than a “drop in the ocean.”

The Car is Still King

The car remains the commuters' choice
Pic: LeasePlan
The overriding importance of the car over other modes of transport to keeping Britain moving is underlined by recent ONS data showing that more than three in four Britons outside London go to work by car. 

The Times (£) reports that car use by commuters is 76 per cent in the rest of the UK but only 35 per cent in the capital. Outside London 6 per cent go to work by bus and a mere 2 per cent by train, while in London the figures are 12 per cent and 20 per cent respectively. 18 per cent use the Tube.
 
The figures are from the back end of 2009 when the country was in the depth of recession but the car is undoubtedly still king when it comes to getting Britain to and from work. If you don’t live in an urban hub or within easy reach of practical public transport, the simple truth is that the car is the best way to get to work.
 
As well as taking measures to encourage greater use of public transport, policy chiefs should be freeing up the roads to get the economy moving as a priority.

Friday 27 May 2011

London Steps Up Electric Infrastructure

Electric Decisions in City Hall?
Image Creds - Stock.xchng

The 26th of May marked the launch of a new initiative by London Mayor Boris Johnson. The Source London project is aiming to increase the proliferation of electric vehicle charging points around the Capital, as well as ensuring drivers have access to all existing points.
 
Perhaps keeping one eye on the reported £300m pollution fine that is hanging over London as a result of tightening EU controls, the mayor stated “I want to rapidly accelerate the uptake of electric vehicles and make London the epicentre of electric driving in Europe.”

A Realistic Aim?
 
This remains a bold claim, however it does seem that this particular project is making a difference. Overall, there are now 400 charging points across the city, with many located in supermarket car parks, and the stated ambition is to have 1,300 points by 2013. This has scaled back promises that were made in 2009, something that is pointed out by the green party, but it represents ambition nonetheless.
 
If this number is achieved, it should allay concerns surrounding the range of these vehicles in London, and if the proposed link up with the East of England charge point network is completed, drivers can be confident in driving further afield.
 
For fleet managers controlling fleets that are largely based in London, this commitment should be viewed as  positive since it should help to persuade drivers to make the electric switch, particularly if additional costs, such as the congestion charge, can be avoided.
 
It should be noted that there is a flat £100 charge to use the points for a year, and when held against the high price of petrol, this seems like a worthy investment, particularly as this initiative covers all boroughs, unlike some previous measures.
 

Thursday 26 May 2011

Department for Transport Pledges to Cut Red Tape

The DfT is seeking to engage with drivers on key issues
The Department for Transport (DfT) has pledged to do away with needless regulations on Britain’s roads as part of the Government’s cross department Red Tape Challenge.
 
It is asking for public feedback on 400 pieces of Whitehall road transport regulations as it looks to cut unnecessary bureaucracy. Through a purpose-built website, the ‘Red Tape Challenge’ encourages local authorities, businesses and private motorists to join the debate on these contentious measures.
 
Roads Minister, Mike Penning said, “By getting government off people’s backs we can free businesses to compete, create jobs and unleash a private sector-led recovery.”
 
The current government has expressed a reasonably driver-friendly attitude and business drivers are sure to welcome any reduction in ‘red tape’ that frees up their time for running their business, rather than administrating their fleet.  There are two sections that are most likely to be of interest to fleet managers and drivers; namely the ‘vehicle safety and standards’ and ‘highways’ elements of the debate.
 
The government has taken a first step in seeking drivers’ views on the legislation they face on a day-to-day basis,  and drivers will no doubt watch with interest as the coming months will reveal whether any affirmative action arises.

Wednesday 25 May 2011

Calling for BiK clarity

ACFO: Lobbying for BiK guarantees
Fleet managers and company car drivers will cheer the news that ACFO is pressing the Government to guarantee five year benefit-in-kind tax rates. LeasePlan supports any such measures which give managers and drivers more certainty and allow them to plan for the future.

The recent Budget was a step in the right direction as it confirmed company car benefit-in-kind tax rates through to 2014. But a significant chunk of employees have their company cars replaced on a four-year cycle and under current policy they can’t be confident that their BiK taxes will be stable throughout that period.

Locking in tax rates for the full cycle of a company car will make life easier for all concerned by allowing them to evaluate the long term cost of vehicles. 

Managing Expectations

But employers and employees alike should not hold their breath. In the current environment, the expectation has to be of more CO2 related BiK increases. Employers should continue to set policies accordingly, selecting fleets which pull employees towards the lowest NIC and BiK vehicles.

Encouraging lower emitting vehicles will secure employers lower whole life costs, minimise environmental impact and at the same time help employees get the greatest benefit regardless of future tax changes.

So on behalf of all its drivers and managers, LeasePlan wishes ACFO the very best of luck with its lobbying.

Friday 20 May 2011

Scotland Leads the Charge in Electric Vehicle Race

The Leaf's Livery
LeasePlan is delighted to announce that Dumfries and Galloway Council has become the first council in the UK to add fully electric Nissan Leaf vehicles to its fleet, following the delivery of four of the innovative cars on Wednesday 20th April. This follows the delivery of an electric sweeper on Thursday 10th February.
 
The vehicles are provided by Automotive Leasing, our specialist public sector division and this latest contract forms part of a longstanding relationship between the Council and AL.  The electric vehicles will be added to the council’s existing 100 car fleet and will be made available for use by employees. NHS staff will also be able to use two of the vehicles, which are based at Dumfries & Galloway Royal Infirmary.
 

The Council has installed dedicated charging points for
the vehicles
We are looking forward to the council’s feedback on using these revolutionary vehicles and we will continue to post updates on their progress, as well as other orders that we are working to secure around the UK.

‘Vehicle To Grid’: Payback for Electric Car Drivers

Green Motoring, good for the wallet
and the conscience?
(Image - LeasePlan)
The Economist reported this week that there may be further positive financial news for those looking to invest in an electric vehicle. Aside from the lower fuel costs, the prospect of a vehicle to grid (V2G) system could add further monetary reward for EV owners.
The idea is that electric vehicle users’ plugged in vehicles will be used as external batteries to boost power supply to the grid at peak times. In theory this would reduce the need for expensive, emission-heavy backup generators.
Owners would be paid around 20p per hour for use of their vehicle in this manner. The system would be operated by the power company, so there would be no further logistical demands on the driver.
The Economist calculates that an EV driver could make around $4000 (£2472) per year using this system, which would far exceed the recharging costs of the vehicle. As a guide, Nissan suggests that their ‘Leaf’ vehicles cost around $225 (£140) per year to charge, so there is the potential for a substantial financial windfall.

US-Driven Change

While this is a technology very much in its infancy, the University of Delaware is leading research into the project and the first legislative steps towards the provision of a V2G system have already been taken in that state.
Fleet managers should take note, as there is the potential for their car parks, using this technology, to become giant battery cells, with a significant revenue stream attached to their use. Indeed, if this technology becomes commonplace, the financial remuneration could offer a further incentive for business drivers to swap petrol-driven vehicles for an electric alternative.