Ever more efficient fleet management in 2011

With the news that councils face a roughly 10 per cent cut in their core central government funding next year, the need for savings is more acute than ever. The challenge is fierce but there are solutions that need not harm frontline services. Outsourcing is going to be a hot theme in 2011 in many areas of service provision. Fleet management is one area that can be outsourced to free up manpower, save money and improve the efficiency of travel policies.

Streamlining for the new realities

As the implications of the Spending Review hit home, the public sector faces the harsh reality of long-term budget constraints and it must make some very difficult decisions about where the axe will fall. With a long-term vision, however, the public sector cuts present an opportunity to reform fleet management, increase efficiency and achieve significant cost savings.

The provision of business travel across the public sector is a likely target for scrutiny and improvement. With changes to taxation, volatile fuel costs, rapid changes in on- and off-vehicle technologies and the ongoing drive to reduce carbon emissions, vehicle use offers significant potential for cutting costs. As budget necessities force the public sector to rethink the status quo, they have an opportunity not only to cut costs, but to implement a more efficient form of fleet management.

In doing so, the public sector can learn from the recent experience of the private sector, which has made significant changes to transport policies resulting in tangible savings and benefits. Automotive Leasing's White Paper, Streamlining for the new realities, looks at the diverse vehicle provision arrangements currently being used in the public sector, examines alternative options and where improvements can be made, and outlines future strategies.

Is the war on the motorist coming to an end?

The National Infrastructure Plan is further evidence that the war on the motorist has ended. It must have been very tempting for a cash-strapped government to impose further levies on motorists but thankfully the transport secretary has not gone down that road. Instead, we’re encouraged that he has signalled the strategic importance of car travel to the economy by committing investment to road infrastructure.

Automotive Leasing supports all efforts that make life easier for the business driver, including more innovative ways to reduce congestion that go beyond road-building. At a national policy level, there is a need to think creatively about freeing up capacity on Britain’s roads.

We also firmly support the ‘decarbonisation of fleet’ initiative and commitment to incentivise electric vehicles. The country cannot achieve critical mass for electric vehicles without large-scale adoption among commercial and public sector fleets, so it is reassuring that the government understands that a substantial commitment to the supporting infrastructure is necessary to achieve success.

Life after the Spending Review

The Age of Austerity has been the catchphrase of recent months, but after the long-awaited Spending Review announcement, talk of budget constraints must now be turned into tangible reductions. Cutting costs need not equate to cutting services.

If necessity is the mother of invention, the Spending Review should act as the catalyst for a new strategic approach to fleet management in the public sector. With a long-term vision and openness to change, the public sector has an opportunity to reform its fleet operations and increase efficiency, whilst cutting costs.

As the fifth highest indirect government expense, fleet may be a tempting target for quick savings. But ill-considered cuts will not lead to long term savings and may indeed cause higher costs in the long run. There is a risk that leasing savings could be cancelled out as employees file expense claims for increasing mileage or more frequent vehicle rental. Equally, with rail fares set to rise at three per cent above inflation, public transport may not offer a cheaper or practical option.

By outsourcing fleets, the public sector can make the most of its vast buying power, save administrative time, gain external industry expertise and access newer vehicles, meaning lower carbon emissions and improved employee health & safety.

The private sector is already leading the way and offers a blueprint for the public sector. An estimated 60 per cent of private sector fleets with over 250 vehicles are outsourced, yet for similar sized public sector organisations, the figure is closer to 25%.

Outsourcing will not be the perfect solution for every fleet, but it is definitely something the public sector should be considering.

Helping Sir Philip's crusade

Sir Philip Green’s Efficiency Review singles out the government’s wasteful approach to car hire, which accounts for £29m of central government spend annually. We know the equivalent bills for local council car hire are significant and that they can be avoided by a more prudent approach to travel budgeting.

One reason the spending is so high is due to inadequate or inefficient fleet provision. Getting rid of fleet vehicles in favour of private or hire cars can look good on paper but it is a false economy in the long-term. Pooling fleet vehicles, for example, can avoid the need for hire cars altogether.

Another solution we are exploring more and more with the public sector is fully managed, outsourced fleets. For private sector fleets in excess of 250 vehicles, it’s estimated 60% are using outsourcing but this is much lower for similar sized public sector organisations, somewhere near 25%. Businesses have made substantial savings in recent years by outsourcing their fleet management to specialist providers and the public sector can learn from this experience.

There are examples of public sector organisations, like Ashford Council, that have reaped significant benefits from outsourcing their fleets, including significant financial savings, reducing emissions and improving employee health & safety. It’s time more government bodies followed suit and planned their vehicle needs for the long-term.

Automotive Leasing conference sets out the path for public sector fleets

Automotive Leasing’s Defining the Future of Fleet conference, held in the Heritage Motor Centre on June 29^th, brought together the leading public sector fleet managers, government representatives and suppliers, highlighting the major changes that will affect public sector fleets and how to adapt to the new political landscape.

As Brand Director of Automotive Leasing, I was honoured to chair the debate, Lively and considered discussion ranged across topics including environmental fleet management, collaborative procurement and fleet risk. Difficulties over government frameworks were raised, with queries on how to reduce the public sector grey fleet and issues of corporate manslaughter vigorously debated.

Some significant agreements were reached: for example it was agreed that environmental changes to fleets had to be implemented in a measured way, with bespoke solutions needed for individual businesses. Employee engagement was recognised as a vital part of behavioural change in the employee population and videos conferencing was suggested as a strong alternative to a lot of unnecessary business travel. The panel also recognised the need to impose clear targets on fleets to achieve emissions reductions.

Electric cars were debated as a vital step for the industry but one that should be considered as part of the fleet solution and not implemented without serious fleet analysis.

Collaborative procurement was discussed in some detail, with the recognition that the quality and detail of frameworks varies dramatically.

The conference could not have been better timed for fleet decision makers. As the new government decides how to cut spending across the UK, the public sector faces some real challenges, not only through budget cuts, but also through emission reductions and grey fleet management.

By bringing key decision makers together ahead of the government spending review, delegates were able to voice their concerns in an open forum, and really debate how public sector fleets will work under this new government. With consideration given to a variety of issues, from outsourcing agreements, behavioural change processes and grey fleet management, we were able to demystify much of the public sector issues and understand more clearly the challenges that lay ahead.

Now, as the spending review nears we want to continue the debate and invite, stimulate and share views and opinions on the future of fleet in the public sector and beyond. This blog is designed to provide a forum for that debate. Although hosted by Automotive Leasing, we are keen to encourage comment and submissions from all sources. Please do get in touch if you'd like to contribute.