Construction company Willmott Dixon has taken the bold step of fining its business divisions if staff exceed an annual business mileage cap of 25,000 miles.
The policy was put in place at the start of last year to coincide with the introduction of an electronic mileage capture system from The Miles Consultancy (TMC).
It is part of wider changes to the company’s transport policy as it aims to become carbon neutral by 2012.
But the move will also help to reduce fleet overheads at a time of record fuel prices.
The measures resulted in an Energy Saving Trust Fleet Hero Award for ‘Leadership’ earlier this year.
Willmott Dixon is currently verifying business mileages and calculating fines, but early indications suggest that every part of the business has employees who travelled more than 25,000 miles last year.
The businesses are divided into cost centres and each cost centre will be fined £1,000 per driver with £1 levied for every mile above 25,000. There is a further penalty at 30,000 miles.
The fines will be used to fund further low carbon activity. The total amount currently stands at £500,000 across 12 cost centres.
“It’s very consistent – there’s not one office or department that has particular offenders,” according to Rob Lambe, managing director of Re-Thinking, the company’s internal specialist sustainability consultancy. “It’s approximately 5% of staff across the business.
“Some have only just tipped over 25,000 miles and we think we can lower the limit to 20,000 within the next few years.”
So how did the company arrive at 25,000 miles?
“It was based on judgement,” Lambe says. “We didn’t have our TMC system at the time – the fuel card data was the best we had. We looked at a typical journey of 50 miles each way and also used journey time as an indicator.
“We wanted to pick a line that was appropriately aggressive. We want people to feel the pinch, but we don’t want it to be too extreme.”
Mileage clocked up by staff travelling from their home to work sites is also included in the system, owing to HMRC regulations about temporary locations.
“Unless employees travel to the same site for more than two years it’s considered a temporary location,” Lambe explains.
“So, from a tax point of view, we treat that mileage as business mileage rather than commuter mileage.”
The cap applies only to Willmott Dixon’s 740 company car drivers and 750 grey fleet drivers – there are no restrictions in place on the 1,000 van fleet.
“We’ve got a tracking system on our van fleet to drive a reduction in travel so we don’t need the same measures,” Lambe explains.
The mileage cap is already delivering results on the car fleet. A lot of the data still needs to be analysed, but there are positive signs.
For example, a team of building health and safety inspectors has cut its mileage by 15% compared to the beginning of 2010.
“The nature of their work means that they spend a lot of time driving as they travel round businesses,” Lambe says.
“They were quite concerned about the scheme but we decided that we couldn’t exclude them and they would just have to accept that they would have a more difficult task.”
The reduction has been achieved by the inspectors liaising with each other more and using public transport.
Lambe acknowledges that staff switching from company cars to public transport might not prove to be cost-effective.
“There is a danger that there’s a cost there,” he says. “We need to recognise and understand that and feed that into our policies. There’s further work to be done but I don’t believe the cost of public transport will exceed the savings.
“In everything we do we’re looking for cost savings, but we have to balance that against other agendas.
“And even if they pay a premium for public transport, the benefit is that they arrive fresher for work.”
Lambe adds: “A lot of hours can be spent in a vehicle and that’s not productive.”
The policy has been put in place alongside existing measures to reduce mileage and CO2 emissions.