What is grey fleet?
Grey fleet travel refers to mileage in employee-owned vehicles – a grey area, where millions of hidden miles are travelled each year and often overlooked by employers and employees alike.

In the public sector, evidence indicates that grey fleet makes up around 57% of total road mileage. Across the whole of the sector, this could add up to as much as 1.4 billion miles every year!

Why tackle grey fleet?
“We have to do our utmost to push the message that driving for work can, and should, be managed like any other part of the business.” - Road Safety Minister Jim Fitzpatrick

The management of grey fleet travel plays an important part in supporting three key policy areas of health and safety, environmental sustainability and financial efficiency. It is about removing unnecessary mileage and transferring travel to more environmentally efficient and cost effective alternatives like public transport and hire cars, as well as minimising the risk where employees do use grey fleet for work.

Health & Safety

• Up to one in three road crashes involves a vehicle being driven for work
• Every week, this results in around 200 work-related deaths or serious injuries
• For the majority of people the most dangerous thing they do at work is drive on the public highway
• Over 34% of organisations admitted in a recent survey that they do not have basic  procedures for checking the driving licences and insurance of grey fleet drivers.(Department for Transport, HSE and Arval statistics1)
   

Managing the duty of care to employees driving for work is a legal requirement, and this includes employees driving their own vehicles for work.

• The Health & Safety at Work Act 1974 states that: “It shall be the duty of every employer to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all employees.”
  
  This means that:
• Both management and employees can be prosecuted for road traffic
  crashes involving work-related journeys, even when the driver is using
  their own vehicle
• Under HSE regulations, there is a requirement for any organisation
  employing five or more people to have a written policy statement on
  health and safety, and this should cover work-related road safety
• In the case of a work-related road incident, organisations will need to
  provide evidence that they have taken ‘reasonably practicable’ steps to
  manage their duty of care.
   

The Corporate Manslaughter and Corporate Homicide Act 2007 came into
force in April 08 and creates a new offence where death is caused by a
gross breach of duty of care by senior management. This means that:

• Crown immunity will no longer apply in the case of the outlined offence, and it will therefore apply alike to all government departments, NHS bodies, corporations, police forces and prisons
• Where it can be proved that senior management are responsible for a gross breach of duty of care relating to an employee driving for work and that death has resulted from this breach, penalties can be applied including unlimited fines and publicity orders.

All public sector organisations need to consider the implications of these Acts and question whether they are taking reasonable steps to manage duty of care for all employees driving for work, including the hidden grey fleet drivers.

Where organisations do take steps to manage duty of care relating to driving
for work, this can also bring a range of benefits:

• Reduced downtime
• Improved safety culture
• Improved public image and business performance
• Financial savings associated with lower insurance premiums, fewer repairsand lower costs of staff replacements and sick pay (it is estimated that the full cost of every road accident might be £8 to £36 for every pound paid on the insurance claim).
   

Environmental

• 400,000 tons of CO2 are emitted, on average, from grey fleet cars over 1.4billion public sector miles
• This is an annual carbon profile that would take 550,000 UK trees their whole lifetimes to offset.

In June 2006, the Prime Minister launched revised targets for Sustainable operations on the government estate. All central government departments are expected to meet these targets, which include a commitment to:
“Reduce carbon emissions from road vehicles used for Government administrative operations by 15% by 2010/11, relative to 2005/2006 levels.”

This means that:
With an average of 57% of public sector road mileage travelled in the grey fleet, the reduction of emissions from employee-owned vehicles will be key to achieving the Government targets for sustainable operations.

This will require the gathering of solid management information on grey fleet travel, as well as the implementation of policy changes to reduce grey fleet mileage, or transfer it to lower emitting forms of travel.

Studies conducted on a sample of public sector organisations indicate that the average age of an employee-owned car used for business is 6.7 years. Changes in the manufacturing industry over the last decade have meant that carbon emissions levels on new vehicles are constantly being cut. For example, a Ford Escort (1.8 TCi) bought in 2000 would produce carbon emissions 27% higher than its 2008 Ford Focus equivalent.

This shows that there are significant environmental benefits available from moving
grey fleet drivers both into public transport, and also into newer leased cars or hire cars (on average 18 and 6 months old respectively).

Financial
An organisation travelling 10 million grey fleet miles a year will be spending £2.5 to £4 million per year – or more where annual cash alternative payments are made to grey fleet drivers

Most central civil government departments pay mileage at 40p/mile higher rate and 25p/mile public transport rate, though there are examples of organisations paying 81p/mile and higher.

Evidence from two departments shows that an average of 84% of all claims are at the higher rate, although there may be justification for many of these being paid at the public transport rate.

Often grey fleet is not the most cost effective method of transport available to an employee, but may be preferred for a range of reasons, including:
• The employee may not be aware of the other, more cost-effective, alternative methods of transport that are available
• Effective journey planning may not be being undertaken – grey fleet is easy
• In some cases, the mileage rates offered by departments may act as an incentive for people to drive their own vehicles.

Without appropriate demand management measures, this can lead to rising mileage in employee-owned cars, as well as rising mileage costs.

Obviously, the choice of transport is dependent on the type of journey being undertaken and overall annual driving patterns, but here are some sample direct cost comparisons:

Where organisations have taken steps to manage grey fleet travel financial savings have been achieved, both direct and indirect:

Based on the experiences of OGC and Environment Agency, a 20% reduction in organisational grey fleet mileage of 10 million miles could generate an annual net saving of over £1 million 10million miles at an average speed of 40mph would take up 250,000
hours. Assuming an average hourly cost of £15, this would represent £3.8 million of indirect costs, which could be reduced through eliminating unnecessary journeys and using alternative forms of transport like the train.

 

To go to the second part of this best practice guide, click here