Case study: North Lincolnshire Council
Policy: reduce reimbursement to AMAP rates
Result: expected annual saving of £635,000
North Lincolnshire Council used to pay essential users a lump sum and a base mileage rate, while casual users were paid either 46.9ppm or 52.2ppm (dependent on engine size) for the first 8,500 miles and 13.7ppm or 14.1ppm thereafter.
The decision to move away from this system and pay all staff 45ppm was to achieve “greater equality across the workforce”, according to a council spokesman.
The first step was to analyse and compare all council mileage claims.
Staff were then informed about the proposals and asked for feedback.
Trade unions were consulted and balloted their members. Two out of three agreed to accept the change. As this wasn’t a collective agreement, the council sought individual agreements and wrote to 3,850 staff.
Ultimately, all staff agreed.
The council sold the idea to staff by explaining that a single rate would bring greater equality, that HMRC rates are tax-exempt whereas the previous rates were not, and pointing out “the need to make savings and protect jobs”.
The council also launched a car salary sacrifice scheme in July through which employees can lease vehicles with CO2 emissions of less than 120g/km.
“We anticipated that some staff may be unhappy with the proposals and things like the salary sacrifice scheme were designed to mitigate this,” says the spokesman.
The council’s advice for other organisations looking to reduce reimbursement rates is:
- Be explicit in proposed savings and what these mean for the organisation.
- Take time to work out real examples of effects in terms of pay for staff.
- Be open and honest, with regular communication.
Case study: Natural Resource Wales
Policy: cut mileage rate and launched travel decision tree
Result: saved £180,000
In 2008, the Countryside Council for Wales (now Natural Resources Wales) reduced its mileage reimbursement rates from 40p per mile (the AMAP rate at the time) to 25ppm.
It also introduced a number of other measures to discourage grey fleet use.
“We already had a travel decision tree in place and provided the top 10 high mileage users with individual travel plans but we felt we could do more,” says Gareth Roberts, transport manager at Natural Resources Wales.
The initial idea came from a grey fleet review which looked at the organisation’s overall grey fleet mileage, along with payment history. Following the review, a number of recommendations were made to the board of directors.
After their initial acceptance, a four-week consultation with the unions took place.
The mileage reimbursement rate was not included in employee’s terms and conditions, but it was referred to in the finance manual and was a change in policy.
Employees were able to give feedback before the change was made.
Since introducing the lower rate, there has been a rise in other sustainable travel methods, with public transport use increasing by 59% and video conferencing by 26%.
Sarah Tooze is a former managing editor of sister title Smart Transport. Prior to joining Smart Transport she worked on Fleet News for more than 10 years, latterly as deputy editor, and won the ‘automotive business journalist’ award in the 2017 Newspress Awards.
Alastair.kendrick - 26/09/2013 11:41
Sorry but this article seems to over simplify the issues and gloss over the tax position. Public sector workers operate what is called the fixed profit car arrangement so they provide a list each year of the taxable element of the allowance paid which gets coded out in most instances. The question is does the AMAP rate give enough to reimburse costs incurred on business travel. This comes down to if figures are on marginal or apportioned costs. If on the latter ( which is the basis adopted by HMRC in setting the rates) then the current HMRC rates are unlikely to cover the drivers costs unless employee is driving a low emission vehicle.