Fleet News

Fleet News Spring Conference: Double Jeopardy

FULL coverage from our latest conference.

Legal expert warns of huge rise in civil cases

FLEETS should not panic about being prosecuted for health and safety breaches as the chances of being convicted are about the same as a big win on the lottery.

However, civil lawsuits are becoming increasingly an area of concern, especially if a vehicle suffers a mechanical failure.

According to David Faithful, partner with Clarke Willmott solicitors, firms, fleet managers and drivers are more likely to be sued following incidents where cars have gone wrong.

And as the law stands, even if an outsourced servicing and repair firm has made the mistake, fleets will bear the brunt of the costs in a civil case.

Faithful said: ‘It’s becoming a case of ‘he who touched it last’. Please put some management systems in place to show there is an ongoing audit trail. The buck will stop with you because you are the user. It will come back to bite you in a civil case.’

Faithful cited the case of a Land Rover employee who had an accident due to a mistake in servicing from an outsourced provider. In the civil case the court still found Land Rover liable as it was the owner of the vehicle.

Faithful said that, as a result of this precedent, companies need to have competent fleet managers in place to ensure outsourced providers are doing their job properly.

He claimed that failure to keep tabs on suppliers’ standards could result in huge legal bills for firms.

Stewart Whyte, managing director of Fleet Audits and a director of the Association of Car Fleet Operators, agreed with Faithful. He said the proposed corporate manslaughter bill would be of ‘almost no concern to fleets’.

Industry experts have been warning that the growing focus on health and safety and the Corporate Manslaughter Bill will make it easier for companies to be prosecuted for breaches of their duty of care to drivers.

But Whyte said: ‘I do not think there is a material risk of prosecution for car and van fleets with professional drivers. I am passionate about road safety, but in terms of prosecution I don’t think there is much that fleets need to fear from prosecution.’

Well-run fleet examples

GRAHAM Hine, facilities manager at the Adult Learning Inspectorate (ALI), gave best practice examples of a well-run fleet. He illustrated how a fleet can improve its safety record through strong, top-down leadership and a number of clear, well-implemented and enforced guidelines for his team of inspectors out on the road. They are:

  • Drivers are given driving-for-work guidelines
  • Inspections and risk assessments include journey planning and travelling arrangements
  • Inspectors are encouraged to car share
  • Inspectors are advised to use company cars and not travel in third party vehicles during inspections
  • Drivers are advised to take a break every two hours of continuous driving
  • Inspectors are encouraged to stay in overnight accommodation
  • The ALI is proactive in providing drivers with safety information such as winter driving and links to the Think! Safety campaign website
  • Risk assessments are carried out and appropriate action or training implemented
  • Driver accidents are analysed and recommendations for appropriate driver training are made to line managers
  • Accident/incident analysis reports are benchmarked against local and national statistics

    Success comes with detective work ...

    FLEET managers who become ‘crash detectives’, skilled at analysing their fleet incident figures, will save their employers thousands of pounds through better risk management.

    Speaking at the conference, Charles Davis, head of driver and fleet solutions at RoSPA said that only by understanding the figures and establishing trends will managers be able to make their fleets safer.

    He said: ‘We need to give fleet managers the skills to recognise damage levels and understand incidents – but that doesn’t mean they have to be trained to police accident investigator level.’

    Davis reckoned that a fleet manager who could pick up subtle clues from incident reports – such as the type of damage sustained, whereabouts on the car it was, or whether incidents were happening regularly at one location – could piece together exactly how crashes have happened and then work out if a employee needs training in specific driving skills.

    He said it was essential that fleets number-crunch their data on incidents once a quarter to establish trends and look for problems. Once patterns have been established, Davis said fleet managers can start to change the culture of the company.

    Big Brother is watching fleets

    JUST because there have been very few instances so far of fleets being prosecuted for health and safety breaches, fleet managers should not believe the law does not apply to them.

    According to Roger Williams, a retired corporate lawyer with decades of experience working in the industry: ‘Health and safety law does apply to you very much – there’s no mistake about it. If it’s a work activity, you are very much affected by Health and Safety at Work Act 1974. However, the risks of prosecution are few and far between.’

    Many fleets are working on the assumption that doing ‘as far as is reasonably practicable’ is enough to protect them from prosecution or a civil claim.

    But Williams believes that this is not nearly enough, and in none of the prosecutions for health and safety has this been the case.

    He said: ‘The regulations do not say that risk assessment is as far as is reasonably practicable. It says you must address it irrespective of pressure or cost. Get caught out and you could find yourself in a civil law suit.

    ‘Risk assessment isn’t just a good idea, it’s law. There’s doesn’t even have to be an accident for the HSE to get involved. The mere existence of a risk is enough and it is a worry for us all.’

    Williams added that ‘work equipment’ under law is a very widely defined area – from the smallest bolt upwards – and any car, whether private, used for business, or company-funded, qualifies.

    Safe cars save lives

    FLEETS should insist that all the cars on their choice lists are rated at five stars for crash protection by Euro NCAP and demand that an anti-skid device commonly known as ESP is fitted as standard, the conference heard.

    The European New Car Assessment Programme (Euro NCAP) has been at the forefront of showing how safe a car is in an accident.

    Matthew Avery, crash laboratory manager at Thatcham, said accidents were slashed where cars were fitted with ESP, which brakes individual wheels under extreme lane changes to make the vehicle follow the path the driver intends, rather than spinning out of control.

    He said: ‘ESP is an absolute lifesaver. I really recommend it because research has shown that where it has been used there has been a 30% reduction in fatalities.’ He added that until all cars reached the maximum five-star EuroNCAP rating, there was still a much greater risk of drivers being killed and seriously injured in accidents.

    Even buying a four-star car can make a difference, as there is a 30% reduction in the chances of being killed or seriously injured compared to a one star car, while there is a 40% reduction in total injuries. Avery added: ‘When choosing cars for your fleets, look for vehicles with five stars in the Euro NCAP crash tests, proper head protection and ESP.’

    The key is knowing what problems are

    FLEETS are buying into risk management solutions before they even know what their problems are and wasting money as a result.

    Before companies consider going to outsourced providers for help, they should already understand why they are asking for help.

    This is not just because a fleet is having accidents, but because a fleet is not clear on what it has to do to reduce those accidents and reduce the costs.

    Jeremy Hay, founder of Essential Risk Consultancy, winner of the Risk Management Company of the Year at this year’s Fleet News Awards, said: ‘The Health and Safety Executive’s Driving at Work guidelines give you the knowledge, so you can do most things that are needed to the fleet by yourselves.

    ‘There are loads of companies telling you they have the solutions before you even know what the problem is. A lot of it is common sense. You need to know why you have a problem and put driver education at the heart of what you do.’

    To truly understand what problems a company is facing and how it is going to tackle them, data must be the driving force for any fleet.

    So information on drivers, accidents, mileage, fuel use and a whole host of other areas must be stored somewhere.

    Hay said: ‘Data has to run this. If you have a leasing provider that holds a lot of your information, companies need them to give you the data the way you need it.’

    He emphasised that risk management was not a short-term commitment and that it would not have any lasting effect if a company only ran a programme for one year.

    But any investment must have a focus on achieving a significant return on investment to make sure the employer benefits from the cost of any advice or training programme.

    Hay added: ‘The legislation around this subject is horrendous, so you want solutions that make everything simple, not make everything so complicated.’

    Is it RIP for LPG?

    THE most popular alternative fuel of recent years was liquefied petroleum gas (LPG) as take-up among private and business drivers grew the on-road fleet to more than 100,000 vehicles.

    But the past few years have seen a major shift away from its promotion among Government, companies and fuel suppliers, that has raised a question about its future role.

    According to experts, it is destined to be a niche fuel suitable only for a few specific circumstances, particularly around London where the cleanest LPG vehicles are exempt from the £5-a-day congestion charge.

    Alison Chapman, tax partner, automotive sector, Deloitte, said: ‘There is still a financial argument for it, but few people are actually interested in it.

    ‘Particularly in terms of profile among politicians and the national press, it is not seen as sexy.

    ‘There is not enough political argument about it to give it a profile, even though the numbers still work in terms of its use.’

    Stewart Whyte, managing director of Fleet Audits and director of the Association of Car Fleet Operators, said: ‘I was an advocate of LPG and it has a strong position in niche markets, but as a general fuel, the Government has spoiled it.

    ‘They promoted it, but then did not back up their words, particularly with the refuelling infrastructure.

    ‘That inhibited it and as a consequence there were sharply reduced residual values, worries about the refuelling network and that destroyed it as a potential alternative for most fleets.’

    Small change - big effect

    SMALL tax changes that could have a significant effect on the fleet market could be hitting company car drivers and employers in the pocket within the year.

    After securing a record fourth election victory, the Government has a small window to get any unpopular initiatives out of the way to allow time for them to settle in before it has to fight another election.

    But even with at least four years before the country goes to the polls again, there are some controversial and high profile areas the Government will avoid to prevent long-term damage to its name, according to Alison Chapman, tax partner, automotive sector, Deloitte.

    So while direct taxation increases are out, ‘tweaking around the edges’ is in. Expect changes to VAT, Vehicle Excise Duty and National Insurance, she warned. Chapman said: ‘You must review. Are you still doing the right thing with your fleet, especially when it comes to funding? We recommend dividing the fleet into different segments, because usually a mix of solutions is the best solution.’

    PAY DAYS – potential tax changes set to affect fleets

  • NATIONAL INSURANCE – This is a key target for increasing Government funds and it will affect company car drivers and fleet managers alike. Increases of up to 500% have been predicted in some areas. Employees currently pay 1% on earnings over £32,760. An immediate increase of 1% is possible at the next Budget, with future rises to bring the rate up to 5%. Employers’ National Insurance could rise from its current level of 12.8%.

  • APPROVED MILEAGE ALLOWANCE PAYMENTS – The bedrock of reimbursing drivers covering business mileage in private cars, including employee car ownership schemes. Opinion is divided on whether the rates will decrease or increase. The nature of the system encourages people to drive more miles to bring in more money. But would MPs approve a reduction in the rate when they recently slashed their own mileage allowance payments to AMAP levels?

  • FREE FUEL FOR PRIVATE USE – Even if the current taxable benefit of £14,400 for receiving free fuel for private mileage is unchanged, the simple maths suggest this is not a benefit for many drivers. Many barely break even by using enough fuel to cover their tax bills and that doesn’t take into account the Class 1A National Insurance the company has to pay on the benefit provided.

  • CAPITAL ALLOWANCES – there are rumours of changes to the expensive car leasing disallowance, perhaps scrapping it altogether and the basic capital allowances. In both cases, these subtle changes could swing the argument between opting for an outright purchase fleet or a leased fleet and both must be watched carefully.

    ‘Recognising financial risk saved £2.2 million’ – fleet

    A MAJOR fleet slashed £2.2 million from its operating costs with a simple strategy of focusing on efficiency and employing a qualified full-time fleet manager, the conference heard.

    The fleet, which has not been named but serves a large local authority, operates 1,400 vehicles, covering cars, vans, trucks and plant items.

    It covers nine departments with differing priorities, a large city centre workshop with two satellites and 24 staff.

    It has bunkered fuel, controlled through fuel cards, and four separate IT systems which couldn’t communicate. In addition, it had no clear idea of its fleet costs. An investigation, carried out by Stewart Whyte, managing director of fleet consultancy Fleet Audits, revealed the workshop was operating at less than 30% of its capacity, the fleet had no idea of how much it spent on fuel and for its owned fleet there was no clear control of how vehicles were sold.

    In addition, it had eight different leasing suppliers, seven different operating cycles and the fleet utilisation was less than 60%.

    After a strategic review, major changes were introduced.

    The workshop was closed and the land sold to bring in £12 million, a new fuel management system was introduced, there were revised service level agreements for suppliers and replacement cycles were extended.

    There was also the key appointment of a central fleet manager.

    To date, benefits have included the annual fuel bill being slashed by 32%, a cut in fleet size of more than 250 vehicles to remove redundant units and a rational lease/buy decision about each major vehicle type. Whyte said: ‘Overall net savings are currently £2.2 million a year and they are ongoing. Every fleet is different, but it shows the kind of thing a customer can do if they are constructive and they recognise they can change.’

    Fleet before

  • No idea of fleet costs
  • Workshop efficiency less than 30%
  • Fuel costs uncontrolled
  • Owned vehicles sold on ad hoc basis
  • Leasing from eight suppliers, seven different cycles
  • Fleet utilisation less than 60%

    Fleet after

  • Closure of workshop and sale of land - £12 million capital return
  • Annual fuel bill reduced by 32%
  • Remove redundant units – reduce fleet by more than 250 units
  • Rational lease/buy decision for each vehicle
  • Assessment of driver group entitlements
  • Consider wider risk areas related to health and safety

    Race day winners named

    THE co-sponsor of Double Jeopardy, Nissan UK, offered delegates a couple of chances to win a day at PalmerSport’s racing facility on July 18, to be hosted by Nissan Fleet. Activities will include track racing with 350Zs, off-roading in the firm’s new 4x4 product range and various driving agility tests.

    To win a place on the day, delegates pitted their wits against the clock on the Autumn Ring mini circuit in a Nissan 350Z GT4 on the new Sony Playstation game Gran Turismo 4 or enter a business card draw.

    The fastest lap around the circuit was by a man who obviously keeps his risk confined to the virtual world: Andy Price, practice leader, Motor Fleet, Zurich Risk Services, with a time of 46.12 seconds.

    In the business card draw Martin Hall, head of procurement & General Services, BTCV, was the winner.

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