Fleet News

Risk in Fleet Conference: Reduce risk to save money

Act now over tax changes to lessen long-term pain

The recent changes to taxation relating to company cars are the biggest since 2002, according to Gary Hull, director of employment solutions at PricewaterhouseCoopers.

“Employers should review their company car policies now to ensure they, and their employees, are getting benefits from the latest changes in taxation,” he said.

“Drivers need to be educated about the benefits of choosing low-emission cars.”

Cars emitting more than 160g/km of CO2 were particularly disadvantaged and there were many suitable cars producing emissions below this level.

Mr Hull said it was the Government’s aim to reduce emissions even further in the future, so acting now could lessen the pain.

Existing policies needed to be scrutinised. “Does an employee car ownership (ECO) scheme still meet the same requirements as when it was introduced?” he said.

Mr Hull said there was evidence that, on average, cars in ECO schemes emitted more CO2 than those in company car schemes.

Changes to ECO schemes would need to be reported to HM Revenue & Customs (HMRC) to avoid failing the rules of dispensation.

HMRC would enjoy greater powers to examine records from next April.

Free fuel must be reconsidered, Mr Hull added.
“In most cases, it just doesn’t work.

Drivers need to be doing 30,000 to 35,000 private miles for the employer to break even – that’s a huge amount.

“And the driver breaks even at 14,000 private miles but still pays tax on 100% of the fuel provided.”

This advice was echoed by Meryl Gilbert, business development director for fuel, at Arval.

Ms Gilbert told how British American Tobacco had halved its fuel costs by getting rid of free fuel for its employees.

“Fuel is the second biggest cost associated with running a fleet, second only to depreciation,” she said.

Ms Gilbert suggested that good fuel management could bring cost savings of 5–20%.
“Your fleet policy needs to encompass a policy for buying and using fuel,” she said.

“Analyse where your driver is buying fuel as pump prices can vary by 9p per litre.

Identify drivers who are not using the best value retailers in the network.

There are lots of internet sites that can show you where the nearest low-cost station is.”

Ms Gilbert pointed out that fuel consumption could be affected by under-inflated tyres and by turning on the air conditioning.

Air conditioning could increase fuel consumption by as much as 10%.

To put in place a fuel reduction programme, she recommended using fuel cards.

“A fuel card is the only accurate way to monitor your fleets’ CO2 output, enabling you to set a start point and monitor reductions over time,” she added.

Policy saved firm from prosecution

Fleet manager, Office Depot

Freddie Watts, fleet manager at Office Depot, spoke publicly for the first time about a crash involving one of his drivers in April 2003 and how a robust mobile phone policy saved his company from prosecution.

The driver of the other vehicle involved died at the scene and police retrieved a mobile phone belonging to the Office Depot driver.

An 18-month investigation followed, during which police called in phone network providers, airtime providers and a senior research scientist from the National Physical Laboratory.

There were no eye-witnesses to the crash, yet the prosecution was able to present 20 expert witness statements.

“Some of my colleagues and I were questioned under police caution, which is a sobering experience,” said Mr Watts.

“When we were able to provide evidence of our policy and show the driver’s signature for having read the drivers’ handbook, the police backed off, believing we had taken all reasonable steps.”

Evidence led the court to believe that the driver had been on his mobile phone immediately before the crash and he was found guilty of causing death by dangerous driving.

Telematics in spotlight

Telematics business manager, Norwich Union

Telematics help fleet managers identify risks and prevent accidents, said Julie Perry.

Norwich Union introduced telematics to customers’ vehicles to support its pay-as-you-drive insurance products, but the company is now making more of the duty-of-care benefits offered by these systems.

“People need factual information and telematics can tell you how your vehicles are being driven and used,” Ms Perry said.

“Information from the vehicle about journey times, when speed and location are considered, can show how likely it is that a driver could suffer from fatigue.”

Fleet managers could use the information to target driver training, which may lead to reduced premiums.

Don’t neglect grey fleet

Practice leader, Zurich

Fleet managers were reminded of their responsibilities towards grey fleet drivers, especially given the amount of money and downtime that can be saved with proper grey fleet management.

Andrew Price, practice leader at Zurich, said: “There should be no difference between a grey fleet driver and a company vehicle driver when it comes to best practice.”

The average cost of uninsured losses after a grey fleet crash is more than £6,000 and Mr Price said there was a “very sound financial case”
for addressing the safety of grey fleets.

Employee vehicles should be maintained to the same standard as business vehicles, he said.

Like company car drivers, grey fleet drivers should undergo training, as well as being issued with safety handbooks and driver pledges.

“I think driver training is the best thing that you can do to keep employees safe,” Mr Price said.

Data can cut costs

Head of marketing and product development, FMG Support

Incident monitoring and intelligent data collection are central to cutting costs and improving fleet performance, according to Stefan Rodgers, of FMG Support.

“It is critical that you have a good understanding of accident costs and fleet performance,” Mr Rodgers said.

He added that accurate incident reporting and swift negotiations with third parties would also improve public relations.

Zero tolerance ‘will improve safety’

Head of fleet, Network Rail

Chuck Ives, head of fleet at Network Rail, told delegates that a zero tolerance approach to vehicle maintenance was the only safe way to manage fleets.

He said: “I’m convinced a zero tolerance maintenance approach will improve your fleet’s safety.”

Fleet News revealed this month how Mr Ives has described the scheme as the “best thing I have ever done as a fleet manager” after it led to a reduction in running costs and incidents.

Under the ground-breaking initiative, vehicles must be maintained according to their service schedule.

If they miss a service, a prohibition notice is issued and the vehicle cannot be driven.

Although some fleet managers may assume this will cost money, Mr Ives said it was actually reducing fleet running costs.

He said: “Some people may accuse us of falling into a nanny state but, without rules, where would we be?

“Would our roads be safer? Certainly not. Within our company, fleet safety is a shining light. We will not use poorly-maintained or unsafe vehicles, whatever the operational pressures.”

“Safety isn’t a gadget, it’s a state of mind.

"All vehicle fleets should adopt this common sense approach to vehicle maintenance.”

Fleets urged to apply joined-up thinking

Solicitor, Lyons Davidson

Fleet managers have been urged to apply “joined-up thinking” when tackling risk, which may involve carrying out multiple assessments.

Solicitor David Faithful said: “One size does not fit all.

"If you are a large company you may have to do more than one risk assessment.

"If you have lots of different vehicles you may also have to do more than one assessment. If you’re not joining up these different factors, then you’re not really managing risk.”

Mr Faithful assured employers that if they carried out appropriate risk assessments and acted accordingly, they had little to fear from new corporate manslaughter legislation.

“If you are managing risk and can demonstrate that your company is doing something about risk factors then you should be fine,” he said.

Mr Faithful also told fleets that senior management support was vital when looking to mitigate corporate risk.

“If your managing directors haven’t got a handle on corporate manslaughter and risk management now then they really need to,” he said.

“They’re the ones that are going to end up talking to the police if you come under a health and safety investigation.”

Five hour assessment for apprentive drivers

Fleet operations manager, British Gas

British Gas is the UK’s biggest employer of apprentices, which probably contributes to the significant number of high-risk 17-25 year-old drivers in Jon York’s fleet.

Mr York is responsible for 9,500 vans on a day-to-day basis.

He told the Risk in Fleet conference how a rigorous driver training programme had reduced the number of insurance claims by 14.6% (933 fewer claims) in the past three years.

All drivers must undergo a five-hour induction, which includes questions on the Highway Code.

The Health and Safety Executive’s Driving for Work manual is the baseline for British Gas.

But it is adapted by the company and expectations are, in reality, much higher.

Mr York points out other benefits to his drivers.

“I tell them that at-work training helps their private driving,” he said.

“They take their skills home and keep their families safe. It’s a selling point.”

One of the most controversial of Mr York’s decisions was to limit vans to 70mph.

“I was absolutely hated,” he said.

“But now it’s just part of the culture.”

Driver drug testing on its way

Senior investigating officer, Lincs Road Safety Partnership

All fleets should have policies in place to deal with drug and alcohol misuse, a leading accident investigator says.

“There is a real need to address drug-driving and you need to get a drug and alcohol policy in place as part of your business,” said Sgt Dave Kay, of Lincolnshire Police.

He explained the increased risk of accidents, absenteeism and inefficiency as a result of drug and alcohol misuse.

Under existing legislation, police can ask drivers to undertake field impairment tests, which include eye examinations and balance and co-ordination tests.

They also hope to start operating a drug detection device in the next couple of years, making it easier to detect and prosecute drivers under the influence.

Sat-nav to boost RVs

President, EurotaxGlass’s

Vehicles with useful technical appliances and low CO2 emissions will enjoy solid residual values in the coming years.

Kevin Gaskell, president of EurotaxGlass’s, said devices that reduced mileage and operating costs, such as satellite navigation units, were worthwhile and would bring slower rates of vehicle depreciation.

“Managers need to recognise the importance of getting the right technical specifications,” he said.

“Where customers understand the benefits of these items, they will happily pay for them.”

Mr Gaskell went on to say that gas guzzlers would have problems raising money at auction as a result of high operating costs and the incoming CO2-based VED system.

“Cars that emit over 225g/km are going to depreciate at a high rate and their operating costs will go up,” he said.

‘Minor’ damage costs can reach £2,000

Head of health and safety, Wolseley UK

Fleet operators looking for senior management buy-in need to stress the financial benefits of a safe driving culture.

Paul Gallemore, head of health and safety at Wolseley UK, explained that if fleets rigorously reviewed risk and demonstrated a proactive approach to safety then financial savings would follow.

He advised all fleets to start by monitoring the cost and causes of accidents.

“Some managers don’t even know how much car incidents cost their company, simply because they never ask,” Mr Gallemore said.

He said it should become apparent to managers that savings could be made through safer driving.

For example, the accumulative cost of a damaged wing mirror could reach £2,312. With a robust training and safety culture in place, Mr Gallemore said drivers should be able to avoid such high-cost, albeit minor, incidents.

He added that fleet managers should educate business motorists towards safer driving.

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