Fleet News

Councils stung by £93m grey fleet bill

Central government departments are taking decisive action to address the massive expense of running grey fleets, which currently costs tax payers in excess of £64 million a year.

However many county councils are still failing to address this major cost, with several continuing to pay their grey fleet drivers more than Government-approved rates.

Fleet News quizzed 39 government departments and 32 county councils about their reliance on the grey fleet – the term for employees who use their own vehicles for business journeys – and how much this reliance is costing tax payers in the one of the largest investigations into public sector fleet operations.
The research revealed that all central government bodies now refuse to pay more than the HMRC’s Approved Mileage Allowance Payment (AMAP) rate of 40p per mile for the first 10,000 miles and then 25p for every mile thereafter.
Several now pay well under AMAP, including the Foreign and Commonwealth Office, which pays 7ppm under AMAP and HM Land Registry, which pays a fixed rate of just 28.2ppm – 11.8ppm under AMAP. This has helped more than half its grey fleet costs from £112,394 in 2007/08 to just £47,534 last financial year. A spokesman said the office is now working towards a goal of zero grey fleet use. “We are setting new policy which will eradicate the use of grey fleet,” the spokesman said.
Action by other government departments include a travel moratorium by the Ministry of Defence and edicts to staff by departments such as the Department for Business, Innovation and Skills which tells them the use of a car must be a last resort and never if it be at an additional cost.
The picture however is very different at county councils, where nearly two-thirds continue to pay their grey fleet drivers an annual allowance of up to £1,239 a year.
Many councils also pay more than AMAP. Durham pays some grey fleet drivers 60.1p per mile for the first 8,500 miles, which is 20.1ppm above the government-approved rates.
Last year Fleet News (November 19) revealed for the first time how much county councils were paying their grey fleet drivers. Little has changed despite massive budgetary pressures.
For example, West Dorset is now not only paying its grey fleet drivers an annual allowance of up to £1,239 a year but is also paying some drivers up to 66.7ppm. Last year it did not pay any annual allowance and only paid an average of 43ppm.
Meanwhile West Sussex, which was praised for the action it was taking to reduce its grey fleet costs last year, has increased the rate it pays its grey fleet drivers to a fixed 46.9ppm – 6.9ppm above official rates - regardless of how many miles they cover. This is a rise of 3.8ppm since November last year and means that it will pay out an estimated additional £271,000 if its grey fleet mileage remains at the current 7,149,588 miles a year. If it cut its payments to the AMAP rate, it could save an estimated half a million pounds annually.
Lance John, West Sussex County Council spokesman said the council pays up to 46.9ppm because “this is a nationally negotiated (NJC - National Joint Council) rate for local government, and I would have thought it would have been applied by other local authorities. AMAP is not a rate we apply, and we are, as I understand it, beholden to the NJC rates.”

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Comments

  • neilmccrossan - 01/10/2010 14:04

    It is encouraging to see this report that local councils appear to be taking some action to cut the enormous expense of running grey fleets. But there is so much more that could be done. The problem, from our point of view at Nexus, seems to be that there is no overall control and co-ordination – on vehicle usage and on so many other areas of spend. It seems that every arm of local and national Government, all the emergency services and the military each run their own tender exercises, placing individual contracts - at varying terms - with rental companies. Many rental companies will, therefore, have a number of different contracts with various different Government clients, as we do, probably each at different terms. Yet it is all Government spend, so why isn’t it brought together into a single budget and accessed through a single portal available to all Government users. And on the subject of grey fleet usage, we have pioneered a system that deals with this issue, and is available to Government at no cost. This is our Mileage versus Rental tool which is accessible through our IRIS rental management system. It allows users to input the business mileage and type of vehicle to be used and the amount paid per mile. This then compares the cost with the cost of rental. If rental is the cheaper option the user can simply press ‘use rental’ to book a rental vehicle online from an approved supplier at a special rate. It’s an incredibly simple and cost-free tool that could save millions. But Government buyers want to consider it, will review it again in 6 months, hire consultants to produce feasibility studies. Where is the decision-making ? Where is the action? Neil McCrossan, CEO, Nexus Vehicle Rental

  • adamrollins - 01/10/2010 15:39

    Badly set rates for mileage reimbursement, whether too high or low, encourage bad driver behaviour for mileage claims. Behaviour that needs to be managed by public sector organisations that have responsiblitiy to the public purse. Whether they maintain the current situation such as it can be too profitable to travel, or are able to reduce mileage rates leaving drivers feeling out of pocket, mileage management will result in accurate mileage claims and create huge savings across public sector company car fleet and grey fleet travel. Journey logging and approval to manage business mileage is readily available through systems such as Midas FMS. This will help to optimise the actual miles for which a driver claims for journeys. Whether or not journeys are controlled on a need-to-travel basis, there has to be management of the actual journeys taken. All the processes are covered through journey approval and the total mileages are reconciled against odometer readings making it very difficult for large margins of error to creep in. The long term solution is not to allow grey fleet travel. If drivers are always to travel in company cars, pool cars, or indeed hire cars, proper management through MIDAS FMS will enable mileage rates to always be paid at actual pence per mile, which is the most economical and equitable solution. Adam Rollins. Business Development. MIDAS FMS. www.midas-fms.com

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