Fleet News

Public sector fleets face massive cost cuts

The chancellor George Osborne will take to his feet at 12:30 today to present the findings of the autumn spending review.

He will detail the scale of the cuts facing the public sector.

These cuts are predicted to lead to almost 500,000 public sector employees losing their jobs.

They will also undoubtedly lead to a reduction in public sector fleet budgets.

Alliance Asset Management says the public sector must completely review the way it funds staff travel.

The spending review coupled with the findings of the Green Report on Government efficiency and its procurement of goods and services will mark a new age of austerity.

But, says Alliance Asset Management Managing Director Vincent St Claire the new age does not simply mean searching out the cheapest deal or cutting staff mileage reimbursement rates.

“A complete change in culture and behaviour is required across the board in relation to public sector travel. Collectively billions of pounds of taxpayers’ money is spent on fleet vehicles and staff travel across the segment but, it seems, often with little accountability or real-world knowledge of costs,” he said.

“We are prepared to undertake a level of free consultancy on behalf of individual public sector organisations to assist them in identifying ways in which they can develop cost-effective, value for money policies and procedures.”

In his report to Sir Philip Green singled out car hire as one of the clearest examples of poor practice.

The report found that centrally the Government spent £29 million a year on vehicle hire but that there was no standard policy for vehicle rental.

A benchmark on a sample of vehicle hire across four Whitehall departments found that daily rates of rental for a category D vehicle (Ford Mondeo1.6 or equivalent) varied between £27 and £119, a difference of 77%.

In highlighting the Government’s travel budget as a second example, the report said: “We were initially advised that the annual travel spend for central Government was £2 billion; the second estimate was £500m; the third estimate was £768m. A thorough review revealed that the actual spend was £551m.”

In advocating centralised buying and a leveraging of buying power, Green said: “We have examined central Government, but the whole public sector should be able to take advantage of better procurement by the centre.”

Meanwhile, the Office of Government Commerce, an independent office of HM Treasury, has called on public sector organisations to review ‘grey’ fleet use - staff driving their own cars on business trips and claiming mileage.

With a wide disparity in mileage rates paid by local authorities, concerns over whether employee-owned vehicles meet at-work driving health and safety standards and the age of those vehicles prompting concerns that they are not as environmentally-friendly as newer vehicles, the OGC highlights car hire, vehicle leasing and use of public transport as cheaper, safer and more environmentally-friendly alternatives.

St Claire said: “Mileage rates can be an incentive for staff using their own cars on business to clock up mileage so improved journey management controls need to be introduced. Making use of modern, environmentally-friendly pool cars, daily rental or company cars may be more cost-effective than paying mileage rates.

“Using our expertise we will analyse an organisation’s current operating policies, procedures and costs and make a series of recommendations that will deliver financial savings without compromising on operational efficiency.

“The financial savings generated can then be used to help fund frontline public sector services to the benefit of the community at large.

“Additionally, our recommendations will help public sector organisations compile policies and procedures that will reduce their exposure to ‘grey’ fleet at-work driving risk and cut their carbon footprint.

“As the public sector gets to grips with identifying cost savings, transport policies should highlight the requirements for employees to use the most economic and efficient method of travel, taking into account cost, environmental impact and timing factors. Planning safer, more efficient and economic journeys may also mean restricting ‘grey’ fleet use.”

Fleet News will cover the spending review in the October 28 issue.

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