Fleet News

Public sector fleets face up to costs

The findings of the Spending Review, announced by Chancellor of the Exchequer George Osborne last week, could fundamentally change the way public sector fleets operate.

Average cuts across each department will be 19%, but some will see budgets cut significantly more.

Fleets will have to play a major role in the cost reductions although many local authorities managers had been planning for more severe cuts.

Up to 480,000 public sector staff are expected to lose their jobs by 2014-15 as a result of the spending review.

The cuts are down to the £109 billion deficit, which is draining £120 million a day in interest pay-ments alone.

Administration budgets across the whole of Whitehall and its arms-length bodies fall by 34%, saving £5.9bn a year by 2014-15.

Local authorities and councils have been hit with a combined 26% drop in contributions from central Government and a 14% cut in local government spending.

In addition, the amount of money the Government pays towards the police drops by a fifth.

According to the latest government data, spending on public sector fleets was £2.5bn in 2008, the fifth highest indirect government expenditure.

Experts believe some public sector fleets will be forced to change funding methods from outright purchase to leasing, with others outsourcing a large part of their fleet operations.

According to the Fleet200, two-thirds of the 20 biggest public sector fleets buy their cars outright, while 89% purchase their vans. This sector accounts for more than 26,000 cars and almost 9,700 vans.

Meanwhile, 85% of the 20 biggest bluelight/NHS fleets buy their cars; 92% buy vans outright. In total they account for 31,530 vehicles.

While just one police fleet manager admitted that he was looking to change funding method, Stuart Walker, brand director of Automotive Leasing, believed the review should act as a catalyst for a new approach to fleet management focused on leasing and outsourcing.

“By outsourcing fleets, the public sector can make the most of its vast buying power and save administrative time,” he said.

However, pooling resources has been an issue for government bodies as highlighted in the recent report by Sir Philip Green.

Sir Philip found significant waste due to a lack of best practice and poor procurement methods, including in vehicle hire. 

Richard Flint, NAPFM chairman and North Yorkshire Police fleet manager, said that while police fleet managers have been preparing for the spending review for some time, it should not be seen as the stimulus for making savings.

“Fleet managers are a victim of their own success as we have been working together on a national basis for a number of years to drive efficiency savings out of our business areas,” Flint told Fleet News.

“It is therefore harder to identify those saving without cutting the number of vehicles that we operate, which unfortunately will now be the reality. Fleet managers across the country are reviewing all areas of their costs and one of the main areas we can address is by further collaboration on national and regional contracts to maximise our purchasing power.”

Stewart Whyte, ACFO director, said: “Changes to travel policy embracing vehicle use, improved journey planning, changes to vehicle selection criteria, fuel use monitoring, risk management and employee mileage claims can be made constructively to ensure support from staff.”

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