‘Grey’ fleet firms wasting millions
Organisations continuing to allow employees to drive their own cars on business could collectively be wasting millions of pounds because they are ignoring safer, more environmentally-friendly and more cost-effective alternatives...
The Grey Fleet Best Practice guide
The UK fleet industry has consistently highlighted the health and safety tightrope being walked by public and private sector organisations that continue to allow staff to drive their own cars on business – known as the ‘grey’ fleet. Occupational road risk management professionals say it is the single biggest risk facing organisations (RoadSafe: summer 2008). Now the Office of Government Commerce (OGC) has added its voice to the debate with publication of a ‘Grey Fleet Best Practice’ guide. Last year Arval, which this year has won a Prince Michael International Road Safety Award for its ‘fleet service’, published a report that claimed the ‘grey’ fleet was often ‘overlooked and misunderstood with the vast majority of organisations failing to give it the same level of risk management attention as they did to company cars and vans.
Although the OGC guide is not anti ‘grey’ fleet use – it provides a series of ‘essential steps’ for managing the ‘grey’ fleet – it does say: “The management of ‘grey’ fleet travel plays an important part in supporting three key policy areas of health and safety, environmental sustainability and financial efficiency. It is about removing unnecessary mileage and transferring travel to more environmentally efficient and cost effective alternatives like public transport and hire cars, as well as minimising the risk where employees do use ‘grey’ fleet for work.”
Sample
Studies conducted on a sample of public sector organisations indicate that the average age of an employee-owned car used for business is 6.7 years making them less environmentally friendly and not as safe as today’s vehicles. As a result the OGC says: “There are significant environmental benefits available from moving ‘grey’ fleet drivers both into public transport, and also into newer leased cars or hire cars.”
And referring to employers’ duty of care legislation, the guide says: “All organisations need to consider the implications of these acts and question whether they are taking reasonable steps to manage duty of care for all employees driving for work, including the hidden ‘grey’ fleet drivers.”
As companies battle to cut costs with the onset of recession, it is the financial argument that makes the most compelling argument for organisations to review their ‘grey’ fleet usage. And, while the guide highlights the ‘millions of hidden miles travelled each year and often overlooked by employers and employees alike’ in the public sector, the message is similar for the private sector.
The OGC has calculated that in the public sector, the ‘grey’ fleet accounts for around 57% of total road mileage. Across the whole of the sector, that could add up to as much as 1.4 billion miles every year. An organisation employing staff travelling 10 million ‘grey’ fleet miles a year will be spending £2.5 to £4 million per year – or more where annual cash alternative payments are made to ‘grey’ fleet drivers, says the OGC guide.
Most central civil government departments pay mileage according to the tax-free Approved Mileage Allowance Payments (AMAPs) of 40p per mile for the first 10,000 miles and 25p per mile thereafter. Figures in the guide highlight that invariably ‘grey’ fleet use is the most expensive option available (see table) but is often preferred because:
- The employee may not be aware of the other, more cost-effective, alternative methods of transport that are available
- Effective journey planning may not be being undertaken – ‘grey’ fleet is easy
- In some cases, the mileage rates offered may act as an incentive for employees to drive their own vehicles.
The guide says: “Without appropriate demand management measures, this can lead to rising mileage in employee-owned cars, as well as rising mileage costs.”
| Method | Grey fleet | Public transport | Hire car | Lease car |
| Explanation | 40p per mile | Standard rail, booked in advance | Vauxhall Astrasized, petrol, delivery/collection | £2,000 for 10,000 miles, 12 per mile |
| Miles | 240-mile round trip between London and Bristol | |||
| Cost | £96 | £49 | £60 | £76 |
| Saving | - | £47 | £36 | £20 |
Steps
And, the guide continues: “Where organisations have taken steps to manage ‘grey’ fleet travel financial savings have been achieved, both direct and indirect.”
Indeed, the guide highlights the experiences of both the OGC and Environment Agency where a 20% reduction in ‘grey’ fleet mileage of 10 million miles could generate an annual net saving of over £1 million. But, the indirect cost savings will be significantly higher.
Driving 10 million miles at an average speed of 40 mph would take up 250,000 hours. Assuming, says the guide, an average hourly cost of £15, that represents £3.8 million of indirect costs, which could be reduced through eliminating unnecessary journeys and using alternative forms of transport or introducing tele and video conferencing.
The OGC’s ‘Grey Fleet Best Practice’ guide is available at www.ogc.gov.uk