The company car is a benefit bound up as much with prestige as practicality, and the new CO2 tax rules mean benefits managers have a delicate juggling act to perform. The government’s main aim is to get company car drivers into smaller, greener models. But many benefits managers baulk at the thought of forcing status-conscious employees into Nissan Micras when air conditioned, CD autochanger-equipped Mondeos are what they’re used to. Russell Piper, human resources director at Crane Telecommunications, decided its 150 company car drivers would best respond to individually tailored communication statements. He says: “Our drivers are extremely image conscious. We put a note in with every driver’s P11D slip to let them know the difference in costs from 2002. They need the hard facts about how tax changes could affect their own pocket for common sense to prevail.” Crane operates a user-chooser policy and now has a low emissions car in each of its ten allowance bands. Piper wrote an employee guide – Choosing Your Company Car – to help explain the tax issues and publicise the scheme. Piper says: “It was launched to be employee friendly rather than environmentally friendly.” Manpower decided to switch its 280 company car drivers into trust-based car ownership scheme, to sidestep taxation issues. Manpower’s compensation and benefits manager, Paul Harrison, felt persuading employees into smaller, greener models, wasn’t a position the company wanted to get into. He says: “We’re not a paternalistic employer.” Under the scheme, cars are sold to employees, enabling them to avoid paying benefits-in-kind tax. The money that employees would have paid in tax is used instead to pay the monthly car payments, with Manpower using a cost allowance to pay the remainder. Manpower gives staff interest-free loans to fund the initial deposit and at the end of three years, the employee can either finish off paying the instalments to keep the car or sell it back to the supplier and start a new loan deal with a new car. Employees can also opt out and receive a cash equivalent. Some companies have opted to just offer cash and to get rid of company cars altogether. Power supply company, Innogy, phased out its 500-strong company car fleet in August. The owner of Npower and Yorkshire Electricity decided this was the best move for them, not only because of the CO2 tax changes, but because human resources outsourcing has left no-one on site to manage the fleet. Ten pool cars are left which are on contract hire and managed by Citroen Contract Management. Innogy’s contracts manager, Gareth Wiliams, thinks the move was popular with staff: “There are plenty of second hand soft tops in the car park now.” At the other end of the spectrum, some employers have decided to actively pursue environmentally aware transport policies – with added benefits for both employees and for the business. Pfizer has nurtured environmental tendencies among its staff by paying them every time they don’t use the car park at its UK headquarters at Sandwich, Kent. Assistant transport and planning manager, Sophie Chadwick, says: “We already used a swipe card system as a site access control, so it only needed adjusting slightly to enable us to monitor use.” The company encourages employees to use the bus to get to and from work, which has had unexpected, but positive, work/life balance spinoffs. With a bus to catch, employees have to discipline themselves to make sure they finish work on time. Safeway has introduced video-conferencing and promotes the benefits of greener cars to its 1,400 company drivers. Nicola Ellen, Safeway’s environmental manager, says: “The introduction of video-conferencing and company car options with lower CO2 emissions are part of our on-going bid to offer staff choice and to reduce the business impact on the environment.” A centre page spread in Safeway’s company magazine, The Leader, briefed employees on the advantages of video-conferencing over business travel in terms of time management and health and safety. Safeway estimates video-conferencing will save the company 90,000 kilometres and over ¬£10,000 in travel and related expenses each year. Yorkshire Building Society has been working towards targets set by Motorvate, the environmental accreditation scheme, since January 2000. Diesel versions of larger models are seen as an economical choice for its high mileage drivers for whom smaller cars aren’t really appropriate. Mary Blackwell, contracts costs manager, says: “As a building society, we have business drivers who are out on the road valuing properties and do in excess of 20,000 miles. [Larger cars] are an essential tool of the job.” In May, the Yorkshire Building Society encouraged staff to sign up for cars that can run on liquid petroleum gas (LPG), in an incentive scheme which gives them a 15% trade-up if they chose greener cars. Other green initiatives introduced in the past year include new accounting procedures for travel expenses aimed at reducing overall staff fuel consumption – which also reduces costs. Blackwell arranged the expense claim procedure in order to elicit if staff were using public transport instead of the car. Management and staff now monitor how business journeys are made, and the aim is to move to integrated transport solutions . Cornwall NHS Trust has also signed up to Motorvate. Jane Perriss, the Trust’s transport manager says Motorvate provides, “a useful external benchmark to measure the reductions we’re achieving in CO2 emissions and fuel consumption, as we work towards the NHS Controls Assurance Standard”. The Trust’s cars are leased on a three-year replacement contract and staff have chosen models which can run on LPG. These include the Vauxhall Vectra, Corsa and Astra and the Nissan Micra. Perriss says: “We have negotiated with local garages and District Councils to provide local facilities both for vehicle conversion and refuelling.” To succeed with an environmentally-driven scheme, you really need to decide whether you’ll get employee buy-in, otherwise a lot of hard work could go to waste. Some employees simply value a flashy motor over anything else – even the size of their own wallet. The most conscientious benefits manager can be powerless in the face of employee vanity. In April, Hogg Robinson harmonised its fleet policy within its flexible benefits package and employees were given a variety of modelling tools to calculate the effect on their take-home pay of opting for particular cars. They could trade up or down and were encouraged to consider a cash alternative – which was a generous one at that. When Clive Cripps, flexible benefits practice leader, analysed take-up figures in August, he found that few decisions had been made on the results of financial modelling alone. “Almost 50% of people have traded up. It’s been particularly popular with young men in the travel division. Those who have traded down tend to be women – particularly married women. There seems to have been some testosterone-based decision making,” he says. The employee’s view Karen Stone, 40, facilities manger for a national newspaper. I consider my car a perk rather than a necessity, I rely upon it to get to and from work and for personal use. If the company were to take it away, I would expect some form of compensation, probably in cash. I have been made aware of the April tax changes. On our intranet site there is useful information. Derrick Allen, 44, auditor at a multi-national bank. I have a company car, but don’t consider it essential. I have been toying with the idea of not holding on to it – my company offers a cash option instead, which I think I will take this year. I don’t want to have to take a smaller car so I think I will use the cash I get from not having a company car to buy my own and avoid the tax. John Adams, 37, salesman for lock manufacturer. I have an allowance I can spend on a car, and I can upgrade it and deduct the extra from my salary. My employer has advised me to opt for a lower emission vehicle in future. I doubt how effective the new tax will be in reducing emissions. Drivers will just opt for diesel cars which are even more polluting.