The fleet agenda for 2008

Corporate manslaughter and environmental concerns will dominate the new year agenda, says Nick Golding

When Croatia hammered the final nail into the coffin of England’s Euro 2008 football campaign and condemned the nation to a summer of potentially washed-out tennis, many fleet managers probably breathed a very quiet sigh of relief. With legislative changes around driver safety and corporate responsibility, alterations to company car tax and an increased focus on making fleets more environmentally friendly, they may not have had time in the year ahead for football.

Their time will be taken up getting to grips with the Corporate Manslaughter and Corporate Homicide Act 2007 which comes into effect on 6 April this year. Under the new rules, where the death of an individual is caused by gross corporate failings in health and safety, the organisation in question could face prosecution and an unlimited fine. Previously, any prosecution would have had to have shown gross negligence by at least one individual senior company officer or director.

Nick Sutton, chairman at Provecta, explains: “Effectively, this will mean that the business will be accountable for the conduct of their employees while on business, including employees driving their own vehicle or a company vehicle.”

To protect the organisation against such liability, fleet managers need to ensure that they know exactly which cars are being driven, by whom and that these vehicles are all fit for their intended business purpose. As long as organisations meet existing minimum health and safety standards, however, the new legislation is unlikely to impact them greatly.

Peter Cooke, KPMG professor of automotive management at the University of Buckingham, says: “[In the event of a death], not having a suitable car policy could mean unlimited fines and being taken to court. It is the image of the company at stake as well.”

To guard against potential breaches of safety, fleet managers should first target cash allowance or employee car ownership plan (Ecop) drivers, as well as occasional business drivers who have the freedom to use their own car on business. It is these groups that employers are likely to know the least about when it comes to the type of vehicle they drive, and whether it is adequately insured, taxed, serviced and fit for the road.

Although the Corporate Manslaughter Act is not likely to push employers away from offering Ecops, it may well encourage them to put in more structure around the scheme they offer and limit the choice of cars to models they feel are safe and fit for purpose, says Andrew Cope, chief executive at Zenith Vehicle Contracts.

“I think this year we will see more structured Ecops, with organisations saying, ‘we want you in this car because it isn’t too old, it has its tax, and it is well-maintained and serviced’. They will basically mirror the level of duty of care available in company car schemes,” he explains.

Other employers may take a tougher approach with employees to ensure that they care for and maintain their car so that it is fit for purpose at all times. Network Rail, for example, takes a hard line with its contract hire drivers, and removes any cars from the road that are not properly maintained.Chuck Ives, head of fleet, says: “If a vehicle is not properly maintained, for example, [it is] not serviced on time, we will issue a prohibition of that vehicle [and] we withdraw it immediately from service. I believe Network Rail is unique in this respect.”

Alongside health and safety issues, environmental concerns are also likely to enter on to more fleet managers’ agendas over the coming year, particularly when it comes to reducing CO2 emissions to a reasonable level. Some larger employers, such as Barclays, Xerox, and PricewaterhouseCoopers have already laid down plans to combat the environmental impact of their fleets. “I think there is going to be a lot of pressure on employers to reduce the amount of fuel their fleet uses over the next 12 months,” says academic Cooke.

Fleet managers, therefore, may well be tasked with coming up with innovative ways to reduce the amount of damage the fleet inflicts upon the environment. For example, Cooke believes many employers may re-arrange their working practices to help clean up their fleet.

“I think policies will change. We won’t see organisations letting employees drive 50 miles everyday to work on a specific territory, [and] there may well be policies put in place that require staff to live in the territory they work. This is something that [bosses] will have to think about,” he explains.

Environmental concerns could also impact the way authorised mileage allowance payments (Amaps), which are currently subject to a government review, are calculated.

Through Amaps, employee drivers who use their own cars on business can be reimbursed by employers at a rate of 40p per mile for the first 10,000 miles covered per year, and 25p thereafter, tax-free – the rule was introduced to help occasional drivers who use their own car on business if they are not entitled to a company vehicle.

But the government is looking at introducing a range of rates reflecting the carbon emissions of different cars so that drivers are encouraged to get behind the wheel of green vehicles as opposed to the gas guzzlers.

Gary Hull, director of employment solutions, at PricewaterhouseCoopers, explains: “The review on Amaps is still underway at the moment and I would expect an announcement in the Budget this year. I suspect there will be a change and it is being considered to offer Amaps on an environmental basis.”

Providers agree that this is a chance for the government to show the fleet industry where it stands on greener cars. Provecta’s Sutton says: “There is an opportunity here for the government to send out some powerful environmental signals, and we stipulated that it should be a simple system, by linking the Amap rate to the cleanliness of the vehicle.”

Separately, further financial incentives are also being put in place to make vehicles that produce less than 120 grams of CO2 per kilometre even more tax-friendly for employees.

Currently, benefit-in-kind tax for these cars is calculated by multiplying the list price of the car by the starting rate, which is 15% of the list price. However, this multiplier will be reduced to 10% from April. Fleet managers may well find they experience an upsurge in demand for these low-emission cars because of the cost savings.

“The lower CO2 cars will have a starting rate of 10% of the list price, so a £10,000 car will require tax to be paid on £1,000. These are going to be incredibly cheap,” explains Hull.†

Case study:†Network Rail

Network Rail has taken out all the stops to ensure that its fleet is as environmentally-friendly as possible by constantly looking for ways to reduce the carbon footprint of its vehicles.

Chuck Ives, head of fleet at the train infrastructure firm, explains: “I think the green issue is here to stay, and I also think all fleets have a responsibility to reduce their carbon footprint.”†

To reduce its environmental impact, the organisation has added hybrid vehicles to its 1,500-strong contract hire fleet, and is replacing its older vehicles with newer, cleaner-engine cars. “Through an aggressive replacement of old vehicles with new ones across the whole fleet, we have managed to reduce the footprint,” Ives adds.

Network Rail also has measures in place to reduce its potential liabilities under the Corporate Manslaughter and Corporate Homicide Act 2007. As well as adopting a zero tolerance policy around vehicle safety checks, it also sends its drivers on extensive driver training sessions to minimise on-road risk.