Removing the grey area of your fleet

It is estimated that 1.5 billion grey fleet miles are driven in the public sector each year, at a cost of £786 million. The Energy Saving Trust’s Andrew Benfield shares some steps to a better grey fleet

Grey fleets have long been the problem child for many fleet managers. Not only is there an aptly named ‘grey area’ surrounding what constitutes a grey fleet, but there is also the time consuming and sometimes neglected responsibilities associated with their management.

Firstly, what is a grey fleet? Simply, it is any vehicle, owned by an employee who uses it for business travel. It is notoriously difficult to calculate the number of grey fleet vehicles on UK roads because, unlike company cars, there is no requirement to provide records of the vehicles in which journeys are made.

Getting to Grips with Grey Fleet, a report researched and written by Energy Saving Trust and published by BVRLA in 2016, estimates that 1.5 billion grey fleet miles at a cost of £786m are driven in the public sector each year, and up to 11 billion miles at a cost of up to £5bn in the private sector.

The use of 14m cars in the grey fleet is in stark contrast to the number of drivers paying benefit in kind for the use of a company car in the UK – which is a mere 960,000.

The number of vehicles in the private sector includes cash allowance cars, funded by the employer but often without any restrictions in place. As a result the report found that although younger at 5.3 years than the UK car fleet (7.9 years), they were considerably older than the average lease car (1.6 years) and had significantly higher CO2 emissions, 155g/km compared with 119g/km for the average lease car.

Effective grey fleet management

Fleet managers have historically neglected the management of grey fleets. However, with the increasing concern that they are affecting organisations both financially and environmentally, there is a realisation that effective grey fleet management is absolutely essential.

Effective grey fleet management should cover three distinct areas including, duty of care and health and safety, financial efficiency and corporate environmental responsibility.

Senior management teams have a duty of care to employees who use their vehicle for business purposes to be safe and secure on business related journeys. Similarly, firms should conduct regular driving licence checks and monitor driving offences to ensure their drivers are both qualified to drive their vehicles and are not at risk of losing their licence. Understanding the conviction rate of drivers is essential to managing on-road risk.

The financial impact of grey fleet from both an organisational and public spending point of view is estimated by the Health and Safety Executive (HSE) to be in the region of £2.7billion per year from ‘at-work’ traffic accidents.

Simply putting in place a mileage management system to accurately record business mileage usually pays dividends, for example if a driver rounds up a claim from eight to ten miles, this increases the cost of the journey to the organisation by 25 per cent. If 50 employees driving an average of 2,000 each year exaggerated claims by 25 per cent it would cost an organisation an additional cost of £11,250 per year in unidentified miles.

In the public sector this cost can be even higher, with organisations often paying over the recognised Approved Mileage Allowance Payments (AMAP) rates of 45 pence per mile (ppm) for the first 10,000 miles and 25ppm thereafter. AMAP rates cover fuel, depreciation, maintenance and insurance costs to an employee using their own car for business purposes.

Steps to a better grey fleet

The Energy Saving Trust recommends that grey fleet managers take the following steps. Firstly, they should assign the responsibility of the grey fleet to someone within the fleet management team; meaning one individual is accountable.

Secondly, they should identify the current impact that the grey fleet is having on the organisation, in other words, benchmark the grey fleet. This will allow the newly appointed manager of the grey fleet to recognise the current position of the grey fleet and take steps to improve it.

The third step is to improve the accuracy of the data gathered from the grey fleet drivers. By reviewing the mileage claiming process and tightening up on the prerequisite information required in order to submit a claim, this encourages a change in driver behaviours and transparency which can significantly reduce the financial implications placed upon a business due to mileage claim inaccuracies.

Another way to travel

Another step should be to offer alternative transport methods and incentives as a matter of course for employees; public transport, opportunities to walk and utilising pool cars where required.

Equally, encourage the use of telephone meetings and video conferencing thus reducing the requirement to travel to meetings.

Fleet consultancy support is available for public sector organisations through the Energy Saving Trust; organisations can receive a Green Fleet Review, ULEV Review or Clean Air Fleet Review depending on their needs and objectives.

The report, Getting to grips with Grey Fleet, is a great place to start, providing best practice guidance and examples of the savings possible in emissions and cost; and including best practice examples from organisations that have successfully introduced processes and policies to manage their grey fleet.