Grey Fleet Report | Lex Autolease

the GREY FLEET

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It has potentially never been as important to understand and effectively manage the grey fleet – privately-owned or leased vehicles used for business purposes. From safeguarding staff and business liability, to cutting costs to maintaining the company’s green credentials, getting to grips with this grey area can have huge implications.

Since publishing our Driving Intelligence report, Managing the Grey Fleet, in 2016, the issues around tracking and controlling private vehicle use at work continue, especially given today’s increasing focus on meeting duty of care obligations and government support for Clean Air Zones and ULEVs.

There are a number of challenges associated with the grey fleet and organisations may be underplaying the potential risks. Employee safety, expense cost control and business reputation can all be compromised without robust and effective management controls. Many companies quite simply have no idea what cars their employees are driving or the associated costs.

Businesses have a duty of care responsibility to their employees whenever they are operating on behalf of the organisation. This extends to employees' use of their own cars for business purposes – employers must ensure their staff are travelling as safely as possible when fulfilling work duties, and from a legal perspective, grey fleet vehicles need to be managed as closely as company vehicles.

However in our Grey Fleet Report, we found that in 2016, 41% of those questioned were not fully aware of the employer Duty of Care regulations with the Health and Safety at Work Act (1974) and how they impact the grey fleet¹.

FAILING TO MANAGE RISK

With the average age of a grey fleet car at 8.2 years², these vehicles lack some of the safety features of newer vehicles, meaning that employees may be driving vehicles which are unsuitable and potentially unsafe.

Many businesses are therefore unwittingly failing to look after their people simply because they don't have a full picture of vehicle use. A clearer view around grey fleet vehicles is needed to prevent any potential incidents occurring, and a grey fleet policy backed up by compliance checks will result in safer vehicles being used on company business.

GREY FLEET RISK MANAGEMENT

Grey fleet is not an area to get wrong. Under the Corporate Manslaughter Act (2007)³, companies can be prosecuted for the death of drivers resulting from work-related journeys.

Page 9 Managing the Grey Fleet report covers the risks businesses face and how to mitigate these, warning:

“In the event of a serious incident, authorities may seek evidence that robust policies and processes were already in place to manage an organisation's Grey Fleet risks. Failure to provide an audit trail showing that all reasonable steps have been taken could prove that an employer had been negligent in its Duty of Care to its employees; resulting in fines and even prosecution.”

It's an area that can also hinder some businesses when trying to win contracts. More and more tendering processes – especially for public sector work – require evidence that duty of care is well-managed.

An unaudited grey fleet means not knowing the true financial costs, the environmental impact and the associated health and safety issues that could have an impact on the business.

According to the British Vehicle Rental and Leasing Association (BVRLA), there are around 14m grey fleet cars on UK roads². However, figures for an individual company are often a murky area for a fleet decision-maker to establish with costs often hidden in delegated budgets rather than central fleet budgets.

HIDDEN COSTS

The BVRLA estimates that UK employees travel more than 12 billion miles⁴ in grey fleet vehicles each year at a cost of around £5.5 billion in mileage claims and allowances⁴.

While private vehicles can be the most cost-effective for short ad-hoc journeys, robust management is needed to ensure mileage claims are accurate and can be audited, especially as HMRC take a keen interest in the accuracy of business mileage claims.

Issues can arise when there is a lack of structure around mileage claims, with employees guessing and possibly exaggerating journey lengths, resulting in extra costs to the business. Some pressure can be taken off fleet managers or HR teams thanks to advances in technology, for example, if employees are 'taking the scenic route' to enhance mileage, then telematics can track vehicle usage.

MANAGING COSTS EFFECTIVELY

Page 17 of Managing the Grey Fleet focuses on the hidden costs, highlighting potential financial risks, covering mileage allowance limits and fuel reimbursement, and providing guidance on the financial implications of the grey fleet. To demonstrate this, the report compares three different vehicle scenarios to calculate which provides the best and cheapest option for individual journeys: lease cars, daily rentals, and providing mileage payments for an employee’s own vehicle.

We are on the cusp of significant change in the vehicle market, guided by:

• Ever-evolving technologies which are making electric vehicles a more realistic alternative to traditionally fuelled cars.

• Incentives to increase the use of ultra-low emitting vehicles (ULEVs) by businesses and individuals alike.

• High-polluting vehicles being pushed towards extinction – with the goal being a ban on sales of new diesel and petrol cars from 2040.

• Announcements during the Autumn 2017 Budget which will provide financial support to encourage electric vehicle purchases and funding to enhance the UK’s charging point network.

GREY FLEET AND THE ENVIRONMENT

According to the BVRLA, the estimated emissions from the grey fleet total 3.5m tonnes of CO2 and 8,156 tonnes of NOx emissions².

If an organisation is committed to environmental and social responsibility, it will be falling short of its obligations if a large proportion of its business travel is in higher-emitting grey fleet vehicles. Organisations are therefore advised to draw up grey fleet policies that disallow high-polluting cars or incentivise ULEVs to help maintain their 'green' focus. This is discussed on page 20 of our Managing the Grey Fleet Report

A NEW IMPERATIVE FOR GREY FLEET MANAGEMENT

Phase 2 of the UK Energy Savings Opportunity Scheme (ESOS) began last autumn, with a compliance deadline of December 5, 2019.

ESOS sets regulations for large organisations (typically with 250 or more employees) to measure the energy (usually in the form of fuel) consumed directly by their fleets, including grey fleet. The scheme requires audits to identify cost-effective energy across buildings, industrial processes and, of course, transport.

The strongest message to come from the grey fleet report is that an unaudited fleet is one that can't be controlled – either for risks or for cost-saving opportunities.

The report, however, offers both reassurance and practical guidance: "Putting together a grey fleet policy need not be complex or time-consuming", it says. "A few straightforward rules help to make it clear to colleagues the minimum requirements that could allow them to use their own vehicles for work purposes."

The first step is a thorough evaluation – such as our Grey Fleet Mobility Audit – to give management an up-to-date and accurate picture of the fleet. From that position of strength, it's then possible to set policies, controls and checks that maximise efficiency, cost-control, employee safety and compliance.

Are your employees using their private vehicles for business use?

Duty of care focus

FAILING TO MANAGE RISK

GREY FLEET RISK MANAGEMENT

Hidden costs of the grey fleet

HIDDEN COSTS

MANAGING COSTS EFFECTIVELY

Environmental impact of the grey fleet

MOVING FROM GREY TO GREEN

GREY FLEET AND THE ENVIRONMENT

A NEW IMPERATIVE FOR GREY FLEET MANAGEMENT

Next steps for fleet decision-makers