26 July 2016

Billions of pounds ‘wasted on grey fleet' with costs ‘invisible' to company bosses

Businesses are collectively ‘wasting' billions of pounds a year paying mileage claims and car allowances to grey fleet drivers with the costs ‘invisible' to company bosses and vehicle rental and leasing more financially astute alternatives, according to a new report.

The study, produced by the Energy Saving Trust (EST) and commissioned by the British Vehicle Leasing and Rental Association (BVRLA) highlights the UK’s grey fleet - employees who drive their own cars on business trips.

This grey fleet:

  • Comprises 14 million cars, 40% of all vehicles on the road.
  • Costs employers more than £5.5 billion a year in mileage claims and car allowances.
  • Is driven some 12 billion business miles each year on Britain’s roads.

Using government figures and data from real-life fleets, EST researchers were able to produce a profile of a typical grey fleet vehicle and compare it to other alternatives, including rental cars, car club vehicles and company cars.

EST found that the average grey fleet car was ‘exhausted’ – being older, more polluting and potentially more dangerous than its counterparts.

What’s more, with costs associated with the grey fleet potentially ‘unmanaged’, businesses could save significant sums of cash by switching to more cost-effective alternatives – vehicle rental and company cars – with a range of additional spin-off benefits.

Andrew Benfield, EST’s Group Director of Transport, said: ‘Switching to more modern vehicles for work purposes can lead to significant cost savings, cut vehicle emissions and improve employee safety. Bosses should introduce rigorous electronic mileage management systems to reduce “mileage inflation” by employees claiming a mileage allowance, and remove the incentive to drive unnecessary business miles.

'Car rental should be adopted for any work-related vehicle journey over 55 miles and a vehicle should be leased for employees driving at least 10,000 business miles per year. Employers should also incentivise alternatives to driving such as public transport, cycling and walking.’

The report, Getting To Grips With Grey Fleet, identified that of the 14 million in total, 11.8 million vehicles were associated with the private sector and 2.2 million vehicles with the public sector.

The new report calculates that in the private sector, the grey fleet costs almost £5 billion and covers 11 billion miles, emitting 3.2 m tonnes of CO2 and 7,038 tonnes of NOx. In the public sector, use of grey fleet vehicles cost the taxpayer £786 million per year with the bulk of the 1.5 billion miles driven by employees of the NHS, local authorities and the civil service. Those vehicles emit 447,000 tonnes of CO2 and 1,118 tonnes of NOx.

The size of Britain’s grey fleet and the cost of mileage claims was ‘invisible’ to UK company bosses and ‘a blind spot in the government’s transport strategy’, according to the report.

Now the BVRLA is calling for the government to tackle the challenges of the UK’s grey fleet, following publication of the report which it says shows the true cost of employees using their own cars for work purposes.

According to the report, Britain’s grey fleet is responsible for:

  • Some of the oldest cars on UK roads, with an average age of 8.2 years.
  • 3.6 million tonnes of CO2 per year, the equivalent to the average annual emissions of 1.5 million cars.
  • 8,156 tonnes of NOx, a dangerous air pollutant and one of the main contributors to the UK’s air quality issues, equivalent to twice the emissions from Transport for London buses.
  • A significant portion of the £2.7 billion costs associated with work-related road accidents.
  • £5.5 billion-plus worth of potentially unmanaged costs from mileage claims and car allowances.

The BVRLA called the grey fleet’ ‘invisible’ and suggested it was often overlooked by Britain’s bosses.

BVRLA Chief Executive Gerry Keaney said: ‘The invisible grey fleet is hiding in plain sight of Britain’s bosses and is a blind spot in the government’s transport strategy.

‘The Approved Mileage Allowance Payments (AMAP) system used for reimbursing grey fleet drivers is the only part of the motoring tax regime that provides no incentive to drive fewer business miles or use cleaner vehicles.

This blind spot is wasting taxpayer money, costing businesses millions of pounds, damaging our environment and making our roads more dangerous.’

The BVRLA is calling for a concerted effort from company bosses and policymakers to tackle these issues.

It is targeting a 50% reduction in grey fleet mileage and costs by 2020, and is urging government ministers to help by highlighting the alternatives to grey fleet use and offering best practice guidance, particularly for public sector organisations.

Mr Keaney added: ‘Cutting grey fleet mileage by just 15% would be the equivalent of taking 225,000 cars off the road in emissions terms.’