Fleet managers have hugely influential role in Road to Zero Strategy, says Lex
Fleets can help ensure the success of the Government’s Road to Zero Strategy through implementing eco fleet policies and eliminating cash or car policies that are at odds with sustainability.
So said Ashley Barnett, head of fleet consultancy at Lex Autolease, at last week’s ACFO Spring Seminar as he highlighted that developing a sustainable fleet policy offered “immense challenges but also immense opportunities”, and urged fleet managers “to be an active participant in change and not a victim”.
At the seminar, entitled ‘Another Year of Evolution’ and held on 27 March at the British Motor Museum in Gaydon, the issue of the growing number of cash takers came under the spotlight, including the numbers of drivers switching to 7-10 year-old vehicles; a trend that conflicts not only with Government strategy but with employers’ own sustainability agendas.
Instead, Barnett outlined a six-point action plan for fleet managers:
- Identify future fleet strategy and how its sustainability fitted
- Understand why their organisation offered a car or cash benefit
- What should the company car benefit look like in the future in line with the objectives of their employer
- How could sustainability be ensured within future fleet policies
- Identify how they could influence future fleet policy changes
- Identify how they could measure fleet policy success.
Barnett added that fleet managers should question why their organisation offered a cash or car option; just because it had always been available did not mean that it should be continued. “If a business has a policy around sustainability you don’t want a car policy that is at odds with it,” he continued.
“The Government is very clear on its ‘Road to Zero Strategy’. It has 31 years to achieve its aim, that is seven car replacement cycles, and fleet managers have the ability to influence change today.”
With the Government continuing to review the shape of future company car Benefit-in-Kind taxation from April 2020 ahead of an anticipated summer announcement, Barnett highlighted that fleet uptake of plug-in vehicles was “way behind the curve” required to meet official targets.
“Fleet managers have the ability to influence change, but it is not about changing the fleet all in one go,” he said. “We can all see that tax is rising, and the Government wants cars to be at the bottom end of the tax structure in terms of emission levels.
“Too many businesses view company cars as a cost and not a benefit, but some policies have become too restrictive. Fleet managers have the ability to take back control, promote company cars as a reward and give employees the responsibility to select the car they want. We could then see an increase in company car take-up. Company cars should be valued because they provide a hassle-free comfort blanket for employees, particularly in terms of maintenance and insurance.”
His comments were backed up in a talk from Mike Moore, tax director at professional services firm Deloitte, who said that fleets may come under pressure from employees to allow them to take a cash in lieu of a company car, but employers should be aware of “unintended consequences”.
Distinguishing between ‘perk’ and ‘essential user’ drivers, Moore added: “Employers must be very careful about what the aims are in offering cash and undertake due diligence to ensure it meets business needs and there are no unintended consequences – a higher tax bill for both a company and driver because of the way a deal was structured.”
He also suggested that establishing the ‘right level’ of cash allowance could prove troublesome – employer or employee-neutral – with “most businesses going somewhere in between”.
Moore acknowledged that some company car drivers may have seen their Benefit-in-Kind tax bill increase by as much as 127% over two four-year vehicle replacement cycles.
Responding to concerns over the rising number of employees opting out of company cars, Moore highlighted that company cars offered benefits to both employers and employees. In respect of employers, benefits included an easier ability to meet duty of care and corporate responsibility requirements as well as harmonised benefit provision at job/car grade level; while for employees the benefits included business/private mileage profile protection, comfort around vehicle service and maintenance and insurance costs being covered and no issue with potentially having to meet credit rating requirements if acquiring a vehicle privately.
Hoping that the Government would provide tax clarity with its forthcoming announcement, Moore said: “In the next five to six years fleets may come under pressure from drivers to move towards cash, but I don’t think it is the answer for all drivers.”