HRZone talks ‘company cars’ with FleetNews

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John Maslen

John Maslen is Editor of FleetNews, a magazine targeted at fleet decision-makers within the UK; Annie Hayes spoke to him about current market trends and the future of company cars.

Corporate manslaughter – a cause for concern

According to Maslen, 18,000 core fleet decision makers, operating around 460,000 vehicles can’t be wrong. This group put money as the key concern when it comes to company cars and fleet management.

So cash it would seem is still king and with 30% of bill invoices calculated inaccurately, our bevy of fleet managers have their work cut out for them. But it’s not just checking the bills that are worrying Maslen’s readers:

“Health and safety is a big issue. One of the main concerns is how to run a fleet policy in the current Health and Safety climate. The picture on prosecutions is just not clear.”

What Maslen is referring to is the corporate manslaughter debate, an ongoing saga and one made all the more murky by government deliberations and stalling over the final legislation.

Regulations aside, with ten people killed on the roads every day in the UK it is worrying that businesses still put risk management at the bottom of their ‘company car’ to do list. A report conducted by Norwich Union shows that a staggering 85% of companies are apparently not completing even the most rudimentary checks to ensure their staff are safe on the roads.

Businesses it would seem might do well to remember the HSE guidelines which dictate that any vehicle used for business is considered to be part and parcel of an employee’s ability to perform their job and as such both the driver and the vehicle must be fit for this purpose.

Company cars – do they have a future?

I asked Maslen whether increased regulation and spiralling insurance costs would force company cars to go in the same direction as the video player and film camera. He said:

“They most certainly do have a future, if anything it’s more so because of the debate that is going on around the cash-for-car alternative. These schemes are proving to open up new concerns for businesses.”

The lack of control that dominates the cash-for-car alternative means that employers have no rights over the look and style of the car or levels of maintenance persuading some companies that protecting their image is more important and the statistics seem to support Maslen’s comments.

Half of all new cars sold are for company car use and the industry itself is worth £40 billion a year.

HR involvement

Outsourcing it would seem doesn’t mitigate the need for some management responsibility and where a fleet manager isn’t required the burden usually falls upon the HR or finance function:

“Company cars are often the second biggest cost after salaries but often the obligation of responsibility is passed to a member of HR or finance who has no formal training. There are few professions in which a standard qualification is not required, accountancy, law – they all require formal training but not fleet management and many don’t fully understand their roles.”

But help is at hand, adds Maslen. The Institute of Car Fleet Management (ICFM) established in 1992 now offers a formal qualification. With many fleet operatives dealing with million pound car investment schemes, it would seem that some training should be a pre-requisite to this kind of responsibility.

Budget 2005 – surprises or disappointments?

Maslen describes the recent Budget as a ‘nothing lost – nothing gained’ scenario for company car drivers and fleet managers.

Key amongst the announcements is the freeze on company car tax for 2007/08, petrol duty only rises to take inflation into account and vehicle excise duty is frozen for most vehicles.

But beyond the Budget, Maslen sees government support for company cars improving:

“David Jamieson, the Transport Minister recently said that people should move back into company cars because they are new. The trend with cash-for-car schemes is for individuals to buy a big old dirty car and not pay for it.”

Referring of course to the trend of drivers who opt out of their company car schemes and switch to employee car ownership escaping benefit in kind taxation and tending to choose higher polluting, more fuel thirsty vehicles.

Pitching cash allowances

For businesses opting for the cash-for-car allowance alternative the question is how much to give, offering the right level can mean the difference between retention and high staff turnover making it an important decision to get right.

“Businesses can get it hideously wrong. One option is to ask other fleets – but remember that the cash allowance you announce to drivers will be subject to Tax and National Insurance deductions so you must make that clear - £4,500 seems a good benchmark, however”

But says Maslen, allowances can and do vary between grades and industry.

“In the NHS a lot of the lower levels use work vehicles as part of their job and I also know of a company, Pearl Insurance that used to offer a BMW 3 series to its entire staff – they don’t do this anymore however!”

Final thoughts

Maslen believes that the future of company cars looks bright and says that he can’t see the number of cars sold for this use falling significantly. Concluding he comments:

“Judging by what the government says and how officials react, they are supportive of company vehicles from an environmental and health and safety perspective. It’s important for companies of a certain size to have a footing in the industry and so long as the economy grows I can’t see that changing.”

As for what car Maslen drives, well he was rather coy but perhaps he just has the best of all worlds: “I drive a new car every day,” he laughs.

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