RSS feedsExecutives clocking up thousands of pounds in penalties are causing major headaches for employers, with one high-ranking manager in a FTSE 100 company incurring £3,400 in penalty charges in a year.
Violations range from parking illegally to speeding and driving in bus lanes. But the biggest problem is non-payment of the London congestion charge.
Although companies can register vehicles so that they are automatically billed when a car enters the congestion zone, this is only available to fleets over a certain size. And some companies admit that, even if they qualify, they haven’t got the resources to manage the scheme and therefore haven’t signed up.
Although the wisdom of such an approach can be questioned, some executives are driving finance departments to distraction, as they repeatedly incur fines, using the excuse that they are too busy to either pay, or remember to pay, and too important to worry about the consequences.
SETTING A FINE EXAMPLE
A source at a leading FTSE 100 company revealed that one high-ranking executive had incurred fines of nearly £3,400 in a year, an amount that was eventually clawed back from his salary, but only after hours spent dealing with the paperwork involved.
The source, who asked not to be identified, but who is based in the company’s finance department, said: ‘If he wasn’t such a senior member of the company I would have requested disciplinary action be undertaken. It isn’t an isolated case either. There are other drivers who incur fines, particularly congestion fines, and claim they keep forgetting to pay.’
Since its introduction, the congestion charge has been a success at reducing the number of vehicles going into London. The charge was first introduced in the capital in February 2003 and has been credited with reducing congestion in central London by 30%, or 70,000 vehicles.
But it has also been a nightmare for employers, particularly finance depar tments, which bear the brunt of the cost and paperwork from fines. Even if they recover the cost from the driver, they still have to waste hours managing the process.
Research among contract hire and leasing companies on the cost of congestion charging fines showed that the bill ran into millions of pounds. The annual FN50, the industry guide to Britain’s largest leasing companies, found that annual congestion charging fines were at least £3.54m, equivalent to 70,800 penalties of £50. In addition, the fine increases if it isn’t paid promptly, and leasing companies normally charge an administration fee, which can be about £25.
Ignorance is as great a danger as the self-importance of senior executives, with one driver in Stevenage, just outside the capital, driving into the zone without paying five times in a week and incurring £250 in charges. Her excuse was that she didn’t know about it.
A CAPITAL IDEA
For employers throughout the country, it serves as a warning, as congestion charging or road pricing becomes widespread. Cities throughout the UK have examined the potential for congestion charging to reduce traffic, although enthusiasm was dampened after the failed attempt to introduce it in Edinburgh.
Three-quarters of voters in Scotland’s capital – more than 133,000 people – were against the £2 daily charge plan. Only 45,000 people supported the proposals.
Planning chiefs in cities including Bristol, York, Leeds, Southampton, Manchester and Cardiff are believed to have followed the outcome closely as they assessed its impact on their plans.
Lobby group Transport 2000 said the decision was a defeat ‘for those who could see a better future for the city from less traffic and better public transport’.
At the time, director Stephen Joseph said: ‘This is a setback for Edinburgh, but does not mean the end of city centre congestion charging as an idea. It does mean councils elsewhere will have to work harder to explain the benefits.’ Welcoming the result, Association of British Drivers spokesman Nigel Humphries said: ‘This is a blow to the government’s road pricing plans.’
But in the long term, some form of congestion charging for all business motoring seems inevitable, with government plans to introduce road pricing.
Local authorities have been told that extra funding is available to set up congestion charging schemes in the government’s The Future of Transport: Network for 2030, which spells out how it sees the transport infrastructure developing over the next three decades including road tolls. It would be wise to stop the rot early.
This is an edited version of an article that first appeared in Financial Director
