Companies that run a vehicle leasing fleet consisting of tens of thousands of cars should take note of the fact that the government is committed to an integrated transport policy with a goal of switching people from cars to public transport. However, the big fleet operators have mixed views about how real the government’s stated preference for public transport actually is. Some even doubt it has an integrated transport policy in any meaningful sense.
Andrew Cope, managing director of Zenith, a company that has 11,000 vehicles under its management, says there is nothing in the government’s transport strategy – other than the emissions tax and the treatment of private fuel – that he can use as the basis for any decision-making. However, he has little fear the government may come up with something that will damage Britain’s love affair with the company car. “The government knows that to shift Britain to cleaner, better maintained vehicles, there is no better way to do this than to leave business car fleets intact,” he says.
The reason is simple. While company cars are responsible for the bulk of business miles travelled in the UK, they tend to be newer and better maintained than private cars, and they are changed more frequently. This makes them less polluting and also creates an excellent pool of newer, more environmentally friendly used cars which then filter down into the private second-hand market and, again, improves the stock of Britain’s cars.
“The most environmentally friendly thing the government has done with the company car is introduce emissions tax. We do not foresee executives forsaking the company car for public transport outside, say, central London,” he says.
Ian Goswell, commercial director at LeasePlan, feels somewhat more kindly towards the government’s policy. “There are multiple areas that the government is attempting to tackle with its transport policy. We are not just talking about managing mobility within cities here. However, in everything I have seen so far, there is nothing overtly negative in terms of business car usage that will have a negative impact on the takeup of company cars.”
For Goswell, the government’s company car taxation policy is interesting because it has established a well-structured framework for company cars.
“The government has been consistent in the development of policy as far as the company car is concerned. When companies are entering into three-year contracts, as they do with vehicle leasing, uncertainty plays havoc with planning,” he says.
He says sales statistics show that emissions tax is shaping decision-making along the lines that the government wanted. Drivers are actively switching to lower emissions vehicles and to diesel vehicles.
The increased tax on private fuel has made it less attractive as an option. Since free fuel can encourage frivolous motoring, exposing company car drivers to the real costs of fuel on private journeys, it has an environmentally positive impact.
However, Goswell has a gripe with the government’s policy on vehicle excise duty. “It is difficult to make sense of where they are going with this. It is making no discernable impact at all on decision-making with respect to engine size or car type, so it looks like a curiosity rather than a policy,” he says.
More interesting is the approved mileage rate, or the agreed figure of 50p per mile for the first 10,000 miles travelled on company business.
Goswell argues that the approved mileage rate has played a big part in helping leasing companies to structure attractive private leasing deals for company employees. “Basically, it has ended up being a relatively efficient way of providing employees with what, to all intents and purposes, is a company car,” he notes. While not exactly part of the government’s transport scheme, the EU-driven transformation of the block exemption is going to have a big impact on car ownership, Goswell says. The new rules force car manufacturers to allow third parties other than their franchise holders to service and maintain vehicles. The increased competition in this area will drive down the cost of vehicle maintenance, he says.
This is good news for the government, given its focus on minimising the environmental damage caused by private motoring. Well-maintained vehicles are less polluting than poorly maintained vehicles.
Finally, on congestion charging, Goswell argues that when it is taken up by other cities besides London, if some of that money flows back into the transport infrastructure as investment in buses and rail, the results are likely to be positive for business. “I doubt there are as many frivolous business journeys as there are private ones, so congestion charging has to be positive for business.” Essential trips are completed more easily and the resulting improvements in buses and trains will help free up the roads still further, he says.
James Langley, head of customer policy at fleet hire company Arval PHH, does not find any real coherence in the government’s transport policy but, like Goswell, he too finds that as far as business users are concerned, everything the government has done so far as been benign. However, he argues that cars are ultimately about the individual being in control of his or her own space. As long as cars are seen as affordable and, indeed, as costing less than public transport, they will have great appeal.
Professor Edward Glaeser, Harvard economist and expert on the dynamics of cities, argues that transport policies which are not based around the primacy of the car are doomed. In his recent Fraser of Allander lecture in Glasgow – a series of lectures sponsored by Scottish Power and organised by the University of Strathclyde on the theme of Scotland’s future and prospects for economic prosperity – Glaeser argued that the car is seen as an essential lifestyle tool by smart people. Cities need smart people to survive and any transport policy that tries to shift people out of their cars will deprive a city, and ultimately a country, of the very people it needs to thrive and grow.
Glaeser’s speciality is studying cities, which is where the bulk of the earth’s population live. More particularly, he is interested in the modern city. His research points to the fact that the primary reason which justifies the existence of today’s cities is the flow of ideas. People think better and more productively when they achieve proximity to other people who are thinking and working along similar lines.
Where cities used to come into being around the mouths of great rivers (London, Glasgow and Liverpool) or political centres, their founding principle now is as centres of excellence. Existing cities have to become ‘smart’ cities, with plenty of intellectual capital, or they will decline.
What has all this to do with transport? Glaeser reckons that smart people are wedded to the idea of the car as the ultimate form of private transport.
The brighter you are, the less you want to rub shoulders with every Tom, Dick and Harriet. You want your own space to control and having that space when you are on the move means driving your own car. Cities that adopt anticar transport policies are simply erecting barriers to their own success.
It is unclear from Glaeser’s work why smart folk can’t also be bicycle-loving eco warriors, but it seems that, statistically, they aren’t – not in sufficient numbers to have a bearing on the argument. Moreover, for Glaeser there are two types of city – warm and cold. He cites his own research which found that warmth is by far the strongest factor determining city growth. Warm cities grow and those that offer more amenities grow fastest. Cold cities have to work harder to make themselves attractive as centres of intellectual excellence, he argues.
Since all UK cities are, by definition, cold cities, the UK is badly in need of car-friendly policies. Instead of looking at the car as a source of pollution, and as a huge and wasteful consumer of space (the road network) and resource, the car should be seen as the chosen mode of transport of the very people that every city council must attract if its city is to thrive.
Rebecca Bell, head of communications at the RAC, points out that despite the government’s aim to convince us all to use public transport more and the car less, a study by the RAC has found that the real cost of owning and running a car has not risen at all in the past 20 years. It still costs about £105 a week, on average, or 25% of the average family disposable income.
By comparison since 1992, rail fares are up by 44.5% and bus fares by 42.8%. Over the same period, the retail price index has only gone up by 27.3%. “If the cost of running your car has gone down, while the cost of trains and buses has gone up, it is easy to see why most journeys in the UK are still made by car,” she says.
The RAC also reveals that while motorists contribute about £42bn in taxes each year, just £3.7bn is invested by government in the road network, with the same going into rail. “The government subsidises about 32% of the country’s bus service revenue. In Europe, the figure is more like 70%. If the government is going to be serious about giving people an attractive alternative to the car, it is going to have to spend a great deal more,” Bell says.
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