Consulting » WHITE PAPER – The White Paper that’s all bark and no drive.

WHITE PAPER - The White Paper that's all bark and no drive.

The much anticipated Transport White Paper might have been full of sound and fury, but the government's conviction signifies ... nothing. So where does that leave company fleet policy?

Having launched the most comprehensive strategy for public and private transport since the war, the government has suddenly begun to show signs of not quite having the stomach to match John Prescott’s breadth of vision. It seems that the government’s business managers have discovered that, unfortunately, there may not quite be sufficient legislative time for the much heralded Paper to make it into the next Queen’s Speech. After spending what seems like an eternity waiting for the Paper’s appearance, fleet management and fleet contract companies are now left wondering how exactly the government sees the country’s medium and long-term transport strategy, and where, exactly, the company car fits into the scheme of things. These, of course, were questions the White Paper set out to address. Shoving it onto the back burner, instead of speeding its passage to legislation, doesn’t exactly convey a sense of determined urgency on the part of the government, and leaves all sorts of issues dangling in the air. However, as Peter Cook, director of the Centre for Automotive Research at Henley Management College points out, all is not lost. “There is a great deal of the White Paper that does not need primary legislation to be effective. There is much that the Chancellor can bring about through the Budget,” he notes. After decades spent studying the car and the issues surrounding private and public transport, Cook is convinced that leaving things to continue unmanaged and unchecked on the present path is not an option for any government. “If one looks at the projections for levels of expected growth in the number of cars on the road over the next 10 years, I’ve done some calculations which show that we would need to build 3,000km-plus of additional six lane motorways just to park the country’s cars nose-to-tail, never mind driving them,” he says. Cook warns that the government is going to have to do something to grasp the nettle, as he puts it, regardless of how much this upsets Middle England. “Knocking back legislation on the White Paper is not a good start, but there is much that can be done, and the government could use the extra year to change the ethos of car use. It would be a help if people saw it as the last resort for travel, rather than the first resort,” he says. Cook and his colleagues at Henley Management College welcome the White Paper’s emphasis on setting future strategy in terms of an integrated policy, where integration is conceived of in the broadest sense. This means that it embraces integration between different types of transport, with the environment, with land planning use and with policies for education, health and wealth creation. All of this is meant to reduce reliance on the car and to lead to what the Paper calls “A New Deal for Transport – with a balanced mix of appropriate transport being used”. Inevitably, the car gets what Cook and his colleagues call, “something of a bad press” in the White Paper. That, however, was to be expected. The real question, particularly given the government’s postponement of legislation, is whether all the elements required in Prescott’s “New Deal” will get the funding they require to bring about the kind of integrated policy the Paper envisages. In their critique of the White Paper, the Henley team identify at least two new sources of funding. The first is from dedicated income streams raised through road usage charges and parking levies at the local authority level. The second involves pilot charging schemes for motorways and trunk roads, which the Paper envisages introducing. The volume of new monies capable of being generated by such ideas is hard to quantify. Certainly, government will still have to find enormous sums of money to bring public transport to the point where it provides a satisfactory “door-to-door” alternative to the car. However, in the short term, Cook points out that the government should be thinking not just about appropriate vehicle usage (getting people out of cars and onto public transport), but about appropriate fuel usage. This last point means doing much more, via taxation, to encourage alternative fuels. “LPG gas is well worth considering, since it is a much lower pollutant, and government could do a good deal here,” he notes. Taxation, Cook says, also remains the most realistic way of changing company car usage. “Increasing the rate of tax on company cars by 20% per year for the next 10 years will radically change the nature of the leasing industry. It will cause people to move to smaller cars and it will lead to a big growth in personal rather than corporate leasing schemes,” he predicts. Nick Salkeld, commercial director at Lease Plan, slams the White Paper’s proposed workplace parking tax as “nothing less than a tax on work”. “A parking tax is unreasonable since all the signs are that it will not deter people from coming to work in their cars in sufficient numbers to allow it to serve its purpose as a deterrent,” he says. Lease Plan commissioned a survey which suggested that at least 72% of motorists would continue to drive to work, even if they had to pay tax. “What the White Paper does not do, is to recognise that for the majority of car drivers, the alternatives it lists, such as walking, cycling or catching public transport are simply not viable options. Imagine queuing in mid-winter at bus or train stations. You are not in command of your destiny in a way that you are with the car,” he argues. “We think that creating more incentives for car sharing schemes would have been a much more fruitful and creative response. Belgium and the rest of the Continent have much higher levels of incentives on car sharing, which does take cars off the road. Even more innovative would be schemes to encourage remote and home working through IT networks,” he says. In many respects, Salkeld claims, the White Paper does not offer significant solutions, limiting itself instead to proposing goals that it would like to see achieved. It is particularly weak, he argues, in its view of just how much upgrading the UK’s public transport infrastructure requires in order for it to function as a viable alternative to the car. “The government is talking about spending £350m over three years. By way of contrast, the CBI says we need to spend £2.8bn every year for 10 years merely in order to bring our transport infrastructure up to European standards,” he notes. He also points out that a recent analysis on Thames trains, for example, showed that services had deteriorated by a further 8% within the period between April and June of this year. “Waiting around for trains on cold, wet platforms has to have a knock-on effect in the workplace, since staff will be demotivated before they start,” he comments. Much the same could, of course, be said about the effects of getting grid-locked on the M25. However, he counters this by arguing that car drivers at least have control over both their choice of route to work and their departure times. There is also the matter of relative cost to the individual. Salkeld claims that public transport can be more than twice as expensive as a car, particularly where more than one person is travelling. Finally, he points out that Lease Plan, in common with other companies in the industry, has been waiting a long time for a firm decision on company car taxation. “Many potential clients have put their own transport plans on hold, first until the Budget in March this year, then until the publication of the White Paper. We now have to wait until the next Budget for a proper pronouncement on company cars. There is a lack of clarity and certainty there that will continue to confuse the market and this is not good,” he concludes. LOOK AT ALTERNATIVE FUELS Tim Rankin, business development director at Dial, the fleet management and fleet contract arm of Barclays Bank, picks up on the White Paper’s recognition of the superior, more environmentally friendly qualities of the company car. “Dial is very supportive of the government’s efforts to reduce congestion around school areas. Evidence clearly points to the fact that the majority of cars used on school runs are second cars, generally older models, and less environmentally friendly than the company car,” he says. However, while Rankin says that Dial welcomes the White Paper and is pleased that it is “not as anti-company car as had been mooted”, it had definite reservations over the idea of a parking tax. “The possibility of significant differences in local parking tax rates could create a movement of business and employment as local councils set tax rates to encourage or discourage the establishment of local businesses,” he comments. He points out that Dial has already carried out a detailed investigation of the potential benefits of alternative fuels, as envisaged by the White Paper. “There is a very good case for the company fleet to consider moving to LPG,” he notes. “LPG is not only much cleaner, it is almost three times as cheap as petrol, and there is no real argument against changing, at least to vehicles with a dual fuel (petrol/LPG) capability,” he concludes. THE COMPANY CAR IS CLEANER Wallace Stein, managing director of Forward Trust, the motor arm of HSBC, agrees that the White Paper is unlikely to bring about a significant reduction in car usage in the short term. “People in this country see the company car as a business tool and the government accepts this. The White Paper makes it clear that government is not out to clobber the company car but to change the way people use it,” he says. Forward Trust supports sensible measures such as schemes to promote car sharing, and the use of public transport within metropolitan areas, Stein says. “We already work with Birmingham County Council, as a member of their Company Travel Wise scheme, which involves encouraging our employees to use public transport where they can, and the Local Authority has pledged, for its part, to improve public transport,” he notes. Stein says that his company has absolutely no expectation that the government is about to introduce penal tax rates for company cars or for private motoring. “There is a clear acknowledgement in the White Paper that the company car is more environmentally friendly than the private car. It is generally newer, which means that it tends to be cleaner and more efficient in its use of fuel,” he says. Stein notes that the company car also tends to be better maintained, since most contract leases these days include maintenance. This means that it emits less pollutants than more elderly vehicles in private hands. Taken together, these factors mean that hitting the company car would run counter to the government’s urge to improve the integration between the car and the environment, by promoting more environmentally friendly modes of car usage. Stein also points out that Forward Trust is already doing its bit to implement the “alternative fuels” provisions in the White Paper. The company recently undertook to supply pilot numbers of LPG powered vehicles to four local authorities. “The problem with this whole area at present is that while the industry understands to a penny the costs associated with standard fuel engines, no one understands the economics of LPG vehicles,” he points out. What kind of figure, for example, is it reasonable to set as a residual value for such a vehicle; a market for used LPG vehicles has yet to come into existence. “Government has a big role to play here by creating real incentives for companies and local authorities to explore the dynamics of LPG fleets,” he says. Telematics, or the provision of traffic intelligence to drivers to enable them to plan their routes to avoid congestion, also offers significant potential, he claims. “In the contract fleet market we can’t afford to get involved in serious, long-term R&D projects, but we are very interested in real-world schemes with the potential for real payback,” he concludes.

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