29/04/09

Robert Kingdom of Masterlease debates the impact that the proposed levy would have on fleet managers and drivers alike.

“The city where the legend of Robin Hood and his ‘steal from the rich to give to the poor’ philosophy began, is intending to introduce a tax which if introduced would hit businesses at the worst possible time.

“The workplace car parking levy (WPL) has been making in headlines in Nottingham for over 10 years, but the rest of the country is waiting with baited breath to see the outcome of the long-winded debate on whether to introduce this new tax on corporate parking spaces within the city centre. If it gets the go ahead and proves successful in Nottingham, no doubt other local authorities will follow suit including the Core Cities Group, which represents Birmingham, Manchester, Bristol, Leeds, Liverpool, Newcastle and Sheffield.

“However what is interesting from a fleet industry perspective is how will this tax be administered and who will be liable, the employer or the employee?

“It is possible that companies may pass the cost onto their employees, whether this is through a simple annual charge or perhaps by running a car parking pay per day scheme. Despite this the point must be made that it may be easier to pass the charge onto some employees than others, specifically private drivers as fleet car drivers may well argue the point that their vehicle serves a business function and as such they should not be expected to pay to park at work.

“Whatever the process, it would still seem to be a major administrative headache to businesses, especially in the current climate where they are focussing all of their efforts on surviving the recession.

“If indeed the charge is levied on the employer, organisations may then decide to bring in a third party, such as their fleet management company to manage their payments.

“Another key question that requires clarification is how will the City Council police the scheme, will companies simply be liable for all of their spaces, or will they have to demonstrate that they are no longer using all of their spaces? Will the sheriff’s less than merry men patrol the streets of Nottingham morning and evening checking whether spaces are being legally used?

“In Nottingham, council sources state that commuter traffic accounts for 70 per cent of peak traffic in Nottingham. Assuming that the levy will run until 31 October 2030, it will raise £91million which will be invested into better public transport. This will be matched by over £400 million of government money being pumped into the local economy.

“With just under four million fleet vehicles on UK roads currently, the potential cost to businesses is huge. A calculation based on a proposed first year cost of £185 per space shows this could be as much as £740 million per year. But that’s not all; the price per space is predicted to rise to £365 by year five, which means a total cost to business of nearly £1.5 billion per year.

“However there is one discernable loophole, fleet cars which remain in their space overnight will be exempt from the proposed tax as they are not used for commuting to and from work, which is the main driver of congestion. So companies could rethink their fleet strategy and change to a pool car based model, encouraging employees to commute to work on public transport and then have the use of the pool car during the day.

“Although this allowance is well intentioned it is not entirely practical, so for instance a plumber who lives between Nottingham and Derby would need to travel into work in central Nottingham to collect a pool vehicle and then travel to a job in Derby. This is not only a waste of mileage, fuel and carbon dioxide, but also an inefficient way of using their time.

“As Masterlease’s earlier survey on the pull of the company car shows, a third of employees would change job for a better company car, but could we see a culture where people select an organisation based on free car parking spaces? Whatever happens introducing this kind of scheme would involve a big culture change for many organisations.

“The reality is that many firms rely heavily on their company cars, especially in those organisations where business travel is a necessity, such as sales based functions. So until our public transport network improves and prices fall into line with the rest of Europe, the company car is still the only viable option.”