The Vale of Glamorgan Council
Cabinet Meeting: 7 September, 2015
Report of the Cabinet Member for Visible and Leisure Services
Corporate Pool Car Scheme Progress Report
Purpose of the Report
1. To update Cabinet on the success of the staff pool car pilot and to seek authority to introduce an authority wide pool car scheme.
1. That Cabinet notes the conclusion of a successful pilot of the corporate pool car scheme and gives approval to the permanent implementation of the scheme.
2. That delegated authority is granted to the Director of Environment and Housing Services to procure, via reverse electronic auction, 40 small, fuel efficient vehicles in order to realise the full savings required from the scheme, with the option of purchasing up to a further 10 vehicles to meet future requirements of the scheme. The vehicles required are to be funded from the current Vehicle Replacement Budget for 2015/16.
3. That in terms of recommendation 2 above Cabinet agree to the use of article 13.09 of the Council's Constitution (urgent decision procedure).
4. That a further report is presented to Cabinet during the first 6 months of 2016 to detail progress of the pool car scheme, including expansion of the scheme to locations currently exempted.
Reasons for the Recommendations
1. To provide the Council with a permanent arrangement for its corporate pool car scheme, in order to reduce the cost of mileage being undertaken by its "grey fleet", to ensure that employees are appropriately licenced and insured and to support the previously agreed withdrawal of the Essential Car Users allowance.
2. To provide the necessary authority to procure via reverse electronic auction a fleet of vehicles capable of maximising the savings required from the scheme, replacing the current passenger vehicle hire agreement.
3. To ensure that the next E auction deadline for submission of specification of 16 September, 2015 is met so that the maximum vehicle procurement savings can be realised.
4. To maximise the number of staff that are able to benefit from access to the corporate pool car scheme.
2. Prior to April 2015, the vast majority of Council staff were not provided with access to a Council vehicle, contributing to an annual "grey fleet" mileage claim of over 1.2 million miles per year. Staff mileage claims amounted to £776,593 in the financial year 2013/14, spread between 1124 claimants, with an average claim amount of £690.92. A key recommendation of the Council's Transport Savings Programme (approved by Cabinet in January 2015 Minute No. C2623 refers) required the setup of a corporate pool car scheme in order to reduce the cost of "grey-fleet" mileage.
3. Evidence from other public sector organisations has suggested that the total cost of a fuel efficient small car can be maintained at the level of approximately £0.22 per mile. Accordingly, the effective introduction of a pool car travel scheme by public authorities has seen a reduction in travel costs of around 30%, upon reaching full maturity of the scheme. Currently, the Council scheme is projected to save approximately £80,000-£100,000 per annum, although those projections rely upon the purchase, as opposed to hire, of cost efficient pool vehicles.
4. The reliance on staff utilising their own vehicles for work related travel placed the onus on staff to provide vehicles that are appropriately insured and maintained. Prior to April 2015, insurance and licence documentation was approved by line managers as part of the annual personal development review (PDR) process, as opposed to a fleet administration team provided with specific training to ensure that appropriate checks were made.
5. In February 2015, following the decisions of Cabinet, the Council's Corporate Management team endorsed the establishment of a pilot driver registration and pool car scheme, to commence April 2015, including approval of a Draft Policy (Appendix A). The Scheme required all employees that were required to use their vehicles to undertake Council business to provide current proof of business insurance and appropriate driving licence information. Administration support for the scheme was provided by the Business Support team in Visible Services, including the costing of one current full time administrator into the projected savings. Registration onto the scheme would also provide employees with the opportunity to make online bookings for the corporate pool car scheme.
6. In order to support the pilot, a fleet of 40 small passenger vehicles were procured via a short term hire arrangement and situated at 4 key sites (Civic Offices, Alps Depot, Dock Office, Court Road Depot). As a key component of the new policy, staff were required to prioritise the use of a pool car over the use of their own vehicles when undertaking Council business. To enforce this prioritisation, mileage claims for travel conducted in staff owned vehicles is only paid if accompanied with a valid exemption code. Exemption codes, available via the Business Support team, are provided if a pool vehicle is either unavailable for a particular journey or if it would be economically disadvantageous for a pool car to be used for a specific journey. In addition, long term exemption codes were also available for those employees that are contracted to work from a base located further than 500m from the 4 pool car sites.
7. The pilot scheme intended to reduce the number of mileage claims paid out by the Council and support the phased withdrawal of the essential car user scheme. Continued monitoring of usage by the Business Support team has resulted in the relocation of cars to meet demand levels at the sites. An analysis of the 3 month pilot scheme, including savings comparisons is provided at Appendix B.
8. Prior to the implementation of the pilot scheme, a series of management workshops were led by a member of the Business Improvement team in order to review the proposed model and assist in the redesign of the proposal prior to implementation. Similarly, a systems design workshop was conducted with volunteers from employee representative groups. Feedback from these workshops and a meeting with Trade Union representatives was utilised to assist in the implementation of the Scheme.
9. Approximately 6 weeks into the implementation period, a consultation exercise was undertaken via Staffnet, requesting feedback from staff regarding the scheme. A summary of the consultation responses to the implementation of the pilot scheme can be found at Appendix C.
Relevant Issues and Options
10. The initial 3 month pilot for the Driver Registration and Pool Car scheme has now concluded. Effectiveness of the Scheme can be measured using three variables: the ability for the Scheme to contribute to the Council's financial savings targets, the effectiveness of the scheme in supporting the removal of the essential car users allowance and its ability to enable staff that require use of a vehicle to carry out their role effectively.
11. Approximately 884 users have now registered for the Driver Scheme, enabling checks of insurance and licence requirements for "grey fleet" drivers to be carried out with increased accuracy and efficiency and in accordance with VOSA guidelines.
12. Utilisation of pool cars has steadily increased since the implementation of the Scheme. The costings and savings provided at Appendix B*, show that during financial year 2014/15 an average of 91,139 miles were claimed by staff per month, contrasting with an average of 59,623 miles claimed per month during the first three months of the pilot scheme in 2015/16. Approximately 26,500 miles of Council business journeys per month are now undertaken via a pool car.
13. There is an average monthly saving of £11,854, and, whilst the reduction in the mileage rate paid via claims from £0.65 to £0.525 can be attributed to £7,453 of this average monthly saving, an average monthly saving of £4,401 can be directly attributable to the use of pool cars (savings column shown shaded in Appendix B). Current savings are limited by the current spot hire arrangement for the pool car fleet. The potential to purchase vehicles outright via either a recognised procurement framework or via e-auction, in order to support the scheme in the long term, would enable an estimated additional £6,000 per month to be saved. This is based on an estimated monthly vehicle depreciation and running cost total of £11,500 per month compared to the current figure of £17,500 per month. This represents a projection that exceeds the £100,000 annual savings target required from the scheme. This saving target does allow some tolerance for any increased cost in the provision of fleet vehicles and for a potential, less than optimum utilisation, of the pool car scheme during the first year of implementation. It should be noted that in order to ensure a fair comparison, all costings/projections have excluded Shared Regulatory Services employees due to the recent transfer of Cardiff and Bridgend staff to the Vale as host authority.
14. Prior to the implementation of the Scheme, managers were invited to submit business cases if they required certain operations to be exempt from the Scheme. Initial exemptions were provided if agreed by the relevant Head of Service and managers are now required to submit full business cases if they require the exemptions to be extended past the 3 month pilot phase. During this phase, project staff continue to work with services areas (namely Adult/Children Services and School Inclusion) to ensure that implementation of the Scheme within the service area meets operational needs and also contributes to the requirement to make departmental budget savings.
15. The majority of long term exemptions are provided as a result of employee's main office location being more than 500m from one of the main pool car sites. In addition, exemptions are currently provided where no car is available, where the journey is unsuitable for a pool car (i.e. meeting is en route to employees home) or if the work in question is being carried out on weekends. All exemptions are monitored and fed back to the central project team in order to influence the future design of the Scheme. Appendix D provides a breakdown of current exemptions.
16. Whilst initial take-up of the scheme remains encouraging, several barriers remain before full take-up of the scheme can be achieved. During the pilot scheme, exemptions were provided without significant challenge to the chief officers requesting or supporting the exemption on behalf of their staff. In addition, the lack of vehicles available at high mileage user bases such as Barry Hospital has limited the potential uptake of the scheme to certain user groups. All exemption requests plus all instances where a booking request was refused due to unavailability of a vehicle are recorded by the Business Support team (see summary provided at Appendix D). In addition, a recent sample audit of mileage claims has determined that certain mileage claims are being submitted and approved without being accompanied by an authorising exemption code, as required by the pool car policy. In any permanent scheme this practice will be subject to increased scrutiny and use of the Council's disciplinary procedure will be used to enforce the controls if necessary.
17. In order to determine the cause of these areas of non-compliance, the Council's Audit function will undertake an Audit of pool car exemptions/mileage claim in August/September 2015 in order to determine the reasoning behind current levels of exemptions and to assess whether currently excluded departments can be moved into the Scheme more rapidly.
18. Concern has been raised that that pool cars are being utilised by staff that may already have access to an available operational vehicle in their area (for example Building Services, Waste Management, Highways). It is therefore envisaged that some operational vehicles may be pooled in the future in an attempt to drive up utilisation of the operational fleet and also free up pool cars for those staff who would not have access to an operational vehicle.
19. The intended move towards the introduction of an Integrated Transport Unit (ITU) from September 2015 will likely assist with these operational issues, as well as providing a natural home for the holistic management and administration of the scheme.
20. Based on the feedback received via the Staffnet survey, staff reaction to the implementation of the scheme has been largely favourable. However, several learnings have been taken from the pilot implementation and such learnings have either been designed into the existing pilot Scheme or will be incorporated into the permanent version of the scheme. The ability for staff to take vehicles home prior to an early morning work appointment has now been built into the scheme (or alternatively the ability to retain the vehicle at home if an employee is required to work late into the night). In addition, staff are now able to take advantage of a simplified booking process that enables an employee's booking details to be submitted via the use of a single driver reference number.
21. As detailed above, expansion of the scheme over the next 6 months will require the further integration of departments and locations currently exempt from the Scheme, with particular reference to high mileage departments including Adult Social Work teams and Learning & Skills. The Business Support team are currently working with department heads to determine the best approach to achieve this integration.
22. Changes to the scheme are also required to address the issue that a large percentage of the vehicles remain underutilised during evenings/nights/weekends and bank holidays. Potential consideration will be given to the expansion of the Scheme to include private hire of vehicles to Council staff, organised groups or members of the public, similar to the development of a car club and mini-bus hire schemes by Edinburgh University and Monmouth County Council respectively. Any such proposals will be put forward at a later date for Cabinet consideration.
23. Feedback from the Scheme will also be used to inform an update of the Vale of Glamorgan Staff Travel Plan. The revised Staff Travel Plan is due to be considered by Cabinet later in 2015/2016.
Resource Implications (Financial and Employment)
24. Initial administration of the Scheme will be performed as part of the existing duties of the Visible Services Business Support team. Although it is envisaged that the additional work required to administer the scheme would be matched by a corresponding reduction in the administration of hire vehicle requirements. The cost of one Administrator has been included in the savings analysis.
25. An estimated annual net saving of between £80,000 to £100,000 was highlighted as part of the Council's transport savings programme via the introduction of a fleet of approximately 40 pool cars. It is estimated that this level of saving is attainable if the pool cars are purchased as opposed to being hired as this will considerably reduce the cost of running the scheme.
26. The current electronic registration and booking system has been developed in-house using existing resources. Whilst the current system requires the input of a Business Support administrator, any move to an automated system would likely require a similar level of resource in order to effectively manage the booking process to ensure that cars are allocated on an effective basis. This position will be reviewed during the first two quarters of 2016, alongside any potential requirement for 'self-service key access' to vehicles e.g. access to keys via a keypad entry system, thereby replacing the current reliance on reception staff to issue keys.
27. Procurement of 40 small passenger vehicles, with the ability to purchase 10 further vehicles depending on future expansion requirements of the scheme (to be identified via a further business case as required) is to be funded via the existing vehicle replacement budget. The current vehicle replacement budget can accommodate the purchase of these vehicles as other vehicles within the fleet which were originally planned for replacement under the current budget allocation are no longer required due to the ongoing review and increased efficiency of fleet vehicles. A whole life-costing model will be used in order to maximise vehicle life and disposal values and indicate for example, the most cost effective time to replace vehicles based on residual values.
28. Consideration has been given to the most cost effective way of procuring appropriate vehicles. Due to the value of the purchase the procurement exercise would be subject to OJEU thresholds. To expedite the process consideration was given to using an established framework agreement rather than running a full tender process internally. Crown Commercial Services (CCS), an executive agency of UK government, has an established framework for this category of fleet which exploits economies of scale by combining the purchasing power of the UK public sector. Following discussions with CCS an evaluation of the use of a reverse electronic auction has been undertaken. The previous use of CCS reverse electronic auctions by other organisations has resulted in further average savings of 8% in addition to the 25% average discount achieved on list prices via the procurement framework. As such it is proposed that the use of a reverse electronic auction is the most cost effective way of procuring the required vehicles. The Council has previously successfully used these electronic arrangements to leverage buying power and deliver savings when procuring mobile telephony services. CCS auctions are set at 6 monthly intervals with the next available auction scheduled for 22 October, 2015. Should this date not be met the next auction is not until February 2016. As the current vehicles are costing £17,500 per month in total to operate, it is proposed that Cabinet exercise the use of urgency procedures in order to realise the maximum savings via an earlier procurement process.
29. A draft vehicle specification is attached at Appendix E. Vehicles once purchased will be added to the Council's rolling vehicle replacement and disposal programme. All vehicles will be maintained and serviced via in-house facilities, in adherence with the terms and conditions of the manufacturer's warranty. There should however be little need for anything other than servicing and routine maintenance, as these vehicles are likely to be replaced at the most optimum point up to a maximum of a 5 year period.
30. All vehicles are fitted with a corporate telemetry system, enabling the calculation of the actual mileage undertaken. Staff are informed as part of the registration process that all vehicle use is subject to monitoring. Telemetry reports are available to managers to enhance journey planning.
Sustainability and Climate Change Implications
31. There are no direct sustainability and climate change implications associated with this report. However, any attempts to improve the efficiency of both fleet services and current transport procurements arrangements will have a positive impact on the Council’s future carbon emissions.
Legal Implications (to Include Human Rights Implications)
32. None directly attributable to the report.
Crime and Disorder Implications
33. There are no specific crime and disorder implications associated with this report.
Equal Opportunities Implications (to include Welsh Language issues)
34. The implementation programme will require the project sponsor to assess any possible impacts on equality prior to recommendations being progressed.
35. Requirement to make financial savings links directly to the current Medium Term Financial Plan.
Policy Framework and Budget
36. This is a matter for Executive decision.
Consultation (including Ward Member Consultation)
37. Individual ward members have not been consulted as the report affects all wards. As part of the review process the trade union secretaries were invited to a meeting where the scope of the project was outlined. The trade unions have recently been advised of the broad outcome of the review and have raised no major concerns. They will be consulted in more detail when the final policy is agreed by Cabinet.
Relevant Scrutiny Committee
38. Corporate Resources.
September 8th 2014 Transport Savings Review Cabinet Report.
James Rees, Senior Business Improvement Partner Tel: 01446 709891
Accountant - Building and Visible Services
Legal - Committee Reports
Head of Finance
Head of Performance and Development
Transportation Savings Project Board
Miles Punter - Director of Environment and Housing Services