Switching to greener company cars could save £3bn

Firms should take advantage of new tax breaks from April, says Energy Saving Trust

The UK could save almost £3 billion a year if businesses switch to greener company cars, a study has revealed.

Research carried out by independent environmental organisation the Energy Saving Trust has found that when new Government tax breaks come into force today (Sunday 6 April 2008), if UK companies all choose vehicles with 120g/km or fewer carbon dioxide emissions there could be:

• £250m saving for UK employers through reduced National Insurance contributions.
• £645m saving for UK employees through reduced Benefit in Kind (BIK) income tax contributions.
• £780m saving for UK employers through reduced fuel consumption.
• A saving of £1.2bn on the fuel bill of company cars driven privately.
• A reduction in transport emissions from UK company cars used on company business of around 1.9m tonnes per year.
• A reduction in emissions from UK business cars driven privately of around 3m tonnes per year.

The findings form part of the Energy Saving Trust's new report – Behind the Wheel II – launched today (Sunday 6 April). The study of 400 board-level executives at organisations across the UK found that only seven per cent of companies offer a financial reward to employees to choose a smaller, cheaper or lower carbon vehicle.

In addition, more than half of companies (51 per cent) that provide cars do not have a Corporate Social Responsibility (CSR) or environmental policy. And of those that do, only one third consider the environmental impact of the vehicles they provide.

Department for Transport figures show that every year more than half of all new vehicles registered in Britain are company cars and Nigel Underdown, head of transport advice at the Energy Saving Trust, is calling on organisations across Britain to act now and "green" their company car fleets.

He said: "The reasons are there for all to see: running vehicles costs a lot of money and with fuel prices over £1 a litre it's not going to get cheaper any time soon. In addition, companies in the business-to-business sector won't get far when tendering for big contracts unless they can prove their environmental credentials.

"From today there will be tax breaks for driving cars that produce 120g/km of CO2 or fewer and if someone driving an average company car opts for a car in this category, they could see their tax burden cut in half.

"I predict that 2008 will see a tipping point where offering – and choosing – low-emitting cars is the only sensible business option."

Underdown added: "120 really is the magic number as far as people responsible for managing UK car fleets are concerned: implementing a green fleet policy could save an organisation with 50 cars up to £45,000 every year."

The Behind the Wheel II survey also found:

• A third of companies (32 per cent) offer a cash alternative to a company car. 
• 73 per cent of organisations restrict the type of vehicle that employees can use for work.
• Managing directors are responsible for company car policy in 46 per cent of companies surveyed.
• 55 per cent of respondents said they were encouraged by their companies to try to reduce their carbon emissions from business travel.
• Discouraging unnecessary meetings is the most common way of cutting carbon emissions.
• 28 per cent of companies still think it would cost money to cut carbon emissions.

The launch of Behind the Wheel II forms the centrepiece of an Energy Saving Trust campaign to encourage businesses with company car fleets to consider their impact on the environment.

By calling the Energy Saving Trust’s Fleet advice hotline on 0845 602 1425, businesses can arrange to speak to a green fleet expert who can advise on the best ways to reduce vehicle emissions, cut fleet operating costs and improve a company's social and environmental reputation.

In addition to the Fleet advice hotline and regular e-bulletins, businesses in England and Wales with a fleet of 50 or more vehicles (20 or more in Scotland) can benefit from an Energy Saving Trust Green Fleet Review. A Green Fleet Review is a free, tailored, independent review of all aspects of a company’s fleet from an environmental perspective.

Free impartial advice on eco-driving (driving in an efficient manner), managing fuel and driver expenses reimbursement, driver training, mileage reduction, health and safety, low carbon fuels and vehicle choice can also be obtained.

The Energy Saving Trust is an independent organisation providing free, impartial energy advice for all.

For further information or to register for a green fleet review log on to www.energysavingtrust.org.uk/fleet