There’s a push by government for employers to think about green travel plans that by coincidence produce spin-off benefits of improved staff fitness levels and time-keeping, says Amanda Wilkinson
Case studies: National Trust, Pfizer
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Environmental concerns, taxation policy, planning legislation and even terrorist activity, are all factors forcing organisations to reappraise their employees’ transport benefits and travel arrangements. Although many staff may still aspire to a company car and a free car parking space, in order to ease congestion, they are now being encouraged, by employers and government alike, to jump on a bike, train or bus or share their car.
According to Transport 2000, the independent national body promoting sustainable transport, traffic is forecast to rise by 17% over the next ten years. The proportion of commuter journeys made by driving has risen in the last ten years and now stands at 57%. National and local government are responding to this increase in traffic through tax and travel initiatives designed to reduce congestion and CO2 fuel emissions.
These, in turn, are influencing the kinds of transport benefits that are now being made available by employers. But corporate objectives have also had an impact. Lisa Page, a senior consultant at Aon Consulting, says: "Where we are seeing the most change compared with what was happening a few years ago is that employers are wanting to promote healthy lifestyles for employees, which gets them out of their cars, and are also trying to be as environmentally friendly as possible."
One benefit, which fits well with such objectives, is the government’s tax-free bicycle scheme. Employers can loan bicycles as well as safety equipment to their employees as a tax-free benefit on the condition that bicycles are mainly used to get to and from work or for work-related purposes.
Paul Bullett, business-to-business development manager at Halfords, says: "The employer purchases a bicycle for the employee and then loans that bike to the employee who pays the employer back the loan of the bicycle out of their gross salary for a defined period of time normally 12 or 18 months. Because employees are paying back out of gross salary they are saving on tax and national insurance. Also if the organisation is VAT registered that can be recouped and passed back to the employee."
Halfords has found take-up typically varies between 0.2% and 10%, depending on the type and location of the employer and whether or not the loan is administered through a flexible benefits scheme. The average collection value is around £350. "If employers are encouraging people to cycle in they need to have facilities to store the bikes and showers for people to use. They also need to make sure that employees have the right information so that they buy the right safety equipment," says Page. Following the recent terrorist bombings in London, some employers are looking to introduce bicycle schemes because they are finding that staff are turning to this mode of transport in order to avoid using the tube and buses.
Scooters are also becoming popular in the capital not only as an alternative to public transport, but also as a means of avoiding the congestion charge. For both these reasons the John Lewis Partnership introduced discounts on scooters in September as part of an overhaul of its voluntary benefits scheme. Despite the fear of terrorist attacks, a season ticket loan for many employees is still a valuable benefit, saving them more than six weeks on the cost of travel per year and helping staff to cope with the financial strain of rising travel costs.
Despite the significant upfront cash outlay for employers, 47% of them offer season ticket loans according to Employee Benefits/Halifax voluntary benefits research 2005, published in July. Few employers, except for bus and rail companies, offer discounts on travelling on public transport. With changes in taxation and some employers actively discouraging driving to work, that ultimate luxury in transport benefits – the company car – has taken a beating in recent years. The government’s introduction of a CO2 emissions-based tax aimed at cutting pollution in April 2002 has accelerated a shift towards organisations offering cash alternatives. But in order to minimise risk under the forthcoming corporate manslaughter bill, some organisations may find it prudent to provide properly maintained vehicles for work purposes.
And where they do, they may decide to broaden provision to include more environmentally-friendly vehicles. But the popularity of diesel may wane because in December last year the government announced that diesel vehicles which meet Euro IV emission standards will lose their 3% tax break in 2006. There are other alternatives such as liquified petroleum gas (LPG) cars and green fuel cars such as hybrids and electric cars.
However, David Yates, marketing director at ALD Automotive, says that demand for LPG has been consistently low, while it is early days for hybrid cars due to the limited number of models. "As more become available, hybrid technology will become cheaper and that will give impetus to demand. In addition, unlike LPG, there is no infrastructure refuelling problem with hybrids," he adds.
Apart from the treasury’s fiscal measures, the other major outside influences on the provision of employee transport benefits, are local planning and transport policies. Local authorities are expected to encourage all major employers to develop travel plans to help ease congestion, while national planning guidance says planning applications with significant transport implications should be covered by a travel plan.
In the Dorking area, congestion has got so bad that Surrey County Council is working closely with a number of employers, including Friends Provident and Kuoni Travel, to develop travel initiatives. These members of the Dorking Decongestion Forum, which together employ 4,500 staff, are contributing towards the cost of a bus that loops through neighbouring towns delivering employees to work and a dedicated car-sharing scheme that uses computer software to match journeys. The schemes not only have potential to save staff money, but also provide a degree of travel security, as well as alleviating congestion in the town. Peter Cooke, professor of Automotive Industries at Nottingham Trent University, says: "If you are providing employees with a means to get to and from work it adds extra loyalty to those people working for the organisation.
By providing your own buses or transport, you are also installing a certain amount of discipline in people as they are being collected and dropped at a certain a time and such schemes can be very helpful in fostering team spirit." It is now common practice for local authorities to try and restrict the number of car parking spaces in the case of planning applications for new premises, thus forcing employers to try and encourage their staff to introduce green transport plans. Pfizer and the National Trust have both found this to be the case (see case studies). This kind of pressure is likely to increase because the government is now making local authorities prove that they have considered all alternative transport solutions before requesting funding for road building schemes.
Nottingham City Council is already considering targeting employers by introducing a workplace parking charge scheme at a local level. Where free car parking is in short supply, NCP claims to have come up with a scheme that allows employees access to tax-free parking as a flexible benefit. Some employers have already resorted to charging employees for spaces. Offering a pay incentive to stop using car parking spaces could prove to be more palatable, however this type of incentive attracts income tax.
Katinka Broersen, project and events manager at Transport 2000, says that some employers are lobbying for the removal of tax on similar incentive payments designed to encourage car sharing. Members of its Ground Floor Partner group, which includes employers such as Orange and Boots, recently met a treasury official to propose taxation changes to encourage employers to provide green transport solutions and for employees to take them up.
"The treasury is open to ideas and seems to be thinking a lot about what it can do to discourage car use and sees that work- place travel planning is a key area in this," adds Broersen. Whether the government acts on these suggestions or not, employers will continue to come under pressure to help ease congestion by providing alternatives to car travel.
Case Study: National Trust
When the National Trust (NT) relocated its head office functions from London, Westbury and Cirencester to a new site at Swindon, a planning constraint was imposed allowing just one space for every three members of its 450-strong staff.
Keen to promote environmentally-friendly transport solutions, the NT had specifically chosen the site because it was located near the town’s train station and on various bus routes. But research ascertained that a number of staff living in Westbury would not be adequately served by public transport.
So the NT organises a bus service for employees living in the Westbury area. Part-funded by staff, it is used by around 40 people. The NT has also allocated all car parking spaces, except for a few reserved spots for visitors, to those staff who car share. Around 25% of the workforce have taken up this option. Jessica Kill, central office project officer at the NT, says: "If people need to get home in an emergency, we also have a pot of money to send them home in taxis or on the train."
Case Study: Pfizer
Pfizer is spending more than £800,000 a year at its Walton Oaks site on trying to encourage the 1,000 working population to opt for a green commute.When planning permission was granted for the site in Tadworth, Surrey the company agreed to a transport plan setting out stringent green transport goals, including single occupancy vehicle, public transport and car sharing targets.
The company is allowed just 475 car parking spaces. As an incentive for employees to travel green, Pfizer pays £5 a day to those who travel to the site by any method other than single occupancy vehicles. In addition, it runs seven buses a day through its transport contractors RPS Transport. These are used to service shuttle buses from surrounding towns; a demand-response scheme, whereby staff ring to be picked-up for work the next day, and an express service ferrying commuters and visitors to the site from nearby stations.
Maria Hazard, purchasing and facilities manager at Walton Oaks, says: "We also have a car share database which we don’t share with other companies. As a pharmaceutical company, we aren’t comfortable with putting our staff names and addresses out into the public domain." Pfizer also provides bicycle storage areas and showers and is considering putting bicycle racks on the back of the buses so staff can cycle for part of the journey. But despite its hard work, the company has still to reach its single occupancy vehicle target of 40%. It is currently at 59%.