26.06.14
Green car salary sacrifice scheme gaining momentum
Source: Public Sector Executive June/July 2014
Cory Laywood, HR, pay and benefits manager at Leicester City Council, discusses the success of a new low carbon salary sacrifice car scheme for the local authority’s employees.
Leicester City Council has launched a new low carbon salary sacrifice car scheme, which is generating lots of interest, take-up and potentially national recognition.
Car schemes have been offered by many public sector organisations in the past but have, at times, been inflexible. Cory Laywood – the HR, pay and benefits manager at Leicester City Council – told PSE that the authority used to have a loan and incentive system in place, but people were “not really incentivised” to take up the scheme – as the old model didn’t recognise the fact that people don’t just drive to and from work.
However, about two years ago, the local authority decided to re-evaluate the schemes it had in place for its staff. In particular, the council looked at its home working and travel policies in respect of public transport, cycles, cars and car parking, and decided it wanted a new approach.
Delivering change
“This project has run for around 18 months to two years. We thought that rather than make the choice for an employee about how they get to work, we’d put together a package that offered as much flexibility as possible in a tax efficient way,” said Laywood.
“Cars were one of the options, but I did a business case for each scheme that we offered. This was because going for purely one over another just didn’t sit right. People get to work, but some people aren’t on a bus route or can’t cycle to work, so we offered cars as well – it was the last one we offered and introduced it in November 2013. We also put in place a tax efficient way of parking for staff, so near-workplace parking has also been offered.”
By introducing the scheme, Leicester has opened up the prospect of buying a new car to a much wider audience within the council, while they make substantial savings in National Insurance and pension contributions.
It has also set a carbon ceiling of 120g/km to encourage staff to choose fuel efficient and more environmentally-friendly vehicles under the scheme, which is inclusive of motor insurance, servicing and maintenance, Vehicle Excise Duty, roadside assistance, tyres and glass, plus protection against redundancy, resignation and maternity leave.
Laywood told us: “We’ve capped it at 120g/km and also offered the widest range of cars possible. This is because we didn’t want to just capture single people with small cars; we wanted families to take us up on this as well. We went for a provider [Tusker] that offered a wide range of cars and the ability to deliver the cars suitable for the council in a way that allowed employees to purchase them or lease them for a flexible period.
“The scheme isn’t just about getting people to and from work, especially as cars are a lifeline for many people. Additionally, if someone wants to buy or lease a car for their partner or children, this has also been encompassed into the scheme.”
Take-up
The scheme is open to near enough all the local authority’s 18,000 employees, apart from its teaching staff and those who do not earn enough money to sacrifice any part of their salary. Laywood stated that this gives about 11,000 staff the eligibility to join the scheme.
Since its introduction in November 2013, nearly 100 staff members have taken up the scheme, and the authority is receiving, on average, about 15 applications per month.
“Interest-wise it has been phenomenal,” said Laywood. “The benefit it gives them is that it is a fuel-only car – so they have nothing else to do with the vehicle except put petrol in it – it is fully taxed, insured and they can purchase it in a tax efficient way.”
Additionally, PSE was told that the council is convinced that if a staff member wants a new vehicle model, so long as it comes under the 120/km carbon ceiling, it can get that vehicle. “Even if you consider the new BMW i3 – the all-electric car – we can get those,” said Laywood.
Tusker
The council selected Tusker’s SalarySacrifice4Cars (SS4C) scheme under the terms of a Pan Government Collaborative Framework Agreement originally set up by North Yorkshire County Council when it established its own salary sacrifice car scheme with Tusker three years ago.
Under the agreement, the Tusker scheme is available for use by all UK contracting public sector authorities, including government departments, non-departmental public bodies, the NHS, local authorities, police authorities and emergency services.
Laywood said: “Tusker could tailor what they had for our needs, and we were confident in their delivery mechanism. It seemed like a winner for our employees because we could get them the best car at the most reasonable price in the shortest space of time; and it felt like a winner for the employer because there are obviously all the benefits you get with salary sacrifice – plus there was no additional admin or restructuring required.”
Tusker stated that Leicester City Council, as an employer, can benefit in a number of ways through the scheme as it generates National Insurance contribution savings; provides a valuable staff retention tool; helps meet duty of care obligations through a fully-maintained vehicle; uses a fully automated online system for employees; and promotes and provides carbon efficient vehicles.
Sarah Hayter, Tusker senior account development manager, said: “We are delighted to be working with Leicester City Council
to extend the transport solutions that it offers its eligible employees. Our market-leading SS4C solution has been proven to be a
winner and provides employees with a fully expensed, tax efficient car, linked to fixed-cost, worry-free motoring.”
National recognition
Despite only being introduced seven months ago, Leicester’s scheme has been shortlisted for the Best Staff Travel Policy award in the 2014 Employee Benefits Awards, with the winner being announced at the end of June.
Laywood told PSE: “I think the award is important, but I think we have won in so many ways already. It would be nice to get that official recognition, but I don’t believe there is anything we could have done better to win it.
“We have worked very hard over the last few years to bring in a number of transport alternatives for staff at Leicester City Council and this recognition is the fruition of all that hard work. Personally, it gives me a great sense of achievement.”
Green going forward
Going forward, the council has plans to expand the scheme, especially with regards to greater adoption of eco-friendly vehicles.
“We have plans with Tusker to look at what we can do in terms of offering extremely green vehicles, and currently we’ve got a vehicle in our fleet that we are trialling,” said Laywood.
He added that there will be a real push towards using energy-efficient vehicles even more as the infrastructure in Leicester grows to accommodate these vehicles.
Laywood added: “We need to push them and make them affordable. So, going forward, the council will be doing more of the same but trying to make sure we get the greenest vehicles we can on the roads.”
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