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Mike Waters' Blog: March

Date: 23 March 2007   |   Author: Mike Waters

Mike Waters is head of market analysis at Arval

So that is it - apparently - the 'Iron' Chancellor's 11th and final Budget - but how was it for you? While the cut in Income Tax is stealing the headlines, there is a growing suspicion that Gordon Brown has acted more like Derren Brown

23 March 2007: The hidden Budget

So that is it - apparently - the 'Iron' Chancellor's 11th and final Budget - but how was it for you? While the cut in Income Tax is stealing the headlines, there is a growing suspicion that Gordon Brown has acted more like Derren Brown, using a good deal of smoke and mirrors to hide many of the real costs of his plans.

As ever, the devil is in the detail and this is certainly the case for the fleet industry with few of the measures affecting us making it into his speech. The increases in fuel duty did, but this was hardly the best of news. Fuel prices may have dropped from the heights of last September, but it is naïve to think fuel price volatility has gone away. To announce duty rises of almost six pence a litre over the next three years is a tax on business, in what remains an uncertain climate. It is good news that the increase is deferred until October, but whoever is Chancellor at the time must take prevailing fuel market conditions into account before implementing any increase.

He also announced a partnership with Brazil to develop biofuels, but despite doubtless honourable intentions, this arrangement appears a contradiction in terms. Is it really a step forward if a renewable fuel has to be shipped half way around the world to be used, and what about the deforestation happening in Brazil that is being linked to a desire to produce ethanol?

It is pleasing to see that BIK rates are frozen. I believe there is now a clear recognition within Government that if business travel by car is necessary then it is best managed through a company owned vehicle.

Overall this is the classic Budget approach of a few sticks and a few carrots - with some issues still to be confirmed, particularly the approach to capital allowances. Will history be kind to the Chancellor's fleet legacy? I suppose only time will tell.

Till next time, Mike

15 March 2007: Fit for a Low Carbon Economy

As legislation centres this week on the environment specifically with the release of the Climate Change Bill, there is one particular issue which has grabbed my attention and it should almost definitely be grabbing yours! Carbon trading - are we going to be paying for pollution?

The EU Emissions trading scheme has been in existence since 1 January 2005 ensuring that those companies and industries that overspend on their carbon allowance pay for increased carbon credit. The market for carbon will develop rapidly as it now seems that in the not too distant future carbon will become an important currency that business will need to manage.

David Milliband has openly publicised the hope that surface transport will be included within the EU Emissions trading scheme. Does this mean that an expanse of businesses across the UK will soon be using carbon as a mass commodity? It has always been assumed that it would be some time before surface transport became part of the EU scheme; this may well still be the case. What is changing however seems to be the Governments' desire to take a unilateral stand in moving the UK economy to a low carbon platform. Fleet, transport, SME and blue chip companies alike will all witness an impact and will all need to have an increased focus on their CO2 impact.

But this isn't something business needs to be afraid of.

My advice is to get your house in order now; there are two steps companies can take in order to start to prepare to be part of the low carbon economy. Firstly, find out what your carbon footprint is, analyse the cars your drivers are specifying and monitor the fuel they are buying. Secondly, begin taking steps to reduce this footprint early on by making small changes now - don't wait for the legislation to be introduced.

Until next time

Mike

7 March 2007: Fuel for thought

Unless you live under a rock it will have been hard to miss the wall-to-all media coverage on the contaminated fuel story. While an almost unprecedented occurrence, the developments of the past week have brought certain issues under the sometime-hysterical media spotlight.

Question marks were placed against fuel quality and bio fuels by certain sections of the press, which is both unfair and simply inaccurate. To let the facts speak for a moment amongst some of the hyperbole that has made it into the national media, all UK fuel is governed by national and international quality standards, regardless of where it is sold. Ethanol and bio-diesel, far from being a contaminant when added to fuel, is part of a concerted effort to increase fuel from renewable resources and by 2010 5% off all UK fuel sold will have to come from more renewable sources.

Of course, one day this will all become academic as we move to an alternative fuelled future. The Geneva motor show further underlined that almost every manufacturer is pursuing a range of technological routes; hybrids, next generation biofuel engines, compressed natural gas and electric. Whilst major efficiency gains from conventional fuels are still clearly on the agenda.

The current lack of consensus amongst manufacturers as to what will be powering our vehicles in the coming years, contrasts interestingly with the view of what will be powering our vehicles decades ahead. The future's bright, the future's a fuel cell apparently, but when?

Regardless of the future of motoring, what links all these developments together is communication, or rather the lack of it. The Government must play its part in communicating to business and the public the benefits of taking a more environmental approach to driving. Without it, we could be left with more speculation and hyperbole, which could undo years of development and discussion with a few choice headlines.

Till next week

Mike

1 March 2007: In his latest blog Mike defends the business drivers' record on safety

Road safety, in its many forms, has made much of the news this week. An Audit Commission report out this week estimates the 3000 road deaths each year costs the economy £8 billion, giving an idea of the economic, as well as the human cost of poor road safety.

While many would argue it is impossible to put a value on human life, the announcement comes in the same week as the much heralded mobile phone ban; the driving force behind this, of course, to make our roads safer. Anyone that has witnessed a fellow road user navigate a busy roundabout with their phone tucked under their chin will surely testify that the changes surely cannot come soon enough.

In this climate, the business driver can make an easy target. Viewed by certain sections of the media and society as high-mileage hoodlums who are the scourge of the decent, honest road user, I believe the vast majority of business drivers are far from this unfair stereotype.

The fact is business drivers are usually some of the safest on the road. Fleet policies and increased monitoring are leading to better behaviour behind the wheel and company vehicles are arguably amongst the most well maintained on our highways. And with more debate again recently that the driving test should be made harder, the business driver has been facing more stringent testing for years with rise of driver training.

We all want safer roads and 3000 deaths a year is still 3000 too many, but let's not allow the business driver to been seen as part of the problem, more part of the solution.

See you next week.

20 February 2007: The end of the beginning.

As road pricing and congestion charging dominates the February headlines, this week marks the latest development and, in my opinion, the real start of what is likely to be an inexorable drift towards charging for the use of our roads.

Whilst others continue to argue, one man has demonstrated his underlying commitment to ignore the hype and turn rhetoric into action. Ken Livingstone's introduction of the congestion charge in London during 2003 was met with widespread media and public outcry. Despite initial scepticism Livingstone pursued the scheme and now boasts the reduction of over 70,000 vehicles within the original zone.

This week sees the extension of the zone to include some of the most affluent London districts, again amidst widespread concern.

On the subject of public anxiety, the e-petition, set up by Peter Roberts a member of the Association of British Drivers (ABD) on the number 10 website, certainly captured the worried attention and support of individuals across the UK. With over one and a half million signatures against the proposed road pricing policy it seems the debate has stepped up a gear, illustrating the end of the beginning for initial talks and speculated action.

Whilst I appreciate there is a certain amount of justification for the public backlash against road pricing, we still have to acknowledge that the problem of congestion in the UK desperately needs to be tackled.

I think we can expect an interesting few months leading up to the summer with regards to this debate. The Government needs to produce a strong response to the current petitioners, whilst also compiling a more definite plan for its road-pricing campaign in order to limit confusion and objection.

My advice.Watch this space

Cheers

12 February 2007: The year of firsts and lasts

Welcome to my first blog. This made me think; what other firsts can those involved in fleet expect this year?

The future's bright, the future's green. Last week saw the first formal announcement from the EU on cuts in vehicle emissions. The news triggered derision from both the green lobby and the vehicle manufacturers, showing it is possible to please none of the people, all of the time.

What is agreed upon though is the growing importance of climate change in society. This year will see a decade of debate finally turn into action, with environment and broader CSR issues becoming almost the first priority for businesses. The move should reverberate through fleet policy meaning it will be a matter of when, rather than if environmental considerations will play more of a part in decision making.

The year ahead is not just about firsts, it is also about lasts. New enforcement will bring an end to mobile phones and smoking behind the wheel (won't it?), although both announcements have met with a mixed response with calls for clarification, so doubtless it will not be the first and last we hear about this in the coming months.

I hope you have enjoyed my first blog, I intend to keep mulling over the issues affecting us all in the next 12 months. In the mean time, if you have any comments or questions about anything I have raised, get in touch - but no padded envelopes thanks!

After all, we need more debate within industry about the issues ahead and I look forward to carrying on next week with congestion charging.



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