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Preparing for London's new T-Charge

Date: 13 October 2017   |   Author: Rachel Boagey

The T-Charge, or Toxicity Charge, is a £10 levy on older vehicles entering the centre of London, and industry experts say that fleets must have the new cost on their radar.

The charge will come into effect on 23 October 2017 and will apply to all vehicles that do not meet Euro 4 emissions standards: typically those registered before 2006.

Gerry Keaney, CEO of the vehicle rental trade body BVRLA, told BusinessCar that the introduction of the T-Charge had been well signposted and was based on older Euro 4 emission standards, meaning that there should not be any compliance issues for most fleets. However, it could present an issue for businesses that make occasional visits into the city using older vehicles.

"Any organisation that relies on grey fleet and allows employees to use their own vehicles for work journeys will need to rethink its policy, and ensure employees use vehicles that meet a minimum Euro 5 emission standard to avoid incurring increased costs,"
Keaney explained.

The T-Charge will apply to the same area and operate at the same times as the existing London Congestion Charge zone - Monday to Friday from 7am to 6pm. It will be added on top of the London Congestion Charge, amounting to a daily fee of £21.50.

However, Keaney said that there is no need for fleets to pay the charge "as the rental, leasing and car club sector will be ready to meet their transport requirements with the appropriate vehicles".

BusinessCar spoke to David Bushnell, product manager for mobility at business mobility provider Alphabet. He explained that, luckily for modern commercial and business fleets, the fact that vehicles are generally leased on  three, four or five-year terms means that the vast majority of contract-hire vehicles are
already Euro 5 or Euro 6-compliant and thus exempt from the T-Charge in London.

"If fleets do have vehicles of Euro 4 standard or below, then it's definitely time for them to reconsider their fitness for business use - in terms of emissions, employee safety and overall business reputation - as these vehicles are probably six years old or older," he said.

Bushnell's advice was that fleets need to understand the journeys their vehicles are making and choose the model and powertrain most appropriate for that use, whether that's a combustion engine, hybrid or EV. He said, "For shorter journeys, especially in urban and suburban areas, if you're not seriously considering hybrids and EVs in your fleet - as well as the charging infrastructure required to support them - then you're behind the times."

The BVRLA added that one of the benefits of the leasing industry to the UK has been that its traditional three or four-year change cycle ensures company car drivers are driving vehicles equipped with the cleanest and most modern powertrains.

"As a result, company car drivers have led the way in terms of EV and hybrid adoption, as well as in the switch to the latest Euro 6 engine technology," Bushnell said.

Paul Hollick, Chairman of the ICFM and managing director of fleet consultancy TMC, told BusinessCar that the charge will affect few current company vehicles, but will add yet another layer of administration to managing older grey fleet cars. "Its real significance for fleets is as a portent of things to come, with a dozen or so other UK cities weighing their options for following London's lead on both congestion and emissions charges," he said.

Announcing the charge, London Mayor Sadiq Khan, said, "Londoners overwhelmingly support my plans to introduce this £10 charge because they feel when it comes to battling pollution the time for action is now.

The charge paves the way for an ultra-low emission zone, which Khan plans to introduce in 2019. It will involve a fixed fee of £12.50 for all cars that don't meet Euro 6 emission standards. This charge will come in addition to the congestion charge and will apply 24 hours a day, seven days a week, rather than during the set times of the Congestion Charge.

ICFM's Hollick added, "Fleets driving in or into London need to be ready with a plan of action for the arrival of the ultra-low emission zone in 2020. That will significantly alter some operators' cost-benefit calculations around investing in ULEVs versus combustion vehicles.

"In future, costs will increasingly be affected by where, as well as what and how, your employees drive, so capturing travel and expense information is becoming an increasingly vital part of decision-making for a fleet manager."