Councils across the UK are facing union opposition to cost-saving measures targeting mileage rates for grey fleet drivers.

Due to cost-cutting demands across the public sector, councils have been looking to reduce their transport bills, and many see this as an opportunity to bring their mileage rates more into line with those used in the private sector, which typically uses the HMRC tax-free approved mileage rates of 45p a mile for the first 10,000 miles and then 25p a mile thereafter.

Historically, councils have often paid well above the HMRC approved mileage rate for staff using their own cars for business.

Speaking about the cost-cutting moves, Gill Archer, national officer of public service union Unison, said: “Public sector workers, particularly those employed by local councils, are really struggling to make ends meet.

“A prolonged pay freeze followed by a squeeze as inflation has remained high has cut the value of their pay by more than 10%.

“To make matters worse, moves by employers to reduce mileage rates means that many staff who have to use their cars for work are effectively subsidising their employers.

“The full cost of running a car and maintaining it is not covered by the rates and even less so where further cuts are being imposed.”

Many councils are also looking to cut what are termed ‘essential user’ payments, which, typically, are annual or monthly lump-sum payments to selected staff who are regular users of their own cars for council business. These can be more than £1000 per driver, per year.

Councils that have already implemented changes include Anglesey, which is cutting a £1000 essential user payment and 40p a mile in favour of a one-off £150 payment and a 52.2p a mile rate.

Elsewhere, Stoke-on-Trent City Council has scrapped an essential use payment and cut mileage rates to HMRC approved levels, while Windsor and Maidenhead is cutting car allowances from £500 in this financial year to £250 next and to zero from April 2015, and will use HMRC mileage rates.

Bridgend County Borough Council, Lancaster City Council and Nuneaton and Bedworth Borough Council have all also sought to reduce costs with new staff travel rates.

But attempts to cut the mileage rates have led to clashes with staff and unions. Northumberland County Council has seen staff vote for industrial action over the planned scrapping of an essential user payment worth up to £100 a month and a reduction in mileage rates to HMRC levels. However, a new council leader is still negotiating to avert a strike.

The number of clashes has accelerated recently because a nationally agreed 1% pay rise did not include terms and conditions for travel payments. These are instead being negotiated on an individual, council-by-council basis.

Damian James, ACFO chairman, said: “Prudent times call for prudent measures, this has been a gradual process but the cuts have picked up the pace recently.”

Giving advice to fleet managers in the public sector facing the need for cost reductions, James added: “It’s all about communication and fleet managers have to explain how much mileage payments cost and the savings that are possible for the organisation.”

However, unlike Unsion, the fellow union Unite took a more pragmatic opinion with a spokesman adding: “The highest [nationally negotiated] rate is 55.8p per mile. This has been negotiated as part of the national terms and conditions and is higher than HMRC rates and therefore, where applicable, will be used.

“However, car allowance rates can be negotiated locally and many councils now use HMRC rates as part of their cost-cutting measures following Government funding cuts.”