Councils told to tighten up on fleets
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"TRANSPORT is an area where worthwhile economies have been made by many authorities and where improvements in the efficiency and effectiveness of the main local authority services can be made by the correct deployment of vehicles to tasks."
Well, what do you know — Commercial Motor has been saying this for years, yet now it's official because someone has said so in a major report, Improving Vehicle Fleet Management in Local Government, published by The Audit Commission for Local Authorities in England and Wales. Copies can be bought from Her Majesty's Stationery Office, or through booksellers, at £3.50 net.
The report says that it is clear from auditors' reports on individual authorities that there are considerable variations in the expenditure and amount of attention given to vehicle management. Much of this expenditure is within the control of individual service departments, where it may represent only a small proportion of a department's budget. Partly for this reason, it says, transport has not, until recent years, always received the amount of attention it warrants.
Rightly the report points out that local authority transport is big business. A typical county council, it finds, owns and maintains about 500 vehicles and a similar number of items of major plant, costing the authority about £3 to £4m per year. A typical district council runs a fleet of about 100 vehicles.
On top of this, it points out, education authorities spend about £135 million annually on getting children to school, either by hired vehicles or stage carriage bus services.
Police expenditure on transport is about £100 million per year.
All local authorities recompense some of their staff for using their private cars for business purposes.
In total, local authorities in England and Wales spend over £1,000 million a year on transport, including about £700m on their own fleets of vehicles and major plant, says the report.
Each shire district has, the report indicates, about one vehicle maintenance workshop and a shire county about six, with each workshop employing anything from two to 40 skilled fitters plus management and supervisory staff. The cost of maintaining local authority fleets is about 40 per cent of the total fleet cost, or some £280m per year for authorities in England and Wales. As a result of all this the Audit Commission has determined that transport should be one of the services on which auditors should concentrate during their audits of the accounts 1984-5.
In producing the report over 70 different authorities provided information.
The report reveals that there is a large variation in costs and practices between local authorities and while some of the variations found resulted from different but valid ways of doing the same job and from different circumstances outside the control of the authorities, scope for savings ranging up to 25 per cent of the total transport budget was found. And that was with the good authorities! What savings would be achieved by the worst ones it doesn't say.
Variations in efficiency of the order of 2:1 were encountered, particularly with regard to cost of transport and the number of vehicles used to do the same job. Universal application of the good practice as outlined in this report would result in savings of £130 million a year or more with no necessary reduction in standards of service, the report comments. 1, Reducing the number of vehicles operated by the authority without
compromising service standards — in many authorities the size of the fleet can be reduced by 20 per cent and more.
2. Minimising maintenance costs per vehicle without reducing availability or safety levels — an authority can often reduce maintenance costs by 20 per cent and result in better vehicle availability.
3, Improving management effectiveness. In many authorities, the report explains that the present organisation structure and management systems may not permit authorities to take the steps needed to reduce the vehicle fleet or improve maintenance performance.
Referring to the fact that it found numbers of vehicles used for defined tasks to vary by factors of two to one and often more — even when different local circumstances are taken into account — the report comes up with the evidence in the form of a table showing vehicle utilisation (see table 1). This is in turn interesting to compare with a bar chart given later in the report (see figure 11 which gives the percentage of excessive vehicles in an average authority.
This shows that vehicle use varies significantly for the same type of vehicle. For example, some authorities, the report points out, are far short of achieving the utilisation levels (1,250 hours a year) necessary to justify ownership of light vehicles while others comfortably exceed the target levels of 1,700 hours.
Vehicle reserve levels in services like refuse collection, the report contends, vary from under 20 per cent to over 50 per cent. Since the standing cost of each specialist vehicle is about £9,000 a year and a typical district needs 10 or so vehicles, the excess cost of a higher than necessary reserve could easily exceed £30,000 a year. Even if the reserve vehicles are, it explaias, beyond normal replacement age, the excess costs of licence, insurance and keeping the vehicle roadworthy is likely to be about £3,000 per vehicle per an As a result of these findings the report then describes the steps that authorities should be taking — if they have not already done so — to reduce the costs of operating their transport fleet: (i) Determine the size of the fleet needed to provide necessary local services.
(ii) Review purchasing procedures, to obtain vehicles at lowest cost to the authority.
(iii) Review existing policies for replacing and disposing of vehicles.
(iv) Tighten control over fuel to reduce the risk of pilfering and to identify rogue vehicles.
The report pinpoints vehicle maintenance as a main area for cost savings as it represents 40 per cent of the total fleet cost to an authority; £280m a year for authorities in England and Wales, remember. In one part of the report it is estimated that potential savings in this area work out at something in the order of £60m to £70m a year; elsewhere, however, the report appears to say that they would be of the order of £50m. Whichever estimate is correct it boils down to the fact that a lot of money could be saved.
The real "shocker" in the report comes in the reference to fuel costs because the report indicates that not only is there very inadequate cost recording of fuel consumption but that fuel is the subject of fiddles in some authorities.
The report says that four out of 10 authorities could not produce information about fuel consumption for individual vehicles and that even in those authorities that did have some figures, the reliability of the input data was questionable, the problem being highlighted by a number of nonsensical fuel consumption rates.
Not only is there a scarcity of fuel consumption data through the lack of systematic records of vehicle mileages but the quantity of fuel dispensed is also apparently often not verifiable. And here's the real eye-opener! Many transport managers acknowledge that pilfering occurs on some scale in their authority. There can really be no excuse for this.
What local authorities don't realise, however — and it is not really brought out in the report — is that managers of municipal fleets are often low in the managerial hierarchy in local authorities. Can the individuals concerned be expected to exhibit the necessary skills? It is doubtful unless the status and salary levels of the transport managers in local authorities are raised to attract the management capable of implementing the savings made obvious by this report.