County councils are overpaying their grey fleet drivers on mileage rates by millions of pounds a year, according to a Fleet News investigation.

A grey fleet driver – someone who uses their own vehicle for business travel – working for Staffordshire County Council, for example, will receive £5,300 for driving 10,000 miles on business. That’s an average of 53p per mile or more than 32% higher than the Government’s official rates.

Drivers for four other county councils – Cumbria, Warwickshire, Buckinghamshire and Suffolk – also receive more than 32% more than official rates when annual lump sum payments are included.

The Treasury’s approved mileage allowance payment (AMAP) rates, which are used by organisations to repay grey fleet drivers’ travel expenses, are set at 40p per mile for the first 10,000 miles and 25p thereafter. They are intended to cover the cost of fuel and the cost of maintaining the car.

However, two-thirds of councils also pay grey fleet drivers an annual lump sum, ranging from £379 to £1,170, on top of the mileage rate for maintenance.

Factored in, this lump sum means that the majority – 72% – of the 25 county councils quizzed by Fleet News pay their drivers far more than the official 40ppm.

And 11 of these pay so much that even when the lump sums are discounted they still exceed AMAP rates. 

Grey Fleet StatisticsThe research confirms that many council grey fleet drivers are considerably better off driving their own car on business than using a council-supplied lease or rental vehicle. It also makes the battle to get grey fleet drivers into a company car scheme much tougher.

According to the AA, a typical six-year-old car – the average age of a grey fleet vehicle – that cost £12,000 new will cost just 18.74ppm to run plus an annual ‘standing cost’ of between £600 and £2,166 depending on any outstanding loan and depreciation. This means a grey fleet driver can pocket as much as £2,853 in profit every year.

The Office of Government Commerce (OGC) recognises these overpayments and is not happy about them. 

David Olima, OGC’s Grey Fleet Project lead, said at a recent ING Car Lease forum that some public sector employers can be seen to be “incentivising people to travel in their own car”.

An OGC spokesman added: “We would never advise an organisation to pay above the AMAP rates.

  • Part two of this article is available please click here -  where we reveal what some NHS Trusts have been paying grey fleet drivers.