Car Allowances and Rising Fuel Costs

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2011 Local Government Service Group Conference
10 June 2011

Although UNISON has a National Agreement relating to casual and essential users and relevant mileage rates that accompany those categories of user, the outcome of Single Status negotiations together with the austere economic climate has led to more and more employers proposing to move away from the National Agreement towards the Approved Mileage Allowance Payment (AMAP) rates.

This Service Group Conference notes with deep concern the extremely steep rise in fuel costs since Jan 2011. Motorists have been hit with a double whammy with an increase in fuel duty alongside the rise in VAT to 20% The AA estimates that the two rises add 3.5p to a litre of petrol and diesel. However, in rural Scotland, especially the more remote areas, the increase is likely to be far higher, with the cost of a litre of fuel costing £1.45 in some parts of Scotland. 64% of the price of every litre of fuel goes to the government in tax and analysts are predicting that this trend of rising fuel costs will continue with a further increase in fuel duty already scheduled for April.

Employees who use their cars for business should not be expected to subsidise the employers’ travel bill. This is of particular concern in rural areas, where employees have no alternative but to use their cars, often to travel long distances, and where fuel prices are often at their highest. It recognises that this has a very serious and increasing impact on those of our members who are required to provide a car for council business.

High fuel prices also disproportionately hit our low paid members such as home carers, who need their cars to provide a service to our most vulnerable citizens. Petrol and diesel costs eat into their already low incomes and they can end up subsidising the council. This is further exacerbated by the knock on effects of high fuel costs on energy bills and food.

This is a particular problem for members in Scotland, where mileage rates paid by councils are no longer covered by a national agreement which includes a calculation of motoring costs including fuel costs. The mileage payment is at the Inland Revenue rate of 40p per mile, a rate which has not been reviewed for many years and which takes no account at all of the steep increases in fuel prices that we have seen since the rate was set in 2002.

The AMAP rates were first introduced in the 2002/03 tax year at the rate of 40ppm. At that time a litre of petrol was 77.9ppl; petrol prices are now around 130ppl and the rates have remained frozen. Considering there has been almost a 45% rise in the cost of fuel, it is inequitable that the AMAP rate has remained at 40ppm. Added to which, public sector employees are being expected to cope with a 3 year pay freeze.

Conference welcomes the efforts of UNISON at UK level to campaign for an increase in the Inland Revenue rate. However, as prices again rise we believe that more needs to be done. This situation is going to be further exacerbated in January 2011 when the VAT on fuel will rise in line with the announcement made in the Chancellor’s budget

This Conference therefore calls for:

1)The National Joint Council for Local Government Services to review the National Agreement on Pay and Conditions of Service Part 3 car allowance provisions with the view to agreeing a renewed car allowance scheme: that would appropriately reflect the employees cost of using a car for business and also be an acceptable alternative to the employer reverting to the inequitable AMAP rate;

2)The Service Group Executive to redouble its efforts to lobby Government and Her Majesty’s Revenue & Customs to review the Approved Mileage Allowance Payment (AMAP).

3)Lobby the government to honour its pre-election manifesto commitment and establish a fair fuel regulator to ensure that when there are spikes in oil prices, the fuel duty will go down