The impact of ULEZ and CAZ on UK businesses

Background

“29% of businesses were found to be unaware of the planned CAZ charges”

This was the headline findings of the research we recently commissioned through IFF. That’s more than 1 in 4 fleets who are not aware of a regulation which poses a significant operational and financial challenge to using commercial vehicles. However, the problem is not just awareness.

We all face increasing pressure to ensure our vehicles are ‘green’. Through London’s imminent Ultra Low Emission Zone (ULEZ) and the planned Clean Air Zones (CAZ) in other parts of the country, the government have made it clear that their agenda is to improve air quality in our cities.

Tim Bailey, Northgate’s Fleet Director, presented at an event hosted by the British Vehicle Rental and Leasing Association (BVRLA) alongside Transport for London (TfL) to explore the impacts of ULEZ on UK businesses. 

Based on the discussions so far and findings from the IFF research, it’s clear that action is required. Let’s demystify ULEZ and CAZ. It’s time to talk business.

 

Does it affect you?

To encourage drivers to seek out less polluting vehicles and travel alternatives, the government are including financial charges in their regulations. As such, a regulation like London’s ULEZ is creating financial challenges for businesses of all sizes that make use of commercial vehicles.

Whether travel in these zones is regularly required or the result of a client trip/off-site training, the impact on UK business is going to be widespread. If it’s not something that directly affects your business now, it is something to start thinking about.

Reducing air pollution is more than a localised effort in London. With each new EU directive to reduce harmful pollutants from vehicle exhausts, the emission standards for vehicles are getting stricter across Europe. There is an international movement to get highly polluting vehicles off our roads.

If you know your registration number, you can check whether your vehicle will meet the ULEZ standards via a tool provided by Tfl.

 

What is ULEZ?

From 8th April 2019, Ultra Low Emission ZoneEZ (ULEZ) will be replacing the Emissions Surcharge (T-Charge) in London. The government hopes that ULEZ will help reduce air pollution caused by vehicles.

ULEZ will introduce additional charges on top of the weekday Congestion Charge, nearly doubling the daily cost.

The ULEZ charges will operate 24/7 and apply to vehicles that do not meet the emissions standards. Charges will be £12.50 per day for LCVs that aren’t Euro 6 compliant or £100 per day for some heavy goods vehicles.

 

Breakdown of possible charges for LCVs that don’t meet the emissions standards in London*

 

Vehicle Type	Congestion Charge	ULEZ
Small and Larger Vans	£11.50 a day OR £14 next day OR £10.50 a day w/ auto pay	£12.50 a day (applies 24/7)

 

*Correct as of 29.11.2018. For up to date charges, please check TFL.

 

What can we learn from ULEZ?

We should be looking at London’s ULEZ as a model for what will happen elsewhere in the UK. Planning is already underway to introduce CAZ charges in other parts of the country. Councils governing the UK’s major cities are faced with decisions on how to introduce regulations on reducing air pollution. ULEZ will surely have an influence on the decisions of these councils and future regulations.

 

What are the challenges?

The biggest challenge is keeping pace with the regulatory changes and stricter emissions standards. For example, even vehicles that were LEZ compliant before may not be ULEZ compliant. And the financial charges are such that many businesses cannot afford to ignore them.

Equally, making the transition to vehicles that are exempt from ULEZ cannot be done overnight. Businesses are now having to work quickly and find smart ways to prepare for the future, to avoid the incoming financial charges that seem to be growing costlier with each new regulation.

Here are the challenges to businesses looking to make financially savvy decisions to avoid or mitigate the impact of ULEZ (and the other possible regulations to follow):

1. From 8^th April, Businesses using LCVs or HGVs within the ULEZ zone will be subject to additional charges.
2. Euro 6 diesel vans were made available from September 2015. Many of the vans on the road today will not be compliant.
3. The retail value of existing non-compliant vehicles is reducing on an ongoing basis, so the comparative investment of replacing them with ULEZ exempt vehicles is rising.
4. Awareness: Many fleets are still unaware of regulations like CAZ. Finding out too late could mean not enough time to prepare for the financial charges being put in place.

 

What are some of the possible solutions? 

1. Changing the way businesses get vans

Hiring vans is one way that businesses can keep abreast with the fast-moving regulatory changes.

If you hire a van from Northgate, your van will be regularly replaced with newer models. At the time of writing (December 2018), almost 70% of our fleet is Euro 6 compliant and this number is constantly growing.

There are other benefits as well that come with hiring a van – some you might not expect. For example, with Northgate, you get the following:

 

• Vehicles can be hired on a minimum term or flexible rental basis.
• Simple monthly cost includes servicing, maintenance, road tax and breakdown recovery all in one
• Vehicles can be tailored with everything from branding to racking to roof bars

 

2. Sell existing LCVs and hire new ones

Disposing of existing vans can come with its own costs both in time and money. At Northgate, we provide a way for fleets to sell their existing LCVs without a large outlay to hire new ones. We call this solution ‘We Buy, You Rent’ and it provides the following:

 

1. A fair market value for existing vehicles
2. The value can be returned into the business, rather than tying up capital
3. Euro 6 compliant vehicles can then be hired.

 

3. Buy a vehicle through Van Monster and part exchange your old ones

If you buy a vehicle through Van Monster, our vehicle sales division, you can also choose to part exchange your old vehicle. Van Monster can provide the following:

 

• Increasing volumes of late model Euro6 compliant stock (on request)
• Part exchange your old vehicles
• All vehicles come with a 6-month warranty and breakdown cover
• Finance available (subject to application)

 

Update:  On the 22 January 2020, the Mayor of London, Sadiq Khan, announced several measures to further reduce air pollution.

Scrappage Scheme changes:

• More businesses are now eligible.
• Applies to firms with fewer than 50 employees instead of 10.
• Fewer trips into the Congestion Charging Zone are required – lowered from 52 to 26 (counted in the six months prior to the launch of the scheme).  
• Payments have been doubled to £7,000.
• £9,500 is available to those switching from vans or minibuses to electric alternatives.
• The scheme will open to small businesses operating heavy vehicles later this year. Details are currently being finalised.
  
  Further ULEZ plans were announced to:
   
  Expand ULEZ up to the north and south circular next year
  Tighten the standards this October