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The past few years have seen company car schemes die out, but there are compelling reasons to re-build corporate fleets, as Alex Blyth discovers.

The company car scheme has become increasingly unfashionable as a benefit over the past five years. Many organisations have opted to offer cash alternatives and have dramatically reduced corporate fleets.

But in November 2005, financial services provider Barclays announced that it wanted to encourage its employees to take company cars rather than cash, suggesting the company car scheme may have regained popularity.

The Barclays scheme covers around 3,500 employees who currently take the cash option under the organisation's existing benefit scheme.

Catherine Redmond, head of employee reward and benefits, believes there are two good reasons behind its decision to reinstate a company car scheme.

"If someone's role involves regular driving, we want to be certain they are as safe as possible on the road. Also, we want our company car choices to be as environmentally friendly as possible."

Barclays may be one of the UK's largest employers, but that's not to say all organisations of its size have re-embraced company car schemes.

Between 1999 and 2004, the percentage of companies offering a cash alternative climbed from 60% to 89%; and in 2005 it dropped back to 88%, according to reward analysis firm Monks Partnership.

Fleet street

However, Andrew Cope, chief executive of Zenith Vehicle Contracts, believes that many companies, if they did the sums, would find it cheaper to own a fleet rather offering a cash alternative.

"Many companies set the level of their cash alternatives several years ago. Since 1997, bus fares have risen in real terms by 16%, and rail fares by 7%, while the cost of motoring has fallen by 6%. This means that, unless those companies have reduced the cash alternative by 6% in the past eight years, the company car option is cheaper for them," Cope says.

The arguments around duty of care are even more compelling. The government plans to extend a company's duty of care for its staff to the time during which they are driving their cars on business. This means that companies may need to take safety precautions such as restricting the age and mileage of vehicles used by their staff, as well as checking insurance documents and driving licences.

Eddie Amaro, a partner specialising in employee reward at accoun