As the financial pressures on UK councils continue to escalate, new solutions are no longer optional but essential. With a projected funding shortfall of £2.3bn in 2025/26, rising to £3.9bn the following year, local authorities are reviewing every aspect of their operations to identify cost-saving opportunities.

One overlooked area that presents significant potential for both financial and operational gains is fleet management. In particular, flexible vehicle leasing is emerging as a practical and immediate lever to help councils make efficiencies without compromising service delivery.

The Local Government Association (LGA) has warned that nearly one in four councils in England are expected to apply for exceptional financial support simply to balance their budgets. These pressures come despite the 2025/26 Local Government Finance Settlement providing a 6.8% cash-terms increase, totalling more than £69bn. Soaring costs in areas such as adult social care, special educational needs, homelessness services and wage inflation have created a situation where traditional methods of cost control are no longer sufficient.

Fleet operations typically represent a significant line on council budgets. Yet many authorities continue to rely on procurement strategies based on vehicle ownership or rigid long-term leases. These models lock councils into fixed contracts and multi-year lifecycles that can quickly become mismatched with actual service demand. Vehicles that are no longer required cannot easily be disposed of, while unexpected service increases require cumbersome procurement processes to acquire additional fleet capacity.

Flexible leasing presents an alternative that better aligns with the unpredictable nature of modern public service delivery. Instead of investing capital in fleet purchase or entering inflexible long-term hire arrangements, councils can lease vehicles on shorter terms, sometimes monthly, with agreements that include maintenance, servicing and breakdown support. This model enables councils to adjust fleet size and composition quickly in response to changing circumstances.

Financially, the benefits are clear. Flexible leasing reduces the need for upfront capital expenditure and limits exposure to residual value risk and maintenance surprises. It also provides a predictable monthly cost structure, helping budget holders to manage resources better. Analysis by fleet operators suggests that this approach can reduce fleet operating costs by up to 20%, especially when factoring in the reduction in downtime and improved fuel efficiency from using newer vehicles.

Operational resilience is another compelling reason to consider this model. For instance, during flood events, welfare response initiatives in heatwaves or when seasonal pressures such as waste collection peaks arise, councils can temporarily boost their fleet capacity. Once demand subsides, these vehicles can be returned, avoiding the inefficiency and cost of idle assets.

Flexible leasing supports councils in their efforts to decarbonise operations. Rather than waiting for capital approvals to replace older diesel vehicles, authorities can integrate electric or hybrid vehicles into their fleet through regular renewal cycles. This accelerates progress toward net-zero targets and allows fleet managers to trial new vehicle types in real-world use before making longer-term commitments. The UK Government’s Zero Emission Fleet Toolkit notes that transitioning to cleaner vehicles delivers measurable cost and emission benefits, which are far easier to access when leasing flexibility is part of the strategy.

Another advantage is administrative efficiency. With flexible leasing, costs are bundled into a single monthly invoice that includes everything from vehicle hire to servicing and support. This simplifies financial management and frees up time for internal teams to focus on core service priorities rather than chasing multiple suppliers or managing complex maintenance schedules.

Critically, the model also allows councils to experiment with right-sizing their fleets. By monitoring utilisation in real time and adjusting vehicle numbers accordingly, local authorities can eliminate surplus capacity, reduce emissions, and ensure their fleets are truly fit for purpose. This degree of control is especially valuable as staff shortages, service disruptions, and policy changes continue to impact frontline operations.

Flexible leasing will not resolve the entire £2.3bn deficit faced by local government. However, it does offer an actionable and proven way to trim costs, modernise assets and enhance service delivery. For many authorities, adopting this approach is not just about saving money but about gaining the agility to respond to citizens’ needs more effectively.

In a climate of fiscal uncertainty, flexible leasing offers councils the rare combination of reduced costs, increased control and environmental progress. It is a shift in thinking that aligns financial prudence with smarter, more responsive public service.

This article was originally published in the Summer 2025 issue of LAPV. Sign up here to receive your free copy of future issues.