Javid reverses on scrapping subsidies for electric cars
Consumer incentives will continue to play a role as Treasury prepares package to drive change on roads
SAJID JAVID last night performed an about-turn over plans to scrap government grants for electric cars after the motor industry warned it would have a “devastating” impact on demand.
A taxpayer-funded contribution of up to £3,500 towards the cost of new electric cars was due to come to an end next month, but the Treasury will continue paying some subsidies as part of a package of measures expected to be announced in the Budget.
The decision comes after Boris Johnson announced a ban on the sale of all new petrol, diesel and hybrid cars from 2035, meaning motorists will be restricted to buying fully electric or hydrogen-powered vehicles from then.
Motor traders warned ministers that the target could only be met if the Government incentivised drivers to buy electric vehicles, which still make up less than 3 per cent of sales.
The Society of Motor Manufacturers and Traders (SMMT) told Mr Javid he needed to come up with an “ambitious package” of incentives and infrastructure if he wanted to make the policy a success.
Last night the Treasury responded by announcing that “consumer incentives will continue to play a role beyond 2020”.
A Whitehall source said: “People won’t just be dumped at the end of March. There will be a package of measures which will include the Government playing its part.
“We are not going to end up in a cliffedge situation where we suddenly stop subsidising electric cars. We have always said we would phase out the subsidies gradually, but there are other ways we can help people to go electric.”
Among the measures the Treasury is understood to be considering are slashing company car tax for electric vehicles and helping drivers with the cost of installing home charging points.
The Chancellor is believed to have told aides that the Government must invest public money in charging points and the infrastructure that supports them, rather than expecting car manufacturers to pick up the tab.
The Prime Minister’s announcement that the ban on diesel and petrol car sales would be brought forward from 2040 – and include hybrids – sent shock waves through the car industry.
Mike Hawes, chief executive of the SMMT, urged Mr Javid to keep the grants at their current level rather than reducing them over time.
He said: “To achieve its zero emission ambitions, the Government must bring the consumer on the journey with an equally ambitious package of incentives and infrastructure.
“Prematurely removing upfront purchase grants can have a devastating impact on demand so we need a long-term commitment to the plug-in car grant as a matter of urgency.
“This must also apply to all zeroemission capable vehicles, including plug-in hybrids, which not only deliver essential air quality and environmental gains today, but are an important stepping stone to a tailpipe-free future.”
A Treasury spokesman said: “Yesterday we launched a consultation on urgent action to reduce vehicle emissions and accelerate the rollout of zero emission vehicles.
“Our intention to phase out the plugin car grant was announced in 2018 but we recognise consumer incentives will continue to play a role beyond 2020.
“We’ll take a measured approach, balancing the needs of taxpayers, industry and consumers.”
Mr Javid will announce his first budget on March 11 if, as is widely expected, he keeps his job in a Cabinet reshuffle that is expected to take place next Thursday.
Separately, the UK’S first all-electric bus town will be created through a £50million fund, the Department for Transport (DFT) has announced.
Local authorities can now apply to the scheme and the winning area will receive £50 million to help pay for a new fleet of up to 200 electric buses. The chosen town will be used as a model by the Government as it attempts to ensure all buses are fully electric by 2025.