Treasury to cut electric car grants weeks before Cop26

ELECTRIC car grants are to be reduced under Treasury plans, with Rishi Sunak embroiled in a Cabinet row over the Government’s green agenda just weeks before the Cop26 climate summit.

The Chancellor is locked in a battle with the departments for business and transport over proposed cuts to the “plug-in” grants aimed at encouraging motorists to switch from polluting cars.

With the UK to ban the sale of new petrol and diesel cars by 2030, the Government has sought to bolster the green transition by offering grants of up to £2,500 on low-emission vehicles.

But The Daily Telegraph has learnt the Treasury is pushing to cut the generosity of the discount scheme as it seeks to shift focus onto electric charging infrastructure and other vehicles, such as taxis and vans.

It also forms part of wider efforts by Mr Sunak to get to grips with the public finances, which have been ravaged by the pandemic, in the run-up to the

spending review on Oct 27. Sources say the row has pitted the Chancellor against Grant Shapps, the Transport Secretary, and Kwasi Kwarteng, the Business Secretary, who oppose the cut.

There is also concern that it would overshadow the UK’S environmental drive just before the United Nations Climate Change Conference in Glasgow.

Last night a Whitehall source said: “Three weeks today is meant to be the world leader summit. The only other thing people are talking about is the fuel and gas crisis – so this just seems the most extraordinary move. The net zero strategy has to be published next week and we’re nickel-and-diming.”

The Exchequer believes the grants can be reduced without harming the electric vehicles market, which had its best ever month for sales in September.

Treasury ministers also want greater focus on vehicle charging points and infrastructure, as well as the support for electric vans, taxis and motorcycles.

There is concern that the electric van market is lagging behind. However, Mr Shapps, who drives a battery Tesla and is the biggest advocate of electric vehicles in Government, is unconvinced, while Mr Kwarteng believes cutting the scheme will have implications on consumer demand and the transition of car manufacturers towards green vehicles.

Although plug-in models are cheaper to run, the upfront sale price is a key factor in purchasing decisions. There are also concerns that a cut will undermine Alok Sharma, the Cop26 president, who is trying to convince other countries to take climate change action.

But Mr Sunak and his officials are said to be digging in as they seek to rein in government spending. The Treasury said: “We have invested a huge amount already, including £12billion through the Prime Minister’s 10-Point Plan.

“And we are a global leader in green finance, issuing our first Sovereign Green Bond to help finance projects that will tackle climate change and putting in place stricter rules so people can have a better understanding of the environmental impact of their investments.”

Last night, sources close to Mr Shapps sought to distance him from the row, telling The Telegraph he had acknowledged the grant would decline over time.