Treasury says plan to axe petrol and diesel engines could ‘disproportionately’ benefit well-off

Boris Johnson has been warned by his own economic experts that his drive to outlaw petrol and diesel in favour of electric vehicles may disproportionately help the well-off at the expense of the poor. 

Sales of new vehicles with internal combustion engines will be banned in 2030 in a bid to reduce emissions to net zero by the middle of the decade.

And ministers unveiled a raft of additional measures today designed to push Brits into buying electric vehicles (EVs) at an increasing rate even before then. 

 Manufacturers could soon be forced to sell a rising share of electric vehicles each year to speed-up the shift.

The Department for Business Energy & Industrial Strategy confirmed it will consult next year on the introduction of a ‘zero emission vehicle mandate’ from 2024 – and it could fine car makers who do not move quickly enough.

However a Treasury review released at the same time questioned whether the rush to EVs was good for society.

The analysis of the PM’s net zero plans said: ‘Policies to support the adoption of EVs may disproportionately benefit higher income groups, and the costs of any policies that affect the remaining drivers may fall disproportionately on low-income groups; this could create a trade-off in some areas between incentivising decarbonisation and minimising distributional impacts.’ 

Howard Cox, Founder of FairFuelUK, said: ‘The undemocratic enforcement of one modal form of vehicle is nothing less than despotic.

‘But now we are seeing what the ill-informed policies are likely to deliver: a two-tier road user class, where the well-off can wallow in a sanctimonious zero-emissions pop down to Waitrose in a Tesla.

‘And the low income and small business driver struggling to put food on the table, being demonised for driving a diesel, and unable to buy even a Nissan Leaf.’

Mandate for electric cars: The Government will consult on plans to force vehicle manufacturers to sell a rising share of plug-in models each year from 2024

PM plans to INCREASE number of ‘low traffic neighbourhoods’ and build THOUSANDS of miles of segregated cycle lanes

Boris Johnson plans to increase the number of controversial low traffic neighbourhoods (LTNS) under his green drive despite claims that they do not work.

The Prime Minister’s long-awaited net zero strategy today set out an ambition for more LTNs along with thousands of miles of new segregated cycle lanes in UK towns and cities.

It includes a ‘vision’ to make cycling and walking amount for half of all journeys made in urban areas by the end of the decade to improve congesting and air quality.

However the scheme is likely to spark fury as LTNs have been accused of making little impact on pollution and simply moving congestion and emissions to other areas. 

Emergency services have also said they impact on their ability to respond to incidents quickly, although studies have also shown they have helped to reduce injuries to pedestrians and car passengers in areas where they have been introduced.

Some 2000 have been introduced during the pandemic, involving installing cycle lanes, closing off roads to through traffic and widening pavements.

The PM’s report, Net Zero Strategy: Build Back Greener, today declared: ‘We will deliver the Prime Minister’s bold vision for cycling and walking, investing £2 billion over five years with the vision that half of all journeys in towns and cities will be cycled or walked by 2030. 

‘We will also deliver thousands of miles of safe, continuous, direct routes for cycling in towns and cities, physically separated from pedestrians and volume motor traffic along with more low traffic neighbourhoods and school streets.’

In response Downing Street insisted that net zero plans had to be ‘fair’ across society. 

The Prime Minister’s official spokesman said: ‘Any policies we bring in will be designed to be fair across the board. I’m not going to speculate on potential future policies.’

Ministers see the zero emission vehicle mandate as the most effective way of shifting the UK to electric vehicles – while also allowing taxpayer-funded grants to be reduced.

‘Our zero emissions vehicle (ZEV) mandate will guarantee greater number of zero emission vehicles on our roads, unlocking the transformation of our road transport,’ the strategy paper said. 

It was reported last week that Chancellor Rishi Sunak has been at loggerheads with Transport and Businesses Secretaries Grant Shapps and Kwasi Kwarteng over planned cuts to the Plug-in Car Grant.

The scheme, which has been available since 2011, was last slashed by £500 in April, down from £3,000 to £2,500. Additional rules were also put in place so that only buyers of electric vehicles up to the price of £35,000 are eligible for it.  

The Treasury is said to be eager to scale down grants to focus funding towards bolstering the country’s charging infrastructure as well as reduce outgoings in the wake of the pandemic.

Yet both Shapps and Kwarteng are concerned it could derail the recent growth in EV demand and send the wrong message ahead of the COP26 summit in Glasgow later this month.

A ZEV mandate – like the one introduced in California in the 1990s – is being looked at as a best solution, putting the onus on car makers to sell an increasing proportion of electric vehicles each year, for which they will receive credits.

This would – in theory – accelerate the availability of EVs across different price points, with manufacturers forced to introduce battery-powered models that are suitable for all different types of car buyers. 

Failure to meet yearly-increasing sales targets could result in fines for the manufacturers and there would be a separate target introduced for the carbon emissions of their vehicle ranges.

As well as potentially forcing down the prices of traditionally expensive EVs and negate the need for government grants, MPs believe the mandate would provide a clearer indication of how many charging points will needed to ensure there is a suitable infrastructure for the rising use of plug-in cars. 

This will also in turn give the Treasury a clearer picture of how rapidly it will lose revenues earned through motoring taxes on fossil fuel cars – both vehicle excise duty [car tax] and fuel duty – which contribute billions of pounds to its coffers every year.

Failure to meet yearly-increasing sales targets as part of a zero-emission vehicle mandate could result in fines for the manufacturers

Failure to meet yearly-increasing sales targets as part of a zero-emission vehicle mandate could result in fines for the manufacturers

Announcing the strategy in the House of Common today, Greg Hands, junior energy minister, said: ‘The [Net Zero] strategy sets out that we will also introduce a zero emission vehicle mandate that will deliver on our 2030 commitment to end the sale of new petrol and diesel cars and vans.’

Shadow minister, Ed Milliband, responded: ‘We agree with the transition to electric cars and I support and welcome the zero emission vehicle mandate. 

‘But we need to make it fair for consumers. We should at the very least have had long term zero interest loans to cut the cost of purchasing electric cars.’ 

Today’s announcement comes after the Transport Committee’s called on MPs to increase efforts to make electric car ownership more attainable for Britain’s drivers in a paper released in the summer. 

In its ‘Zero emission vehicles‘ report published in July, the committee said there should be a mandate in place before 2035 to boost both the manufacturing and sales of new electric vehicles, requiring those who sell the fewest electric vehicles to buy credits from those who produce the most.

These credits could then be used to cut the purchase price of a new electric car.

And those that fail to meet the required percentage of EV sales per year could face financial penalties. 

MPs on the committee said that ‘shifting the subsidy from the taxpayer to the manufacturer will incentivise those who deliver the fewest electric vehicles in our showrooms to up their game’.  

Responding to the ZEV mandate announcement, Mike Hawes, SMMT chief executive, said: ‘The automotive industry is putting zero-emission vehicles on Britain’s roads at pace beyond all forecasts, such is the choice and appeal of these new models.

‘A well-designed, flexible regulatory framework could help maintain or even increase this pace to ensure we deliver on our shared decarbonisation ambitions.’  

Paul Willcox, managing director at Vauxhall, said a ZEV mandate can work in the UK, though only provided there are ‘complimentary targets on the other key parts of the electric vehicle ecosystem which are key to driving Britain to a more sustainable transport infrastructure’. 

He added: ‘With our Ellesmere Port plant set to become the first electric vehicle only factory within the Stellantis group, we look forward to working with the Government on the detail of how a ZEV mandate can be implemented and help support a sustainable vehicle marketplace in the UK.’

Commenting on the effectiveness of ZEV mandates, Ben Nelmes, head of policy at transport research group New AutoMotive, said: ‘A California-style ZEV mandate will reduce the cost of electric cars for consumers, and provide clarity for businesses – whether they are installing charge points or making electric cars. 

‘Today’s announcement puts the UK well ahead in the global transition to electric cars. 

‘This means cheaper transport for drivers, more jobs and investment in UK car manufacturing and cleaner air for everyone. We now need to see our European neighbours following in our footsteps.’

The AA has been less supporting of such a mandate to reduce battery car prices.

It has previously said that a better way to make EVs more affordable for consumers is to make them VAT exempt.

‘Rather than focusing on tying manufacturers up in red tape to meet EV sales targets, we need to improve the incentives offered to consumers to buy electric vehicles,’ Jack Cousens, the motoring group’s head of roads policy, said in July.

‘Scrapping VAT would be the most influential policy to help spark the electric revolution.’ 

Edmund King, AA president, today added that the ZAV mandate is ‘probably unnecessary’, adding: ‘Manufacturers are already taking big steps in order to meet the 2030 ban on new petrol and diesel cars and vans, but bringing in this ‘red tape’ exercise could harm car production plans already in place.’

Yet he did show support for the extra £620million made available for ‘targeted’ plug-in vehicle grants and EV infrastructure, with the latter focussing on residential charging for those without off-street parking. 

‘This new charge point funding targeted more at the 8 million households without dedicated off-street parking is a welcome step which will give power to electric drivers,’ he said.

‘With the cost of petrol and diesel rising, the desire to switch to electric is stronger than ever before. Should the Chancellor go a step further next week and scrap VAT on targeted new EV sales, he would deliver a truly electrifying Budget that could ‘Get Electric Done’.’   

Jim Holder, editorial director at What Car?, also said that most car makers are already well positioned to cope with a ZEV mandate: ‘The requirement to sell a proportion of clean vehicles each year from 2024 is unlikely to be a concern for most manufacturers who are already gearing towards a ban on the sale of petrol and diesel cars by 2030. While some makers are ahead of others, most new car manufacturers are already offering at least one form of electrified vehicle in their line-up,’ he said. 

It was revealed last week that plans to introduce road pricing as part of the Net Zero Strategy had been shelved amid fears the idea could kill off demand for electric vehicles. 

The Treasury has been examining proposals for the introduction of road pricing to replace the £30billion in lost fuel duty that will result from a move to electric vehicles. But Whitehall sources told the Daily Mail that the idea has been dropped.

‘Road pricing is not happening,’ said one source. ‘There is an issue around revenues that will have to be addressed in the future. But there are no active discussions around it at the moment.’

Officials fear charging drivers by the mile would act as a major disincentive to people considering buying an electric vehicle.

The Prime Minister is also said to be concerned the Government would face a public backlash if it introduced road charging.

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