What the committee said about…

…plug-in car grants

The Plug-In Car grant was launched in January 2011. In 2011 1,052 eligible plug-in car grant vehicles were registered, compared to 111 in 2010. We have heard conflicting reports about whether the rate of plug-in car purchases is on track with the DfT’s ambitious predictions and whether the financial incentives on offer are effective.

The DfT believes that the introduction of the plug-in car consumer incentive scheme has had a positive effect on the demand for these vehicles.  Norman Baker MP, Minister for sustainable travel, told us that the DfT monitored the sales of low carbon vehicles and they are ‘on a trajectory on the way up’. 

He was ‘entirely relaxed about the number of cars that have been sold’ as this was ‘entirely in line with where we thought it was going to be.’

Other witnesses were not so convinced. Dr Berkeley, from Coventry University, told us that ‘consumer demand is still lagging way behind’ and that ‘the subsidy is really ineffective because the price is still too high’.

We were warned of the risk that the Government was subsidising second cars for affluent households, as plug-in cars were being purchased as a ‘support vehicle rather than a primary mode of transport’.

…on infrastructure support

This seemed to differ from the interpretation of these results by Mr Baker, who said: ‘We are on target to spend £11 million by the end of 2012–13 from a budget of £30 million.

‘That is good news. That means we have managed to achieve the uptake and the installation of charge points with the private sector without having to commit as much money as we might otherwise have done from the public sector.’

He also said that vehicle sales were ‘entirely in line’ with departmental predictions.18. It seems to us that the Secretary of State and her Minister have differing interpretations of the budget underspend on low carbon vehicles. The former told us that the budget underspend arose because there has been ‘low’ take-up on this programme, whilst Mr Baker believes the underspend reflects greater private sector involvement to support a programme that is progressing entirely according to forecasts. The DfT should clarify the reasons for the underspend in its low carbon vehicle programme.

‘We looked at the location of chargepoints, as set out on the National Chargepoint Registry, and the location of vehicle purchases to see if a relationship between infrastructure supply and vehicle demand could be found.  However, we could not see any such relationship. We instead found that the National Chargepoint Registry was far from comprehensive, lacking even the location of the majority of chargepoints installed with public funds,’ said Mr Baker.

‘Further work is required before this resource can be made useful for the public.  In the meantime, we recommend that the DfT should evaluate the effectiveness of providing public infrastructure as a means of encouraging plug-in vehicle sales and ensure that the locations of all chargepoints funded by plugged-in places are uploaded onto the National Chargepoint Registry within the next six months,’ he added.

The Coalition Agreement committed the Government to developing a national recharging network of publicly-available chargepoints. Plugged-In Places was launched as a series of trial projects to install these chargepoints at selected project locations across the UK. Initial public investment in charging infrastructure was designed to provide reassurance to potential plug-in vehicle owners that they would be able to charge their cars in public spaces if necessary. The DfT hopes that this will stimulate demand for plug-in vehicles. 

…on taxation

We regret the Treasury’s decision to change the financial incentives framework for low carbon vehicles without prior consultation. Such unexpected changes to these incentives risk creating instability in the market for plug-in vehicles.

Speaking to the committee, General Motors said: ‘We were disappointed with the recent announcements in the 2012 budget relating to low carbon vehicles. In order for low carbon vehicles to be successful they require a taxation system that encourages their uptake.  Increasing the company tax rate for low emission vehicles after 2015 and preventing leased business cars being eligible for first year capital allowances will not help this. This has made purchasing a plug-in vehicle less attractive to the corporate consumer with little overall benefit to the Exchequer.’

What the industry said:

The British Vehicle Rental and Leasing Association has welcomed the Transport Select Committee report on the Government’s Plug-in vehicle strategy.

In particular, the association fully endorses the committee’s criticism of the way in which the Treasury changed the framework of financial incentives available for early plug-in vehicle adopters without any consultation.

Although the Government insists that the business fleet market is vitally important to the uptake of low-carbon vehicles, the last Budget announced the removal of a number of key tax incentives for plug-in cars.

‘The Government needs to radically rethink its Plug-in vehicle policy, which isn’t working,’ said John Lewis, chief executive of the BVRLA.

‘Nearly two-years on from the launch of this policy, we have a huge underspend and just a trickle of plug-in vehicle sales.

‘Companies and drivers still have a lot of uncertainty about this new technology and these cars aren’t going to start selling in serious numbers until the government undertakes a major review of its strategy and incentives.’

The BVRLA is suggesting an array of long-term incentives that would also appeal to the second and third owners of used electric vehicles, instead of throwing £5,000 at people who buy one new.

These incentives could include a reduction in or exemption from Vehicle Excise Duty for the life of the vehicle; financial help with installing domestic charge points; guaranteed lower rates of company car tax; and exemption from parking fees and congestion charges.

The BVRLA also agrees with the Transport Committee’s suggestion that the Government needs to set targets for the uptake of electric vehicles, so that the success of its Plug-in Car Grant incentive can be more accurately measured.

What the suppliers said:

Alexandra Prescott, operations manager of Charge Your Car, said: ‘Investing in the eight Plugged in Places programmes has been an important and productive way of understanding the needs of EV drivers and encouraging low-carbon driving.

‘However, the unintended consequence has been the creation of closed regional networks, meaning that EV drivers are unable to ‘roam’ and have to join multiple schemes and pay multiple subscriptions.  Along with the high purchase price of EVs, this is a major factor that has contributed to slow sales.

‘The Transport Select Committee’s report calls for a solution to this problem, stating that it should be a priority for the DfT to make sure EV drivers can access charge points across the UK, and that they: ‘should set out how it will work to remove barriers to charge point access across the country’.

‘What is required is freedom of access to a fully-interoperable recharging network – or networks – across the UK.’

 TSC’s nine point-plan to improve EV take-up

1. Better Promotion ‘We recommend that the Government promotes public understanding of the availability of infrastructure and the support available for plug-in vehicle purchases.’

2. More consultation with the industry ‘We regret the Treasury’s decision to change the financial incentives framework for low carbon vehicles without prior consultation. Such unexpected changes to these incentives risk creating instability in the market for plug-in vehicles.’ 

3. Spend money better ‘The DfT should clarify the reasons for the underspend in its low carbon vehicle programme.’

4. Access ‘Making sure that vehicle owners can access chargepoints across the UK should be a priority in the DfT’s plug-in vehicle strategy. The DfT should set out how it will work to remove barriers to chargepoint access across the country.’

5. Standardisation ‘The DfT should set out how it intends to reach agreement in the EU on the type of infrastructure to be used as standard for plug-in vehicles.’

6. Infrastructure evaluation ‘The DfT should evaluate the effectiveness of the provision of public infrastructure in encouraging consumer demand for plug-in vehicles.’

7. Chargepoint information ‘An accurate and comprehensive registry of chargepoints installed by the Plugged-In Places scheme should be made available within the next six months.  Publication of a full registry should encourage private chargepoint providers to upload their data for public use.’

8. Consistency ‘The Government must avoid creating instability in the plug-in vehicle market through a lack of consistency between departments in their approaches to financial incentives for plug-in vehicles, and adopt a more coordinated approach to these incentives across Whitehall.’

9. Clearer targets ‘We recommend that as part of the next spending review, the Government set milestones for the numbers of plug-in cars it expects to see on the roads so that the success of its low carbon vehicles strategy can be assessed within that spending review period.’