Hopes for support to strengthen the UK’s electric vehicle sector and charging infrastructure in this week’s Spring Budget have been dashed, leaving many in the fleet and EV industries disappointed.

While the statement did include a continuation of fuel duty relief, extra money for potholes, the new “full expensing” tax break and an extension of the Energy Price Guarantee, there were no specific measures to support the EV sector and help fleets go electric.

That’s despite many in the industry calling for action, including Geotab, which stated that work was needed to “reinvigorate the journey to zero-emission transportation” while others had said the Government should address the lack of charging infrastructure. The Association of Fleet Professionals (AFP) had also called for support to ensure the electrification of LCVs while Monta had urged for “specific grants, incentives, or tax credits for local businesses that want to provide their own EV charge points”.

Campaign group FairCharge meanwhile had renewed its calls to the Treasury to axe the EV ‘Pavement Tax’, equalising the VAT rates for public (20%) and home (5%) EV charging so that those unable to charge at home are not unfairly disadvantaged.

Multiple opportunities missed due to ‘archaic Treasury policy’

Many have now said that the Budget missed multiple opportunities to help drive change.

Quentin Willson, founder of the FairCharge campaign, said: “The Chancellor missed a crucial moment to ensure the UK keeps pace with Europe and the US in the race to net zero. This statement was an opportunity to slash the ludicrous VAT differential between public (20%) and home (5%) EV charging, an unfair and outdated policy hindering EV uptake among those without driveways. It’s enormously disappointing to see this low-cost intervention once again brushed aside. This is a huge policy failure and the mass adoption of EVs in the UK is being sabotaged by archaic Treasury policy.”

David Bushnell, director of consultancy and strategy, Fleet Operations, also said more work was needed.

“EV adoption remains in its infancy and with high energy costs continuing to impact drivers reliant on public charging networks, more must be done to achieve a timely transition to net zero transport. Cutting the public charging VAT rate, to match the rate for domestic electricity, would have been a good place to start.”

Jon Lawes, MD of Novuna Vehicle Solutions, echoed the disappointment over the decision not to lower the VAT on public EV chargers or improve EV infrastructure.

“A VAT cut would level the playing field for those who are unable to charge their vehicles at home due to a lack of off-street parking or an inability to install a home charge point. Furthermore, with the current number of public charging stations unable to meet EV demand, implementing a plan to increase public chargers could have aided in overcoming some of the EV industry’s challenges.

“The Chancellor should have taken more direct action on EV infrastructure. The current system is unfit for 2030 goals and the industry has once again been left without a clear direction.”

Caroline Sandall-Mansergh, consultancy and channels development manager, Alphabet GB, also said that government incentives and further investment in charging infrastructure are crucial to maintaining adoption rates.

She added: “Whilst demand for EVs continues to grow, with BEV forming 33% of Alphabet new car orders in the first two months of this year, wWe are moving away from the early EV adopter population who have transitioned because they can charge easily at home or have access to sufficient workplace charging.

“Now is the time to ramp up support for the wider population of drivers who are unable to charge at home. These drivers are currently faced with paying a significant premium to use the public charging network and the Government has, yet again, failed to address inequity in the VAT treatment between home and public charging.

“Eliminating this disparity would not only have a huge impact for existing drivers, it’s also a very persuasive factor for those fleets and drivers who are yet to make the transition and are debating whether they switch to EVs now or wait for another renewal cycle.”

Failure to tackle growing need for support for auto sector

The UK auto sector also suggested that the Government had failed to provide much-needed help to help the UK compete with “the massive packages of support to power a green transition that are available elsewhere”.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “Indeed, the announced fuel duty freeze contrasts with an absence of measures to boost uptake of zero-emission vehicles, such as reducing VAT on public charging. We, therefore, look forward to additional policy announcements that support advanced manufacturing sectors, as the right conditions will enable the investment that drives growth across the country.”

What Car? editorial director Jim Holder also said the Budget failed to tackle the growing need for significant government support for the automotive sector.

“The industry is at a pivotal point, with countries competing for carmakers to invest into battery and electric vehicle manufacturing facilities. The Inflation Reduction Act in the US has shown how Government support can result in significant investment. If the UK is serious about remaining manufacturing hub in the electric vehicle era, the Government must invest more in the sector, otherwise it risks falling behind its global competitors.”

Introduction of VED for EVs remains controversial

Many also commented about the prior announcement in the Autumn Statement that Vehicle Excise Duty (VED) will be introduced for electric vehicles in 2025 and that EVs will also face the additional rate for vehicles worth over £40,000.

Geotab said the arrival of VED for zero-emission vehicles, coupled with the prior removal of numerous purchasing incentives such as the Plug-In Car Grant (PICG), means the prospect of maintaining a compelling transition ahead of the Government’s 2030 ICE cut-off needs to be better supported.

David Savage, Geotab’s vice president, UK & Ireland, added: “We had hoped to see the Government outlining new cost savings and incentives to electric vehicle adopters, particularly those who charge on the go by bringing VAT for public charging down.

“We hope the Government will continue to consider new ways of incentivising the ‘switch’ to zero emission, ahead of its 2050 net zero ambitions.”

LeasePlan said that it has now made representations to the Department for Transport (DfT) to have the additional rate apply to only the most expensive 20% of EVs.

 

Extended Energy Price Guarantee “is a tremendous boon for EV drivers”

But there was one piece of good news with the announcement that the Government is keeping its domestic Energy Price Guarantee (EPG) at £2,500 a year for an additional three months, until June.

The EPG had been due to rise to £3,000 a year but the Government heeded calls to postpone the planned 20% rise. With energy bills set to fall from July onwards, the temporary extension is expected to bridge the gap and “ease the pressure on families”.

Matthew Walters, head of consultancy services and customer value at LeasePlan UK, added that this “is a tremendous boon for EV drivers”.

What Car’s Jim Holder also said that continuing the Energy Price Guarantee for another three months until June was crucial to support EV demand.

“What Car?’s own research previously found the possibility of rising energy prices from April 2023 put off nearly a quarter of in-market buyers from considering an electric vehicle as their next car. Energy prices are at the forefront for buyers when considering an electric vehicle, and a Government that is targeting a zero-emissions fleet in the future needs to ensure they remain affordable for buyers to run.”