news analysis: picg and budget
Sting in the tail Government cuts plug-in grant after Sunak’s budget extends fuel duty freeze while Furlough and SEISS schemes continue, prompting accusations of inconsistency Mark Bursa
T
here was a sting in the tail for the motor industry
following a relatively tame Budget. Pointedly missing from the annual fiscal statement was any real mention of government policy on electric cars.
Eyebrows were raised – and with good reason, as just a couple of weeks later, the sting in the tail was delivered not by the chancellor, but by Transport Secretary Grant Shapps, who announced, to widespread criticism, a cut in the Plug-in Car Grant, the Governmentbacked incentive programme designed to get motorists to switch to electric cars and vans. The move prompted widespread redrawing of EV prices by manufacturers such as Nissan, Vauxhall, Peugeot and Hyundai, after the Government slashed the PiCG from £3,000 to £2,500 and making it available only for EVs costing up to £35,000. The DfT claimed more than half of EVs currently on sale would remain eligible for the grant, with the proportion of models
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costing under £35,000 almost doubling since 2019. This provoked an angry reaction from the industry. The RAC’s head of roads policy Nicholas Lyes said: “Ministers seem to talk-the-talk when it comes to encouraging people into cleaner vehicles, but cutting the plug-in car grant certainly isn’t walking the walk.” SMMT chief executive Mike Hawes said the government’s decision was “the wrong move at the wrong time”, adding: “New battery electric technology is more expensive than conventional engines and incentives are essential in making these vehicles affordable to the customer.” “Cutting the grant and eligibility moves the UK even further behind other markets, markets which are increasing their support,
making it yet more difficult for the UK to get sufficient supply.” The DfT said in a statement that the reduction was intended to “target less expensive models and reflect a greater range of affordable vehicles available”, spreading subsidies further and helping more drivers switch to EVs. The SMMT called for bigger rather than smaller incentives. Private buyers in Germany receive a €€9,000 grant towards a new EV, while Dutch drivers do not pay VAT on EV purchases, equivalent to a purchase cost saving of around a sixth. The SMMT estimates that maintaining the PiCG at the old level and exempting consumer electric vehicle purchases from VAT would increase uptake by almost two-thirds by 2026 compared to current predictions.
MOTORING ISSUES IN THE BUDGET Earlier, Chancellor Rishi Sunak’s Budget included a freeze on fuel duty and an extension of job support schemes set up
APRIL 2021
