Cuts Watch #154: Partial Reprieve for Low-carbon Vehicles
The government announced this morning that the £5,000 subsidy for low-carbon vehicles will not be axed. Exceptionally, the announcement was made without waiting for the Comprehensive Spending Review.
Three weeks ago, we reported that the last government’s planned support for electric, plug-in hybrid and hydrogen cars – due to be introduced in 2011 – was being reviewed by the Coalition. Today’s announcement confirms that a grant of 25 per cent of the cost of new low-carbon vehicles – up to a cap of £5,000 – will be made available from next year.
There are small print details:
- The last government planned to spend £230 million on the subsidy, today’s announcement only mentions £43 million, the difference being accounted for by the fact that today’s announcement only covers 2011-12. The CSR will decide the details beyond 2012.
- New low-carbon cars will not be 25 per cent cheaper next year, because the subsidy will come in to effect at the same time as the increase in VAT.
- The last government’s plans also included a ‘Plugged-In Places’ initiative to provide the necessary infrastructure for low-carbon cars, at a cost of £30 million. This is unaffected by today’s announcement and is still subject to the CSR.