Chancellor charges up electric car market with £390m funding push

James Murray
clock • 5 min read

Autumn Statement delivers surprise boost for ultra-low emission vehicle sector and retains carbon price floor, as annual address is overshadowed by stark fiscal updates

Chancellor Philip Hammond has announced an additional £390m of funding to help build on the UK's position as a "leader" in the adoption of electric vehicles (EV) and self-driving cars, as part of an Autumn Statement that promised to support those "cutting edge British businesses that are leading the world in disruptive technologies".

Hammond said in addition to further funding for ultra-low emission vehicles the government would extend tax breaks for EV charge points and confirmed corporate tax breaks for ultra-low emission vehicles and cycle to work schemes would be retained, despite a wider crackdown on benefit-in-kind incentives.

The moves are likely to be welcomed by the fast-expanding green car sector, including EV manufacturer Nissan, which recently stepped up investment in its Sunderland plant following a series of assurances from the government about the potential impact of Brexit on its UK operations.

Erik Fairbairn, CEO of EV charging infrastructure specialist POD Point, hailed the announcements as a "game changer" for the industry

"The combination of this new investment, and the tax incentive, really is a game changer for our industry, which will essentially fuel the first wave of mass adoption of electric vehicles in the UK," he said. "It is exciting to see that the government now clearly recognises the central role that EV can, and will play in reducing the environmental impact from transport."

However, in addition to boosting efforts to cut carbon emissions and air pollution from road transport Hammond also announced plans for expanded road-building programs and cancelled the planned fuel duty rise for seventh successive year.

Hammond hailed the move as a tax saving for households and businesses of £850m and the longest period for 40 years in which fuel duty has been frozen. He added that it would save the average driver £130 a year, and the average van driver £350 a year.

But the move is likely to be slammed by green groups who have long argued fuel duty should be increased to help tackle air pollution and incentivise a shift toward more fuel efficient vehicles.

Hammond also confirmed plans announced earlier this week for an additional £2bn of investment in science and research and development, and vowed he would continue to deliver much needed investment in infrastructure, including rail upgrades.

Specifically, he promised to tackle the productivity gap, which means a British worker produces in five days the same amount as a German worker produces in four days.

Hammond announced a new £23bn National Productivity Investment Fund to help address the problem that will be "spent on innovation and infrastructure over the next five years".

The Chancellor also confirmed previous business tax plans to cut corporation tax to 17 per cent, extend tax breaks for the North Sea oil and gas industry, and retain the carbon price floor (CPF) at current levels until at least 2020 will be retained.

The CPF had faced criticism from some industry groups, who accused it of undermining the competitiveness of British firms by pushing up energy bills.

But the CBI, Energy UK and green groups argued the tax should be retained given the crucial role it has played in forcing coal power off the grid far faster than expected. The government has also stressed new measures have been introduced in recent years to protect certain industries from energy policy costs.

"It is good news the government has heeded the call to provide certainty and stability for investors and business," said Dr Doug Parr, chief scientist at Greenpeace. "This is a policy that needs to stay in place until the historic coal phaseout is locked in and renewables plus battery storage and interconnectors are lined up to fill the gap in the long run."

However, Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit (ECIU), said clean energy investors were still being hampered by long term policy uncertainty.

"Despite claiming to provide certainty to businesses, Mr Hammond has failed to offer any clarity for the energy industry beyond the short term," he said. "Freezing the carbon price support to 2020 was already announced in the March Budget, while deciding on the future of the levy control framework has been delayed until next year.

"Considering the long-term nature of energy investments, clarity more than three years into the future is vital for the industry. Vast swathes of the UK's generating capacity are reaching retirement age, and long-term clarity on carbon pricing would provide investors with the platform to back much needed new low-carbon equipment."

Any boost for green industries is also likely to be overshadowed by the stark changes to the Office of Budget Responsibility's fiscal forecasts, revealed by Hammond. Growth next year is now expected to be 1.4 per cent, down from previous forecasts of 2.2 per cent, while debt is expected to peak at 90.2 per cent of GDP in 2018 - a half century high.

WWF-UK's director of advocacy Trevor Hutchings said the Autumn Statement was a missed opportunity for the green economy.

"An ever-shrinking natural environment, climate change, air and water pollution, and declining wildlife populations present our economy with risks and costs that could run into billions," he said. "This statement was an opportunity for the Chancellor to minimise these costs, and to position the economy to take advantage of huge international markets in low-carbon energy and technologies. It's therefore unfortunate that the Chancellor did not have more to say about green growth."

Green Party co-leader Caroline Lucas struck a similar note, attacking Hammond for failing to make any mention of climate change.

"With Trump's election this could have been a moment for Britain to become a world-leader in the fight against catastrophic climate change but, instead, we see little evidence of a commitment to facing up to the greatest challenge of our times," she said. "Indeed, it is shameful that the Chancellor failed to even mention climate change in his speech. By caving into the motor lobby and freezing fuel duty again for the seventh year in a row the government has made a mockery of the fact that it is the hottest year on record and condemned us to more carbon emissions and deadly pollution."

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