Plug-in vehicle spending questioned

The spending of £11 million on government schemes to encourage the use of plug-in vehicles has benefited only a “handful” of motorists, many of them affluent families using grants to help fund second cars, a parliamentary report said today.

The Department for Transport offers grants of up to £5,000 for the purchase of plug-in electric cars as part of its drive to reduce carbon emissions from traffic, and a network of more than 1,600 public charging points has been installed across the country to encourage drivers to switch.

But today's report from the House of Commons Transport Committee raised questions over whether the spending is a good use of public money.

And it accused the Government of sending out "mixed messages", after Chancellor George Osborne's March Budget changed tax incentives in a way which car manufacturers warned could hold back the market in green driving alternatives.

The Government has said it expects to see tens of thousands of plug-in vehicles on British roads by 2015, with independent forecasts suggesting the number could be in six figures by 2020.

The coalition agreement committed the Government to developing a national recharging network of public available charging points.

But today's report found that in the year following the introduction of the plug-in car grant in January 2011, just 1,052 eligible cars were registered, compared to 111 in 2010.

The report found little evidence that take-up of plug-in vehicles was linked to the location of the publicly-funded charging points. A national register of charging points had details of fewer than 500 of the 1,600 installed, said the committee.

Committee chair Louise Ellman said: "The Government must do more to show that its plug-in vehicle strategy is a good use of public money. Carbon emissions from transport must be reduced if the UK is to meet its climate change targets, but public money must be targeted on effective policies.

"So far, Department for Transport expenditure on plug-in cars - some £11 million - has benefited just a handful of motorists.

"We were warned of the risk that the Government is subsidising second cars for affluent households; currently plug-in cars are mostly being purchased as second cars for town driving.

"It is also unclear whether the provision of public charging infrastructure encourages demand for plug-in cars. Indeed, the Government does not even have a register of all the chargepoints installed at public expense.

"Ministers should not sit back and hope that the Government's policy on plug-in cars will reduce transport carbon emissions. Far more work is required to ensure that this programme is a good use of public funds."

The cross-party committee said it "regrets" Mr Osborne's decision to change the incentive framework for low-carbon vehicles without prior consultation in the Budget, warning: "Such unexpected changes to these incentives risk creating instability in the market for plug-in vehicles."

Transport minister Norman Baker said: "Electric vehicles are the arrowhead for a low-carbon revolution in motoring and as more models come to market we are beginning to see sales gather pace - claims for the plug-in car grant in 2012 already exceeding the total claims for 2011 by 50% and new models being added to the list of eligible vehicles.

"The robust procedures we have put in place will make sure that the scheme continues to deliver good value for taxpayers' money.

"It is categorically not the case that this grant is only for rich families wanting a second car - around 75% of purchases made under the plug-in car grants have been by businesses wanting to reduce the carbon emissions and running costs of their fleets rather than by individuals wanting a subsidised second car.

"The UK automotive sector is worth more than £10.4 billion to the economy and we make no apology for supporting the take-up of plug-in vehicles which supports the creation of hi-tech jobs here in the UK.

"We will respond in detail to the report's recommendations in due course."

The British Vehicle Rental and Leasing Association (BVRLA) said it "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".

John Lewis, chief executive of the BVRLA, said: "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."

PA