Fury as green car grant scheme is ditched

The motor industry reacted with fury last night after the Government announced that it would not be proceeding with a scheme offering grants of up to £1,000 towards the cost of buying environmentally friendly cars.

The Transport minister, Stephen Ladyman, said he had decided not to implement the scheme because the £40m available would not be enough to kick-start sales of low-carbon cars and could be better spent elsewhere.

But the Society of Motor Manufacturers and Traders expressed shock at the decision, which was revealed in a written statement from Dr Ladyman to the Commons. Christopher Macgowan, chief executive of the SMMT, said: "We are stunned by this decision. It sends completely the wrong message to consumers and the industry at a time when government claims to be taking the lead on lowering carbon dioxide emissions."

The industry's surprise was all the greater because Brussels gave the go-ahead to the grant scheme only a month ago under its state-aid regime.

There have been no grants available to support sales of low-carbon cars such as the Toyota Prius and LPG-converted vehicles since the Powershift scheme collapsed 15 months ago. The industry had expected the scheme to be replaced by a new grant worth between £300 and £1,000 towards the cost of buying cars which emitted less than 115 grams of carbon per kilometre.

But Dr Ladyman said that the low carbon car programme would only have provided grants for 8,500 cars a year - equivalent to just 0.4 per cent of the new car market - and so would not be enough to transform buying habits. He added that sales of low-carbon cars had continued for the last 18 months despite the demise of the earlier scheme.

"I am not persuaded that giving small grants for individual purchases will deliver significant emissions reductions or change the way we think about green transport," he said.

Instead, the Department for Transport plans to spend the money on a new communications campaign aimed at motorists. There will also be increased funding for research schemes and programmes aimed at van drivers and fleet customers to drive their vehicles in a more fuel-efficient way.