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28/07/2010
The Government has confirmed that it will continue with Labour's plans to introduce a subsidy designed to increase take-up of electric cars.
Confirmed by Transport Secretary Philip Hammond, the incentive - which will be worth up to £5,000 - will be available for both private and business fleet buyers of ultra-low carbon vehicles from January 2011.
There were fears that the incentive would be withdrawn in the light of the coalition's spending review - due to be completed in the autumn - which is examining all financial commitments pledged by the previous administration in a bid to slash £6.2 billion from its budget. However, the Government says that it brought this decision forward to satisfy "the need for certainty from investors who are taking long-term decisions".
The consumer grant will reduce the up-front cost of eligible vehicles by up to 25%, capped at a maximum contribution of £5,000. However, the Government says that initially there will be only £43 million in funding, equivalent to some 8,600 grants at £5,000 each - a figure that, it has been suggested, is far lower than initially expected.
This pool of money will serve until the end of March 2012, with the Government reviewing future funding of the incentive in January of that year.
Mr Hammond said: "We are sending a clear signal that Britain is open for business and that we are committed to greening our economy.
"This will ensure that the UK is a world leader in low-emission vehicles.
"We will review the level of the incentive regularly to ensure that the UK remains competitive and taxpayers get value for money."
The subsidy, which is set to apply to electric, plug-in hybrid, or hydrogen fuel-cell vehicles, would see the cost of the upcoming UK-built Nissan Leaf fall from a suggested £28,350, to £23,350, according to some reports.
It had been suggested that the review would affect the £20 million promised by the Labour administration to Nissan in order to develop the Leaf in Sunderland, but last month the prime minister said that the money would still be forthcoming.
Meanwhile, Canadian research released last week has suggested that hybrid vehicles are more expensive to buy and run than their conventionally-powered counterparts.
The research by the British Columbia Automobile Association, which looked at the costs associated with owning 16 hybrid models over a five-year period, found that only one vehicle - the Mercedes S400 Hybrid saloon - was cheaper to run than its closest stablemate.
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