In an interview with Company Car Today, Rachel Maclean, the minister responsible for transport decarbonisation sets out her and the Government’s road map to an EV future
The Government’s decision to ban the sale of new petrol and diesel car and vans from 2030 is arguably the biggest change in transport policy in the living memory.
Despite the deadline being eight-and-a-bit years away, the Government and the industry are working flat out – not least Rachel Maclean, the Conservative MP for Redditch, who is also the minister responsible for transport decarbonisation.
Speaking to Company Car Today, she said: “This is a really exciting time for the industry to change as people are voting with their wallets and their steering wheels and I think we’re all pushing in the right direction.”
She added the Government’s role in encouraging the shift is to “iron out the wrinkles, find out what we need the industry to do and what we need consumers to do, because clearly we all play a part in this”.
The fleet market has been leading the way in decarbonising the vehicle parc, thanks in part to generous incentives offered by the Government, including the current 1% Benefit-in-Kind rate for EV company cars, and Maclean extolled its benefits to CCT, although she said the preferential rates may not exist forever.
“The company car tax benefit is a really good benefit, and we have that clarity until 2025, but of course when we approach that time it will be right to look at the market, look at the price of the vehicles, who is buying them and decide about the best use of government money” she said, adding that her department is “always pushing the Treasury” to increase certainty around future BIK rates.
“We know that’s what businesses want and need. It’s good that we’ve got that certainty at the moment until 2025 and that gives four years of projections for people to make those calculations. We will review the success of that policy at the time and make those decisions with that in mind in the future,” she added.
Another lever that has helped fleets transition to electric power over the last decade is the Plug-in Car Grant. Maclean hailed its success, but warned the government is unlikely to want to subsidise the cost of EVs forever.
“We’ve always said we intend to pivot away the Plug-in Car Grant and put our resources into other areas over time, as and when these vehicles are affordable and people can get them easily, and when the other elements are in place. I think it is right to keep on looking at that because ultimately, we need to make sure we’re not using government money to help people buy cars who could have afforded them anyway,” she explained.
“One of our concerns is to make this an equitable transition for everyone, and of course at the moment electric cars are a bit more expensive, although if you factor in the overall cost of ownership, they will be on a parity soon.”
In March, the Government made changes to the Plug-in Car Grant, cutting it from £3000 to £2500 and lowering the price cap for eligible EVs from £50,000 to £35,000 without giving the industry any warning. Maclean defended this move and said: “It is right for us to look at where it is making the most impact.
“This is why we changed the plug-in car grants last time around, to focus on lower-priced vehicles, because that’s where people are less likely to be able to fund the cost out of their own pocket entirely. With the Plug-in Car and Van Grants, the Treasury provides a pot of money to the department. It’s demand-led but it isn’t unlimited and that’s why we sometimes have to take the decision to limit the cap so that more people can benefit. The view we take is that more people can benefit even if it is a little less, rather than a few people benefiting to a greater extent.”
With company car drivers set to move away from petrol and diesel in favour of electric power, the Government faces the problem of generating revenue that would have traditionally been derived from fuel duty and road tax. One mooted suggestion (something that was backed by Maclean’s predecessor, George Freeman) is charging motorists by the mile to use the nation’s road network.
Maclean said the Government doesn’t have plans to change its policy on road charging, but added: “However, things change because the world changes and we have to change our response to changes in the environment and overall government policy.” It’s a comment that leaves the door very much ajar.
“Clearly, it’s obvious that road tax and vehicle tax plays a big part to our contribution to the exchequer and we need that money to fund the NHS, so there does have to be a conversation about how do we fill that gap, how do we fill so we make the books balance. That’s not news – we’ve always said we’ve had to have this conversation and think about because we have to be a responsible government. If there is a financial gap somewhere as more people move to electric vehicles and aren’t paying road tax or fuel duty, that has to come from somewhere,” Maclean said.
“That conversation will take place, but we don’t have any immediate plans that we’ll be dropping on people because if we make a change like that it is going to be a big change and we’ll have to take the public with us and we have to take the industry with us, it isn’t something any government could introduce overnight.”