FairCharge and CPOs call on Treasury to cut VAT on public chargers

FairCharge founder Quentin Willson has warned of “unintended consequences” if the Government fails to cut VAT on public charging.

The group have coordinated a letter from 23 charge point operators to Treasury and the Chancellor of the Exchequer Kwasi Kwarteng calling on him to immediately cut VAT on public charging or risk the roll-out of the electric vehicle (EV) charging network stalling.

FairCharge and the CPOs want to see a reduction in VAT from 20% to 5% in line with private charging. 

Speaking exclusively to Transport + Energy, Quentin said: “We wanted to put pressure on the Treasury to make them understand that the rising cost of electricity globally coupled with the VAT applied on public chargers means that charge point operators (CPOs) will have a problem investing because some of them won’t be able to make a profit. 

“The infrastructure that we so badly need is entirely dependent on these companies investing. We spoke to 23 and they all agreed to sign this letter that we would send to the Chancellor to say that you are imperilling the whole electric revolution because the unintended consequences of this 20% VAT and a cap on charging costs is that it will disable investment and slow adoption. Car makers may reduce their production of EVs and the battery factories that we so badly need in the UK won’t get built. The whole thing will just grind to a halt.” 

Signatories include the CEOs of Fastned, Instavolt and Osprey Charging who all want immediate action. 

Part of the letter states: “One quick solution, that is totally within your control, is to heed the FairCharge campaign’s call for an immediate cut in VAT on the electricity delivered by our networks. Such a cut would immediately feed through to a reduction in prices. Further, it would show the strength of the Government’s continued commitment to transport decarbonisation. Fundamentally, it would remove the current VAT anomaly that results in those living in terraced houses or flats who need to use our networks who pay 20% VAT as opposed to those with the ability to charge at home who pay 5% VAT.”

Quentin added: “We need to make sure that this revolution isn’t slowed by the unintended consequences of a piece of VAT legislation which was written in 1991 before electric cars were even a twinkle in Elon Musk’s eye. 

“The CPOs are anxious because some of them are facing a wholesale electricity cost of up to 81p per kwh. That’s before they put their profit margin on and the 20% VAT. That will send, or has already sent in some places, a kwh over a pound to charge at a public charger. This means that it is as expensive as filling up with diesel. That’s completely nuts. The whole reason for switching is to have lower fuel costs. If it is on parity with combustion cars, then we will lose our way. The charging network is a strategic asset that we really must cherish and protect. If we don’t then all the money we have spent on the plug-in grants and the chargers at home will be wasted. That’s billions of pounds of taxpayers’ money.” 

The former Top Gear presenter has been assured by EV charging companies that any savings made from a VAT cut will be passed onto consumers. 

“One of the key things they’ve all told me is that if there is a VAT cut down to 5% in parity with domestic charging, then it will be passed onto consumers and not absorbed by the CPOs like the 5p cut in fuel was. The Treasury spent £2.4bn on this and it was instantly absorbed by fuel retailers. The CPOs are adamant that they want transparency and to pass that reduction onto consumers who charge at public charge points.”

FairCharge recently met with members of the Treasury, with Quentin adding: “We had a face-to-face meeting with them a few weeks ago and of the four people in the meeting only one had sat in an electric car as a passenger. That gives you an idea of how distant they are from the whole notion of electric cars and electrification. We need that to change. They’ve told us that they are looking at this and we provided them with information. 

“We told them at the current levels of adoption of electric cars if you subsidise that VAT cut and brought it down to 5% then it would cost the Treasury £18.4m. That is a raindrop echoing in a nation compared to the £2.4bn they spent on the 5p fuel duty cut. They can afford it and if they don’t people just won’t use public chargers. And then that notional revenue that they’re giving away the VAT won’t happen because the usage will fall.” 

More widely, Quentin wants the Government to quickly set out its commitment to net zero. 

“I want this Government to prove that it does have green credentials and they are going to work towards net zero. They’re not really making any noise like that right now and we don’t want the right wing back benchers to dilute this and get rid of the 2030 target (ban on sale of new petrol and diesel vehicles). There’s a real danger that if we don’t put pressure on and tell them that the public broadly wants net zero and cleaner air along with energy independence – then the progress made might inadvertently get destroyed.” 

Protecting consumers

Ultimately, FairCharge wants to protect consumers – particularly those that don’t have driveways and have no other option but to use the public charging network. 

“We are trying to protect consumers who don’t have driveways because they get punished twice. They get punished on the 20% VAT they pay on a public charger and the fact that they don’t have access to the cheaper electric tariffs which energy suppliers will give you at home. 

“That’s socially divisive and we’re talking about the bulk of the population – not the middle-class early adopters – so if we don’t do something then you have that line of demarcation between those that have driveways and those that don’t. 

“It’s a particular moment in time when the Government needs to look at the unintended consequences of what they’re doing now and how that’s going to play out over the next two or three years. 

“We need a quick statement of intent from Government to say we’re going to manage this and that they’re going to reduce the cost for consumers so that this electric revolution carries on. It is not just about climate change – it is about air quality, energy independence, and giving people cleaner air to breathe. We are so far down the road, let’s not destroy it all now.”   

Signatories of the letter include: Michiel Langezaal (Fastned), Adrian Keen (Instavolt), Ian Johnston (Osprey), Ed Chadwick Till (Motor Fuel Group), John Byrne (ESB Energy), Andreas Atkins (Ionity), Adrian Fielden-Gray (Be.EV), Richard Stobart (Char.gy), Peter Lagesse (CityEV), Will David (Clenergy), Chris Pateman-Jones (Connected Kerb), William Silverstone (Dragon Charging), Linda Grave (EV Driver), Lindsay Wallace (For:EV), Neil Isaacson (Liberty Charge), Karl Anders (MER Charging), Keith Brown (Paythru), Keith Hounsell (Plug-N-Go), Bruce Galiford (Raw Charging), Eugenio Herrero (Swarco), Michael Gibson (Fuse), Daniel Heery (Charge My Street) and Melanie Shufflebotham (Zap-Map).

Quentin Willson will be discussing the threats that face electrification and why the Government needs to act on charging costs at the upcoming Transport + Energy Forum event which is taking place on 17 November at the Birmingham Conference & Events Centre. Book your space now.

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