Government responds to Lords EV inquiry

The UK government has responded to the House of Lords Environment and Climate Change Committee’s electric vehicle (EV) inquiry.

The Lords report ‘EV strategy: rapid recharge needed‘ warned in February that a combination of higher purchase costs, insufficient charging infrastructure and mixed messaging risks people not adopting EV cars.                   

In its response, the government agreed with many of the recommendations, but it also merely noted or disagreed with a number of the report’s findings, including around infrastructure, commitments to incentives to purchase EVs, and the FairCharge-led initiative to equalise the VAT differential between public and domestic charging.

On the issue of public charging costs, it said:

“VAT is a broad-based tax on consumption and the 20% standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.

“Expanding the VAT relief already available would impose additional pressure on the public finances to which VAT makes a significant contribution.

“Although there are no current plans to change the VAT treatment of electricity supplied at public EV charge points, the Government keeps all taxes under review.”

In relation to incentives, the government said:

“Government grants have been in place for over a decade to help reduce the up-front purchase price of new EVs. All Government grants are kept under review to ensure the best value for money for the taxpayer. The Plug-in Car Grant was closed to new orders on 14 June 2022, having injected £1.5 billion in taxpayer funding to support the growth of the early electric car market.

“In June 2022, the Government published a public evaluation report, which highlighted that the Plug-in Car Grant was vital in building the early market for electric vehicles. It then had less of an effect on demand than other existing price incentives, such as company car tax.”

The full response to the Lords report is available here.

In reply to the government’s response, chair of the Lords inquiry, Baroness Parminter, said:

“Whilst we welcome the Government’s acceptance of some of the recommendations in our report, it is particularly disappointing that it is not committing to incentivising the purchase of more EVs, equalising the VAT differential between public and domestic charging, or addressing our concerns about barriers to charging in multi-occupancy buildings.

“If implemented, these recommendations would help people to adopt EVs and ensure a smoother journey towards net zero.  Peers will keep urging the Government to do more, as otherwise the EV revolution is a non-starter.”

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