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New Government Green Vehicle Strategy

The new Minister for Transport, Phillip Hammond MP, has vowed to put a halt to Labour’s ‘war on the motorist’, but will the new government keep the previously announced incentives to encourage ultra-low emission vehicles?

In order to get some clarity, ACFO, the organisation for fleet decision-makers, is calling for talks with the new Government as soon as possible to ensure that future tax changes take account of the real world availability of low and zero emission vehicles.

With the newly-formed Government scheduled to announce its Parliamentary legislative programme in a Queen’s Speech due to be held on Tuesday, May 25 and an emergency Budget statement due on June 22, ACFO is anxious that its long-established influential dialogue with a wide cross-section of Whitehall departments continues.

The previous Labour administration made it abundantly clear through the motoring, benefit-in-kind and corporate tax regimes that businesses and company car drivers would save money by running low emission vehicles and zero emission electric vehicles.

Equally, the election manifestos of both the Conservatives and Liberal Democrats each set out initiatives to develop a low carbon economy with electric vehicles to the fore.

But, ACFO chairman Julie Jenner told the annual AGM and Conference held at the MINI Plant in Oxford and attended by 155 ACFO members and guests: “Whilst much is being done to develop this technology both by manufacturers and Government alike, I still maintain we are some way off before a genuinely viable ‘clean’ vehicle is available that will suit the needs of the majority of fleet operators and encourage them to purchase in any great volume.

“A ‘greener’ future undoubtedly appears to go hand-in-hand with an ‘electric’ future but there must be a viable electric vehicle recharging infrastructure and a stable programme of fiscal incentives to encourage up-take.

“The previous Government laid out a programme of tax incentives for five years, but that timescale is already being eaten into and electric vehicle availability remains very much in its infancy. With many manufacturers not planning to launch electric vehicles until late in 2011, 2012 or beyond, we need clarity on how long incentives will be in place for and, ideally, the timescale extended to ensure maximum take-up whilst bearing in mind fleet operating lifecycles and product availability.

“We will be looking to meet with the new ministerial teams at HM Treasury and the Department for Transport to discuss their strategy and submit our views at the earliest opportunity.”

Tax incentives introduced on April 6 to encourage the public and private sector uptake of electric vehicles were:

* All electric cars exempt from company car tax for five years

* All electric vans exempt from van benefit charge for five years

* A 100% first-year allowance provided for the purchase of electric vans

Electric vehicles are already exempt from Vehicle Excise Duty.

In addition, earlier this year the Government announced the establishment of a grant scheme to reduce the cost of eligible electric, plug-in hybrid and hydrogen cars by 25% up to a maximum of £5,000, which would be available to consumers and business buyers from January 2011 and would run until March 31, 2014. However, following the general election there is no guarantee that the new administration will go ahead with the initiative.

Also on April 6 for five years, the percentage of list price subject to company car tax was halved for cars emitting between 1 and 75 g/km of CO2. This means that drivers will pay benefit-in-kind tax on petrol-engined models at the rate of 5% (8% for diesels).

However, at the moment there are no models on sale in the UK that meet the sub 75 g/km level, although the measure is largely aimed at the range of soon-to-be-introduced plug-in hybrid models from some manufacturers.

Ms Jenner said: “Once again the incentive is well-meaning and to be welcomed, but there is little point in using the tax system to encourage the take-up of certain vehicles when those models are not on sale in the UK. Fiscal incentives and model availability need to be linked and then fleet operators can make an informed decision as to whether those vehicles are appropriate to the individual requirements of their transport operations.”

Keywords: New Government Green Vehicle Strategy, Minister for Transport, Phillip Hammond MP, ACFO