After much uncertainty, the government has today confirmed that the grant of up to £5,000 towards ultra-low carbon cars will go ahead.

The previous administration promised the grant, primarily for electric and plug-in hybrid cars, but the coalition government would not commit to the grant due to the budget deficit.

Exceptionally, the Government has agreed the announcement of this incentive ahead of the completion of the spending review, in order to support the early market for ultra-low carbon cars. The Government says that it remains committed to reducing the UK’s budget deficit, but understands the need for certainty for investors who are taking long-term decisions now on where to launch ultra-low carbon vehicles and where to locate future production.

The consumer grant will reduce the up-front cost of eligible vehicles by 25 per cent, capped at £5,000. Available across the UK, it will be open to both private and business fleet buyers from January 2011.

Paul Clarke, Green-Car-Guide founder and editor, sees the confirmation of this grant as an important signal from the new government. “The coalition government has been talking about how it is committed to the low carbon economy, but it has so far been difficult to see much tangible proof of this in action. By confirming that this grant will go ahead, this really does send a strong signal that David Cameron and Nick Clegg are genuinely taking action to put their words about the low carbon economy into practice. It was always going to be a very difficult decision to balance support for the low carbon automotive industry with the need to show that the era of government handouts is over. This is a good decision and it shows that the government’s words about the low carbon economy and the environment really stand a chance of translating into action in other areas. Perhaps the looming energy crisis, and ensuring we can charge electric cars with low carbon energy, will be the next area to benefit from some smart thinking from the new government.”

Tim Anderson, Consumer Transport Manager, Energy Saving Trust, commented: “The government’s confirmation of the grant programme is great news for the electric vehicle industry in the UK. This funding will give the industry the boost it needs and will encourage the market in the early stages. This announcement sets the UK on a positive road towards low carbon personal mobility.”

The level of the consumer incentive has been agreed until 31 March 2012 and it will be reviewed in January 2012. After taking into consideration a number of key factors such as the costs of vehicles and the development of the early market, the level will then be set for subsequent years.

£43m has been made available up to the end of March 2012. The final budget beyond 2011/12 will be confirmed at the spending review.

Any car eligible for subsidy will have demonstrated compliance against safety and performance criteria. These criteria will be published shortly at www.dft.gov.uk/olev

In the meantime, click here for all the details from the previous government’s announcement about the ultra low carbon car grant scheme .

The Plugged-In Places initiative is on-going and final funding will be decided in the spending review.

Transport Secretary Philip Hammond said: “The coalition Government is absolutely committed to low carbon growth, tackling climate change and making our energy supply more secure. 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 first review will be in January 2012, at which point we will set the level for subsequent years.”

Business Minister Mark Prisk said: “The consumer incentive will help Britain become one of the leading centres for the design, development and manufacture of ultra-low carbon vehicles. It sits alongside public and private sector investment in innovation and infrastructure, leading to the creation of new highly skilled low carbon jobs.”

Energy and Climate Change Secretary Chris Huhne said: “Electric and low carbon cars are fun to drive and essential to meet our climate targets. That’s why we’ll need a massive increase in the number of electric and clean green cars on our roads. Because this is new technology the Government needs to step in to kick start the market which is why today’s initiative is vital.”

Keywords: Electric car grant confirmed