Chancellor announces £600m low emission vehicle boost

George Osborne also delays removal of diesel car supplement, but no changes made to car tax in his Autumn Statement

A £600 million boost to encourage the uptake of ultra low emission vehicles (ULEVs) over the next five years was among government spending plans laid out by the Chancellor yesterday (November 25).

Chancellor George Osborne announced cuts to four department’s spending today (November 9)

Chancellor George Osborne announced plans for government spending over the next five years yesterday (November 25)

And, as well as laying out the detail on spending cuts at Defra, George Osborne said he would delay the removal of the 3% diesel supplement on company car tax until 2021, which will leave drivers of such vehicles facing higher than expected bills from next April.

However, there were no changes Vehicle Excise Duty in order to take into account emissions such as NO2 and particulate matter from vehicles, as was called for last week by the Environmental Audit Committee (see story).

Elsewhere, the Chancellor’s Autumn Statement also committed more than £300 million to cycling investment over the next five years, including the £114 million Cycle Ambition City scheme to construct segregated cycle lanes of 115km in Birmingham and 56km in Manchester.

Car emissions

Between 2015-16 and 2020-21, the government said it will spend more than £600 million to support the uptake and manufacturing of ULEVs in the UK “maintaining the leadership that has seen 1 in 4 of all European electric vehicles built here and keep the UK on track for all new cars to be effectively zero emission by 2040”.

According to the Treasury, this investment will save 65 million tonnes of carbon and “help deliver the Long Term answer on urban air quality”.

The Society of Motor Manufacturers and Traders (SMMT) welcomed the £600 million funding for ULEVs for helping to “maintain the UK’s position as Europe’s fastest growing market for these new technologies”.

In his House of Commons speech yesterday, Mr Osborne said: “The development and sale of ULEVs will continue to be supported — but in light of the slower than expected introduction of more rigorous EU emissions testing, we will delay the removal of the diesel supplement from company cars until 2021.”

The Treasury said that the new EU real world driving (RDE) test procedures confirmed last month to gradually come into force from 2017 (see story) “will ensure new diesel cars meet air quality standards even under strict real world driving conditions”.

However, RAC Business said that company car drivers would “clearly be disappointed by this announcement” as it would “seem unfair to penalise vehicle drivers by extending the Benefit in Kind tax when it was originally based on levels of CO2 emissions, which have improved considerably in the last 10 years”.

It added that the Chancellor had been “influenced” by the recent revelations about emissions test manipulation by German carmaker Volkswagen.

Defra ‘streamlined’

Meanwhile, the Chancellor also revealed the extent of central government departmental spending cuts, with the announcement that spending day-to-day spending on the environment will be cut by 15%.

This was less drastic than previous suggestions earlier this month that Defra would be facing cuts of around 30% to its spending (see story).

However, Defra is still set to be ‘streamlined’ — reducing its administration budget 26% by 2019/20 in a bid to save £123 million.

The 15% savings are to be delivered through efficiencies within the department and across its network. Defra will become a more ‘digital department’ with shared back office functions and roles devolved to the local frontline.

At the same time, Defra will continue to cut regulatory red tape for businesses with a view to secure net savings of £470 million by the end of the current Parliament.

Transport and council cuts

Elsewhere, the Department for Transport (DfT) has agreed to make resource savings of 37% by 2019-20, while Transport for London will need to make a 6% efficiency saving to its annual budget with the announcement that it will lose its resource grant from the government over the next five years.

And, with local authorities at the forefront of the government’s draft UK air quality plan, the Chancellor announced reductions to the local government grant of £6.1 million by 2019-20, although the Treasury said that overall spending in this area would be higher in cash terms by then than it is currently.

The Department for Communities and Local Government (DCLG), meanwhile, will need to make resource savings of 29% over the next five years “through better financial management and further efficiency”.

Related Links:

Autumn Statement and Spending Review 2015


Notify of
Inline Feedbacks
View all comments
Help us break the news – share your information, opinion or analysis
Back to top