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Baroness Parminter
That this House takes note of the Report from the Environment and Climate Change Committee EV strategy: rapid recharge needed (1st Report, Session 2023-24, HL Paper 51).
Baroness Parminter (LD)
My Lords, it gives me great pleasure as the past chair of the Lords Select Committee on Environment and Climate Change to open this debate on electric vehicles. While recognising that the transition to EVs is only one part of the necessary broader transport transition that this country has to make, it is an incredibly important part. Passenger cars account for over half of our surface transport emissions and contribute to the almost 30,000 deaths from air pollution annually in the UK.
It is really important and, as the independent Climate Change Committee said, it is one of the most important actions if we are going to get to net zero. Given that electric vehicles account for only 3% of cars on British roads at the moment, it is an urgent priority. We know it is not going to be easy. ICEs—internal combustion engines—have dominated our roads and popular culture for over 100 years. Even though I am an EV driver and I know that they are clean, quiet and great to drive, it will be a big challenge to bring the British public away from petrol and diesel and into electric vehicles. It will require planning, co-ordination and an awful lot of leadership from the Government.
It was right for our committee to look into the record of the last Government in terms of their approach and success in getting people out of petrol and diesel cars and into electric vehicles. We identified that there had been some progress—certainly there has been an increase in charge point infrastructure, and legislation to ban new petrol and diesel cars from 2035. These were important steps, but overall our committee concluded that an urgent recharge was needed in the Government’s strategy for EVs.
That was, of course, when we reported in February, so it was under the previous Government. It has to be said that, since the new Labour Government have come in, they have hardly put their foot to the floor in terms of delivering on the EV agenda, despite the fact that there were some incredibly welcome proposals both in Labour’s automotive sector plan last year and in the general election manifesto. So it is timely to have this debate today, because the recommendations we made in February are still relevant and, with the upcoming Budget, now is the time to make those strides to bring people with us on the EV transition that is so necessary.
The first thing we identified as a committee is that we are not going to bring the British public with us unless they know where they will be able to charge their electric vehicles. As I said, we identified some progress—when the Minister came before our committee last November, there were 57,000 public charging points; that has now gone up to 70,000. So progress is being made. Indeed, when EVA England did a survey of electric vehicle drivers earlier this month, it identified that two-thirds of EV drivers think that in the last year there has been a big increase—a big improvement—in the public charging point infrastructure. But, as more cars come onto the road, we will need more charge points.
The Government set themselves an advisory target of 300,000 public charge points by 2030. When the Society of Motor Manufacturers and Traders came before the committee, it said that we needed over 2 million charge points by 2030—so we really have to motor on with getting more charge points installed. That is why we as a committee said that the Government needed to mandate local authorities where there are black holes—and there are black holes around our country—to prepare EV strategies to ensure that we are getting the EV infrastructure where we need it.
We also called on the Government to extend the LEVI fund—the local electric vehicle infrastructure fund—which is funding capacity building within councils and providing direct subsidies for charge points. Both those things were, we felt, critical. I hope that in summing up the Minister will say what his current thinking is, particularly on extending the LEVI fund. That is a particularly important part of where we need to be.
As I said, there were some incredibly welcome comments about the transition to EVs and the need to accelerate the rollout of charge points in Labour’s manifesto. Indeed, it picked up some of the recommendations in our committee report, including removing some of the planning barriers that are stopping charge points being introduced. I ask the Minister, when will we see the consultation on the permitted development rights for charge points? I think this is an issue that the noble Lord, Lord Lucas, may wish to come back to in a moment. Also, are the Government minded to agree that renters need to be given a right to charge? It is quite clear that some landlords are blocking renters installing charge point infrastructure.
Finally in that area, the other thing that we were very clear on is the totemic issue of charge points in motorway service stations. We know that people will not buy an electric vehicle if they do not feel confident that there will be charge points at motorway service stations when they take the family away to see relatives at Christmas. The previous Government set and failed to meet their target for six high-powered charge points at all motorway service stations. This Government need to be very clear in saying when they will be able to meet that really iconic issue of charge points in motorway service stations.
Of course, it is not just where you are going to charge your EV that is an issue for the public. One of the other issues that we found was a real barrier for people was the upfront costs of electric vehicles. EVs are still not affordable enough for all people who need to have a car. They are more expensive than their petrol and diesel counterparts and there are not yet enough affordable models on the market. We looked at examples across other European countries that are starting to move away from early adopters into mass saturation markets. All of them have retained fiscal incentives, normally grants, to encourage people with the upfront costs of EVs. Sadly, the last Government got rid of those grants back in 2022 and we as a committee felt that that may be one of the reasons why EVs are still only 17% of new car sales in this country. We need to do better.
It is not just the upfront costs of cars that we found to be an issue; it is also the ongoing running costs. The biggest concern that I had—I say that, knowing I speak merely as a representative of the broader committee—is that, as someone with off-street parking, I can charge my EV and it costs me 5% in VAT. Anyone who does not have home charging has to pay 20%. The committee identified that up to 40% of the population does not have access to off-street parking and, therefore, the ability to get that cheaper rate of VAT for charging. That is not equitable and I would hope that a new Government—a new Labour Government—would see both the issue of equality as well as the impact on the ongoing running costs for cars.
Committee members will know that we conducted an inquiry a couple of years back on mobilising behaviour change for net zero and the environment. One of the things we found was that people really wanted to get towards net zero, but they wanted the decisions and the policy actions to get there to be fair. Having VAT at a differential rate if you do not have the advantage of owning your own home and your own parking space is not fair. Our committee made it very clear, following the almost unanimous evidence that we had from people, that the VAT rate should be equalised and that fiscal policy should follow net-zero policy. So I hope that the Government will look at that issue in the upcoming Budget. The Minister may also wish to comment on the need for fiscal incentives when buying EVs.
But it is not just charging and upfront costs. The third big barrier the committee identified was the need to give people clear information. This is a really big societal change, yet the information for people about EVs—the benefits to them and to society—just is not there. If you looked in the papers, you would not know that nine out of 10 EV owners would not go back to petrol or diesel, or that the lifetime costs of an EV are currently cheaper than for petrol and diesel. What the committee found was a blatant amount of misinformation. Very interestingly, we looked at a number of the broadsheets and other media outlets and found an awful lot of focus on the fire risks of electric vehicles, so we went away and looked into the evidence. They are no more of a fire risk than petrol and diesel cars—so we concluded that there was a blatant campaign of misinformation.
When we launched our campaign in February, a number of the newspapers, including the Daily Telegraph, again showed their fossil fuel-soaked colours. Anthony Browne, the then Minister, came before the committee. We asked him whether there was a concerted campaign of misinformation, and he agreed with us. He said that there was—it was just that the Government were not going to do anything about it. In fact, not only did they not do anything about it, when they pushed the date of the ban on new ICE cars back from 2030 to 2035, the message the public got was that going to EVs was not a priority and that we can afford to wait, whereas they should have been clear with people that this is an urgent priority. Indeed, the then Prime Minister Rishi Sunak went further: when he made that announcement, he said that going to net zero was going to be hard.
We cannot get to net zero without EVs, and we need our Government to face down people who do not believe in net zero. We may not have a Conservative Government, but we certainly have Reform UK down the other end who see this as a rallying cry, and there are siren voices in this House and beyond who need to be called out. The Government need to take every opportunity they have—they have one coming up in the Budget in a couple of weeks—to make it clear to the public that they are on this journey and they are going to support people on it and make some critical interventions, including the equalisation of VAT and a clear statement on not watering down the ZEV mandate, so that people know where they stand and the direction of travel. As our committee said, that should be allied with a 10-year road map which gives car companies policy certainty, investors the confidence to invest and people the information they need.
I am going to stop fairly shortly, but our report covers many other issues, including the need for better recycling facilities for batteries, battery health checks and, critically, decarbonising the grid so that the electricity cars use helps us move towards net zero. I am relying on the many of members of the committee I see in the Chamber today to pick up one or two of those issues. I thank them for their support today and, indeed, throughout the committee. It was a great privilege to chair it. I also thank the staff for producing the report.
I also thank the six schools and colleges which supported us in our youth engagement programme and gave us their wisdom, thoughts and reflections on this issue, which is going to be as much about their future as it is for some of us. I put on record my thanks to Boroughmuir High School in Edinburgh, Loreto Sixth Form College in Greater Manchester, Barnsley College, Langley College in Slough, the London School of Excellence and St Louise’s Comprehensive College in Belfast. They were a great support to us all.
Finally, I hope the Minister, who will be listening to all the comments noble Lords make this afternoon, will be able to make it clear that this Government are committed to a fast track to EVs. We cannot get to net zero without it. Our report was very clear: an urgent recharge of the EV strategy is needed, and we need to make sure that we go in the fast lane to net zero in electric vehicles.
Lord Woodley (Lab)
My Lords, I warmly welcome the report, which deals statistically with a large number of important elements, not least the rapid recharge, which has just been mentioned. Knowing our industry as I do, there should already be a minimum of 50 kilowatts, with a minimum of 100 kilowatts on trunk roads.
Electric charging is expensive. VAT needs to drop from the present 20% to 5% to give people a chance, and it should cost the same to charge on the streets as it does in your driveway. If we are to sell more electric vehicles, the road tax needs to be reduced, and the issue of charge points, which has just been mentioned, needs to be addressed too.
However, I am going to concentrate on manufacturing EVs and the financial penalties which put an unsustainable pressure on manufacturers. For a successful transition, we need to review the present inflexible approach, developed by the civil servants who produced the zero emission vehicles mandate. This was designed when we had a growing economy, interest rates were low—as was the cost of finance—and sales were picking up, which was hoped would lead to lower costs for manufacturing batteries and other things.
However, that is not the case now. The market has collapsed, apart from fleet sales, so we need incentives, both to build and to buy. The ZEV mandate requires manufacturers to sell a percentage of new EVs each year from 2024. It starts this year at 22% and progresses, hitting 80% in 2030. The mandate therefore means that if 22% of your total UK sales are not electric vehicles, for every non-EV vehicle sold up to the target number you will be fined—£15,000 per car. It is ridiculous.
Presently, the industry is falling short of its quotas: by about 4%, which equals—wait for it—£1.4 billion in fines. Companies are already subsidising each electric vehicle by about £6,000 to get sales, which means extra costs of £2 billion on top of the £1.4 billion in fines. It is simply unsustainable for our industry.
Ironically, fines of £15,000 per vehicle under the target can be offset by purchasing credits from those who have exceeded their targets, which can be only the Chinese or Tesla. Either way, the money will not be there for jobs or investment. The idea of UK manufacturers paying the Chinese or the Americans billions in credits is a nonsense and, I suggest, political suicide in automotive constituencies across the country.
The answer is two-fold. First, there needs to be a VAT reduction and equalisation of VAT on public and private charging, and the VED extra tax on expensive car purchases—unfortunately, electric vehicles are expensive at the moment—needs to be scrapped. Secondly, we need a ZEV mandate adjustment, including using 2024’s figures as a reset mechanism to assess the actual market for EVs, and to adjust the trajectory to 2030 accordingly.
We should include EV exports from the UK and commercial vehicle EV sales within the credits. The two Vauxhall plants in the UK, which make only vans, are caught up in this quotas turmoil. Let us be clear: these plants, which the last Government put money into, are at serious risk of being closed if the credits are not sorted out.
Another measure that would be the right way forward would be to allow pre-2024 EV sales in this year’s first quotas, and UK-manufactured vehicles should get additional credits, recognising that there are no “distribution emissions” or the environmental cost of shipping vehicles from as far away as China, the US and Korea. It makes sense. Indeed, the French have already done this. Why cannot we? The US also does this, and it better reflects actual emissions in the sale by including the emissions to get it there in the first place. The US states with ZEV legislation also give up to four credits for “local” built vehicles—again, why can we not do that?
We really need to pause while all this is sorted out, and flexibilities in the system to recognise the reality of the market for EVs right now. We also need time for any changes to bed in and feed into the marketplace. There is an awful lot to be done, but the good news is that our manufacturers, in the main, are prepared for 2030. But incentives to grow the market and help manufacturers and the infrastructure, which has been mentioned, must be put in place in a timely fashion, alongside the much-needed infrastructure improvements outlined in this tremendous report.
Lord Lilley (Con)
My Lords, it was a great privilege to serve on the committee under the noble Baroness, Lady Parminter. Like her, I am no longer in it. Her departure is greatly missed; I suspect that mine, since I was the grit in the oyster on that committee, was much welcomed by its other members. It is also a privilege to follow the noble Lord, Lord Woodley. He made some important points, which I hope I will be able to suggest—probably to other people’s surprise—are not quite as much of a worry as he suggested.
One of the problems with most Select Committee reports is that they tend to be all words and no numbers. Committees show an extreme reluctance to discuss the costs of their proposals to the taxpayer or the consumer. I was originally trained as a scientist; drilled into us was Lord Kelvin’s remark:
“When you can measure what you are speaking about, and express it in numbers, you know something about it. When you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind”.
It may be the beginning of knowledge, but you have scarcely in your thoughts advanced to the stage of science. That is even more true in economics. If you cannot even estimate the costs or benefits of a policy, you can scarcely claim to have advanced to the stage where you can make policy recommendations.
Happily, this report is not devoid of numbers, albeit that most of the important ones are well hidden and the obvious conclusions that might be drawn from them have not always been drawn. I will focus on some of the key numbers in this report, but none of them appear in the initial recommendations. The upfront conclusions on page 4 use all sorts of euphemisms and verbal circumlocutions to avoid mentioning that they will cost money.
Perhaps I might translate what the report actually says. The first recommendation is:
“Tackle the disparity in upfront costs between electric and petrol and diesel cars”.
That means subsidising or, as the noble Lord, Lord Woodley, remarked, penalising the sale of petrol and diesel cars. The second recommendation is:
“Turbo-charge the charging infrastructure rollout”.
That means subsidise it. The third is:
“Ensure charging is reasonably priced, convenient, and reliable”.
That means subsidising fuel costs further. The report goes on to say that
“the Government must explore options for equalising the discrepancy between the VAT rates for domestic and public charging”.
Now there is no conceivable likelihood that the Government will put up VAT on domestic electricity, so that is a call for VAT on public charging points to be reduced, further increasing the subsidy on fuel costs for electric vehicles. I will return to the important fifth point later, but the sixth point is:
“Enhance UK manufacturing and battery innovation”.
That means more subsidies. The seventh is “Invest in UK recycling”—a new area for government subsidies. And so it goes on.
The problem is that the existing level of subsidies is very high, before we add to them from any of the proposals in this report. You have to get to page 33 or 34 to find out how much the subsidies are. They reveal that a privately owned EV is already subsidised, relative to petrol cars, to the tune of £5,000 over 10 years—it actually says £5,000 on page 34 and €5,000 on page 33, but I think the former is correct. However, corporately owned vehicles are subsidised to the tune of £10,000 in just four years. Those are big subsidies, particularly the latter. No wonder the vast majority of sales are to company fleets. If we are to subsidise EVs, it baffles me why the bulk of the money should go to those owned by companies—but so it is.
The main subsidy for private vehicles is, of course, the fact that they pay no duty on their fuel, which is electricity. You have to reach page 36 to find the total costs of this as EVs gradually replace fossil-fuel vehicles. The OBR has pointed out that fuel duties raised £23.4 billion last year, equivalent to £867 per household. That means that, if we forge ahead and succeed in phasing out those vehicles by 2030, we will have created what we might call a black hole in the nation’s finances, heading towards £23 billion as older vehicles are retired and used less.
The committee mentions the important issue of road tax in its fifth recommendation. It simply says that we should:
“Begin an urgent review of road taxation”.
It calls for an honest conversation with the public—quite right. Sadly, the committee did not agree to initiate this honest conversation by honestly admitting that the only option to replace this revenue is to introduce road charging. If we in this House, who do not have to get re-elected, do not have the courage to be honest enough to say that we are going to have to introduce road charging to replace fuel duty, how can we expect the people in the other House, who do have to get re-elected, to broach the subject until that black hole in the public finances is upon us?
The penultimate figure from the report is highly relevant to the decision on whether to phase out the sale of non-EVs sooner or later. There was much criticism of the previous Prime Minister’s decision to postpone the date beyond which sales of fossil fuel cars would be banned—delaying it from 2030 to 2035. There is rather less criticism now. The car companies seem rather relieved he did that, since sales are slower than was anticipated. We were told by the Society of Motor Manufacturers and Traders—which is of course largely a society of traders, and largely represents foreign companies exporting cars to this country—that this had a damaging effect on British manufacturers, who would not have the incentive to develop EVs. However, this ignores the strange nature of the British car market.
We export the overwhelming majority, more than 80%, of the cars we manufacture, and more than 80% of the cars we consume are imported. Indeed, on page 22 of the report you will discover that no less than 97% of the electric vehicles sold in the UK in the last quarter were imported. Most of the EVs produced in this country are presumably exported. So these changing rules only really have a major effect on EVs and other vehicles sold in the UK. Given that 80% of our vehicles are exported, the effect of these rules on our production falls on only one-fifth of the production, 20%. They are mainly affected by the rules of the countries to which they export, so I hope the damage that it does to British manufacturing will be less than the noble Lord, Lord Woodley, fears.
I am reasonably sure that electric vehicles will, eventually, displace petrol and diesel cars without subsidy, when their upfront price comes down to equal that of petrol and diesel cars, when the range of batteries is sufficient so that a normal journey would never require recharging, and when recharging is rapid. Actually, recharging is probably less of an issue than we imagine in this report. For the 60% of people who can keep cars off-road, the normal thing they will do after they use their car and come home is plug it in. The next morning it will be charged. They will not have to stop at the gas station as they would in a petrol car because they will have a fully charged car—so it is actually better. But for the 40% who do not have off-road parking, there is a problem we did not really find a solution to.
When will the price of electric vehicles come down to that of petrol and diesel? In the report, we quote people as saying that
“Other predictions for when average EV prices will meet those of petrol and diesel vehicles range from 2025–27”,
so, apparently, it will be quite imminent. So why are we subsidising people to buy expensive vehicles when they could have them at more or less the same price as the alternatives in a couple of years’ time? It is forecast that, by 2025, the price would be down to about £21,000 for an EV in Europe. Actually, you can get one for £22,000 now in the UK, so they are coming down to a similar price.
We should remember Dieter Helm, the great energy expert, who was asked by the Government to analyse their energy policy. He concluded that the big failure was that we had invested in immature technologies. He said that investing in technologies—which were going to become mature and cheap—when they were still immature and expensive had probably cost us the best part of £100 billion. So why are we encouraging people to do that in the EV market?
I suggest that we should look at this report and the figures, and draw conclusions from them. We might be a little more optimistic than some of the pessimists and a little more realistic than some of the super-optimists.
Lord Birt (CB)
My Lords, I congratulate the noble Baroness, Lady Parminter, on her commanding introduction, and I congratulate the committee on producing a truly comprehensive report of real ambition. My only criticism is that it is far too polite. The committee strictly identifies the gulf between aspiration and delivery thus far on our journey to net zero, and it offers no hope that, on current trends, we are even remotely on course to meet our long-term targets for decarbonising road transport. Decarbonising and expanding the production of electricity, decarbonising the heating of our homes and buildings, and decarbonising road transport must be our prime goals if we are to play our part in reducing the impact of climate change.
Today, only one in 30 of the vehicles on our roads is an EV, with annual sales of new EVs apparently flattening at around 16% of the total. I am an EV owner, and it is easy to see why take-up has been so slow—the committee’s report evidences this well. First, although the lifetime cost of owning an EV is economic, EVs are more expensive to buy up front than petrol and diesel vehicles. Will the new Government seek more ways to incentivise EV purchase and increasingly to disincentivise the purchase of vehicles powered by petrol and diesel?
The second factor inhibiting take-up is that, on the move over longer distances, the charging experience is infinitely less convenient than buying petrol. I am a member of the APPG on EVs, and we were told by a leading motorway service provider that one major motorway service station has no charge points at all. One station has installed charge points, but they are not in service because an adequate grid connection cannot be obtained for some years still to come. He told us that, in busy periods, he has to deploy stewards to avert fights breaking out on charge point queues. Only 63% of motorway service stations have over six charge points, and only around 40% have six or more rapid chargers. In the whole of the UK, there are fewer than 4,000 ultra-rapid charge points. Will this Government ensure that motorway service stations up their game and that grid connections to charge points used by long-distance drivers will be prioritised?
The third reason for the low take-up of EVs is that there is huge variation across the country in the availability of public charge points. The EV APPG was told that 80% of UK public charge points are in London and the south-east. I see from the committee’s report that there are over 100 times more charge points per head of population in Hammersmith and Fulham than in the Wirral, west of the Mersey. Not everyone can install a charge point in their garden at home—if you live in an apartment block or on a terraced street, for example. Will this Government devise and implement a plan for an appropriate rollout of public charge points right across the UK and located conveniently to where people live and park their cars?
The fourth reason why EV take-up is low is because the cost of charging is highly variable. It is economic at home, of course, cheaper than petrol, but high-speed charging is expensive. Will this Government ensure that the daily cost of running an EV is cheaper than a carbon-fuelled vehicle?
Finally, take-up is low because the quality of the user interface at charge points can be completely unfit for purpose, with under-illuminated screens in direct sunlight impossible to read, touch pay not always available, and onerous and complex user instructions. Touring the Inner Hebrides with my wife in the summer, I came across a particularly lurid example: a charge point with a blizzard—over 100 words—of user instructions; the requirement before using it to scan a QR code and to download an app; and a complex process of feeding back a reference number for the individual charge point before it could be used. It was a complete nightmare. I have a picture of that charge point on my smartphone, if any noble Lords present would like to see it. It is a gruesome sight. Will this Government galvanise the industry to ensure that the process of paying to charge your EV is as simple and convenient as buying petrol, and that all payments can be contactless, even below 8 kilowatts?
Briefly, I want to respond to what the noble Lord, Lord Lilley, has said. The noble Lord graces any committee because he is always challenging. I passionately believe that we have to achieve net zero, but I agree that we have to find the most economic route to it. There is far too little debate about that—but at the end of the day there may be a price for achieving net zero. We need to make it the minimum price, but we have to recognise that there is a price, and it is absolutely imperative that we reach our net-zero goals as quickly as possible.
Will this Government produce and publish a comprehensive and granular joined-up plan for delivering net zero, as we do not have one at the moment, including how to decarbonise transport? Will he explain how all the many departments right across government that need to combine to deliver an integrated plan will be involved in that process, and how they will be tasked to deliver? Does the Minister believe that by 2030, in six years’ time, the goal that all new cars should be EVs is achievable?
Baroness Jones of Moulsecoomb (GP)
My Lords, I congratulate the noble Baroness on her introduction and her committee’s work. She is the most amazing Member of our House, and I think we have to appreciate her effort in actually making life greener.
The Green Party wants to switch to electric vehicles to make a real transformation in how people travel and move around. We want the cars, alongside the electric buses and vans, to be a real game-changer. We want all new cars to be zero emission by 2027, with the aim of being able to remove all petrol and diesel cars from our roads by 2035, but that means making them affordable and having a charging point wherever people need them: so, if you are teacher, you need one at school; if you live in terraced housing, you need one on the street close to you; and, if you make long trips, you need chargers at every roadside stop-off.
We have to keep this real. The fact is that electric vehicles will not help with climate change emissions unless all those charging points are run from renewable energy. If they are not, we will just be transporting the pollution somewhere else—somewhere possibly more rural, where it is even worse. We have to do this properly. Of course, we also have to make batteries that can last for years and years; there should be no throwaway culture when it comes to batteries. Electric vehicles will not completely cut roadside pollution. They will not, for example, cut the particulates coming off tyres and brakes, which is quite a big factor in air pollution. Electric vehicles will not stop congestion or cut the number of people killed or injured on our roads—the statistics are horrifying at the moment. There are also environmental trade-offs. Building any car takes raw materials, sometimes toxic materials, and adds to the planetary burden that we humans create.
For those obsessed with the cost of doing this, they should always ask: what is the cost of not doing it? The fact is that climate change is coming at us like an express train. When we look at what is happening in America—indeed, all over the world—we see that the weather patterns are very different. The hurricanes in America were exacerbated by climate change. We could experience something similar here, so we have to move fast. Therefore, however much this costs, we have to ask exactly how much it will cost if we do not do it.
EVs are expensive, however. We need a well-funded scrappage scheme along with a transport system that gives people a genuine choice. The real solution is traffic reduction. More people on buses, bikes and local trains means fewer cars on the road, which means less pollution, less congestion and fewer casualties. Instead of owning a car, many would prefer a mix of car, bus and rail, with electric car clubs set up all over the country and offering car use on the cheap—or relatively cheap. The transition to electric vehicles is a real opportunity to think about how we travel and whether we need car rental, instead of car ownership. After all, people now download or stream, rather than own things. It is time, perhaps, to apply the same approach to driving. It could happen if the Government put enough money and focus on making car clubs convenient, cheap and reliable, but also, of course, on public transport. I very much hope that this Labour Government will take the issue of traffic reduction very seriously. It is the only way forward.
The Lord Bishop of Oxford
My Lords, I too warmly welcome this debate as a member of the committee that produced the report. I pay tribute to the noble Baroness, Lady Parminter, for her introduction to the debate and her very careful, wise and gracious—and patient—leadership of the committee in its first three years.
My experience of serving on the ECC Committee across the three years was that each of the challenges we addressed proved to be both more significant and more complex than we first appreciated. It was a tremendous learning curve. Each issue had multiple questions and problems associated with it and needed complex solutions. That was clearly the case with the EV report before the House today.
Some very good work has been done by the previous Government, manufacturers and local authorities, but much more needs to be done—and urgently—to keep this transition on track. I would highlight that need for urgency in the transition. As the noble Baroness, Lady Jones, has just said, the effects of climate change across the world are accelerating, as all of us in this Chamber recognise, often affecting those who have least, who are least resilient and whose emissions in the present and in the past have been lowest across the world.
Surface transport is the UK’s highest emitting sector, with passenger cars responsible for over half the sector’s emissions. The new Government surely need to do all they can to accelerate the transition, alongside the vital transition to renewable energy, so what do they intend to do? The Labour manifesto for the general election mentions three key steps: accelerating the rollout of charge points; restoring the phase-out date of 2030 for new cars with internal combustion engines; and supporting buyers of second-hand electric cars by standardising information—the second-hand car market is key and complex. These are welcome steps and I ask the Minister, as others have done, to say when we will see action on each of those points. However, as I am sure the Minister will recognise, and as the report makes clear, the steps are not enough by themselves, so I ask for a response and for action on two further areas.
The first, echoing other noble Lords, is to ask what the Government will do to ensure that the transition to EVs as part of the transition to net zero is a fair transition. I commend that word “fair” to the Government: it does not feature in this part of the manifesto. In particular, how will the Government ensure parity of pricing and taxation between those able to charge their EVs at home and those who need to use a commercial charging service? As has been said, 40% of the country will not have access to a home charging point. There is, at present, no viable solution to ensure parity, and I agree that our committee was not able to offer one, but it will need some radical and imaginative thinking. How will the Government address this key question of fairness?
Secondly, how will the Government lead and encourage the transition to EVs through better communication and co-ordination across government? The committee conducted its inquiry through a period when the Government were rowing back from previous commitments and sending very mixed messages to the markets, to manufacturers and to consumers. We are still waiting for a sense of how the new Government will respond in terms of encouragement, incentivisation, accurate information and co-ordination of policy goals and delivery. What task force or structures will the Government put in place to ensure this for the future? The transition to EVs is a potential revolution in our road transport, our economy and public health over the next decade. How will the Government rapidly recharge this sector into the future?
Baroness Young of Old Scone (Lab)
My Lords, I declare an interest as chair of the Labour Climate and Environment Forum. I too am very honoured to have served on this inquiry. I am always amazed by the skill of the noble Baroness, Lady Parminter, in chairing what was a motley crew and her skill this afternoon in being able to name in exquisite detail all the schools we worked with, with no notes whatever. Doesn’t it just make you spit?
Sales of new battery electric vehicles are up—I do not think we should be excessively gloomy. They went up considerably in 2023, but of course that was happening mainly in fleets, and private new car demand for electric vehicles declined substantially during that same year.
I want to deal with four of the issues that have been raised already by noble Lords but perhaps focus on aspects that have not yet been covered. The whole charging infrastructure is the first. There are now 70,000 public charging points and 850,000 domestic and workplace points, and that is still substantial growth. Some 80% of current electric vehicle owners have their own off-street parking, so we must make sure that we do not end up with a situation of haves and have-nots. Equalising tax on charging is really important.
The mixed signals that we got from the previous Government about whether it was going to be a 2030 or 2035 phase-out date did not help the charge point operators—it undermined their prospects of investment. We need to make sure that the clarity around the date of the phase-out—which was in the manifesto, as the right reverend Prelate the Bishop of Oxford mentioned—is honoured and sustained, so that everybody is very clear about the trajectory to which we are working.
There are considerable incentives in place at the moment for charge point installation—such as the rapid charging fund and LEVI, which is a local authority scheme—but they have not accelerated charge point rollout to quite the rate that we wanted. For example, the LEVI rules keep changing, making it very difficult for folk to deal with. There are a number of laggard local authorities that have done nothing since the scheme was opened, and that needs to be subject to government action. Local authorities are key in making charge points available for people who have not got access to driveway parking, and collaboration between charge point operators and local authorities is fundamental. The LEVI scheme and some of the initiatives put in place by the last Government to make it successful need to be continued and looked at, to make sure that they have not been lost sight of in the transition.
The Government have been consulting on-street charging. It would be good to know from the Minister when the results of that consultation are likely to emerge and what is going to happen as a result of them. There is a view that there is a need for Section 50 licences to allow on-street charging to happen, but these are quite expensive and very slow. Why not grant permits to deliver on-street charging in the way that utilities have standing permits to operate the works necessary to keep them moving?
As the noble Lord, Lord Birt, indicated, the rapid charging fund is dragging. It is only a pilot scheme so far. When it is rolled out in full, it needs to include the provision that was in the pilot of having HGVs included. It would be good to hear from the Minister when the full scheme will be introduced.
There is a cross-pavement charging grant, but the guidance on how that will operate has not yet been published. As a result, the money that was set aside for it has literally not been utilised. Can the Minister say what plans the Government have to take forward the cross-pavement charging grant? To be frank, I think that it is not a good idea. I would be much more in favour of looking at how we can ensure that, within communities, there are sufficient accessible charging points, so that people can be assured that they will find one within a decent walking distance of their house, rather than having the prospect of intrusion into pavements by works sponsored by a grant to individuals.
The second point I want to cover is that of upfront costs. The vast majority of people who are buying electric vehicles at the moment are buying them through workplace or other leasing schemes, so I am not as downcast as some previous speakers have been. The second-hand market, which is a really important part of the vehicle market, is struggling. That is partly because of a lack of clarity about depreciation as a result of uncertainty around battery health. I would be grateful if the Minister could tell us what is happening with the support scheme for battery assurance certificates. It has been consulted upon; when will it come about? Could the Minister also tell us how the fairly substantial investment that the Government have put into battery development and initiatives such as solid-state batteries is going?
Commercial fleet operators are key, and the upfront costs of trucks are still very expensive—by a factor of three, compared with diesel. The current government grant schemes are pretty small, so perhaps we need a combination of increased grants and tax incentives, as well as tax disincentives. Disincentivising tax on diesel trucks will help create the market for electric vehicles in the commercial sector.
I turn to one of the bees in my bonnet that the committee discussed: marketing and communications. The reality is that the climate change challenge is one of the biggest that the world has ever faced, yet we do not have a government-co-ordinated marketing scheme for electric vehicles to persuade the public that some of their concerns and fears are being met and are not as huge as they think they are, using modern marketing techniques, social media and all those sorts of things. Under the previous Government, we frequently had Ministers in front of the committee who told us that that was an example of the nanny state and that the Government did not do that.
The reality is that there needs to be a concerted campaign against what is a big disinformation campaign. If you read local and national newspaper reports on electric vehicles, you would think that they are the Antichrist and liable to eat babies if left unattended. Range anxiety is said to cause stress, but range anxiety is rapidly becoming a non-entity. There are groundless fears about spontaneously combusting batteries, and of battery life and resale value. All those fears are not justified by the evidence but the tabloids, and other far more reputable newspapers, continue to peddle them like billy-o. The time has come for the Government to recognise that it is important to take forward a concerted campaign with modern marketing techniques and good information reliably provided to the public, and that this must not be left on some government website for the public to have to seek out. That is long overdue.
I will finish with the ZEV mandate. I do not agree with the noble Lord, Lord Woodley, who is not in his place, that the timescale should be adjusted, although I agree with him that some of the market incentives need to be geared up. We must not forget that it is important to bring in electric vehicles at a greater rate not only for climate change but for the manufacturers themselves. Increasingly, the world is looking for electric vehicles, rather than diesel and petrol. If we are to keep our place at all as an exporter of UK vehicles, we need to make sure that we can meet that requirement and do not see a diminution in the pace of moving our manufacturing capability towards electric vehicles.
I hope that the Minister will be able to give us strong assurances that the Government are not spooked by the manufacturers’ push-back at the mandate, and that there will be a strong campaign for the promotion of electric vehicles and a tweaking of the grants, taxes and other mechanisms, as noble Lords have spoken about today. We do not want to break stride. We need to find ways of addressing the hiccups and bumps in the road that mean that the manufacturers are feeling uncomfortable. We need to meet their legitimate concerns, but not by changing that date.
The mandate is one of the biggest tools in the toolbox. Electric vehicle sales are going up, especially in the lease market. We are seeing heavily discounted prices, which are good for the customer as well as for the climate. If you look at the exact calculations for the 2024 target, which with proper adjustments is about 18.5%, you will see that we are on target to meet it, and therefore should not be panicking now. So let us keep up the pace, drive down the carbon and the costs, drive more feedstock into the second-hand market, and make a real contribution to the huge challenge that is climate change.
No doubt the noble Lord, Lord Lilley, would have hysterics at any suggestion of taxation benefits or subsidy. But the reality is that we are rapidly seeing a closure of the upfront cost between electric and petrol vehicles, and that is as long as the subsidy needs to persist—we are not talking about it being in place for a very long time. We are talking about these sorts of subsidies being time limited by the point when electric vehicles can hold their own in that market.
I also thank the noble Lord, Lord Lilley, for his strenuous efforts on the committee to keep us honest. Many of his points were absolutely admirable, but I think the point at which I parted company from him was this: he does not believe that the costs of not doing this are higher than the costs of doing it, and that climate change down stream has huge costs that are now dreaded by the reinsurance and insurance market, the banking sector and every sensible business. Of course, if you do not believe that, a cost now is a bogeyman, and a cost in 20 or 30 years that you do not believe in is not worth thinking about. It was fun.
Lord Lucas (Con)
My Lords, I am very grateful to the noble Baroness, Lady Parminter, for her superb chairing of the committee; it was a real pleasure to be part of it.
I share my noble friend Lord Lilley’s aversion to subsidy. It seems to me that subsidies that are too large and too long stop real solutions emerging, and that we really need to work against them. It was a huge pleasure being on the committee with him. I learned what dissent effectively delivered with great style was, and I learned how one can chair in such circumstances, so it was a great educational experience.
I do not think my noble friend should despair too much about not being on the committee any more: we have my noble friend Lord Frost there. I see that the current inquiry is into methane. When I was a Whip in MAFF, the BSE crisis hit and the first reaction of the scientists was, “We must kill every cow in the country”. I hope, with the fate of the cows being in my noble friend’s hands, that he will mount as good a defence as the noble Viscount, Lord Hailsham, did under those circumstances.
There are some things the Government can do to move things along. First, on regulations, as mentioned by the noble Baroness, Lady Young, and others, we are faced with a set of regulations, particularly when it comes to flats, on-street charging and similar areas, where we are deliberately slowing things down. We are making it harder to make progress. This is a Government who have said, in Defra, in housing and elsewhere, that they will do something about ineffective and unnecessary regulations. I know how hard that is but I am optimistic; I very much hope that the Government will go down that way.
Another area where regulations have been getting in the way is on the evolution of small, cheap electric vehicles. If I want something that will carry myself and a couple of kids, or maybe the shopping around town, I can go to China and buy it for £1,500. The cheapest alternative here is £15,000. Some of that difference is quality but an awful lot of it is regulation. The question of whether the value that we are getting from that regulation justifies the cost of implementing it really needs examining. We really ought not to be getting in the way of the development of new forms of local mobility in the way that we are.
I very much support what the noble Lord, Lord Birt, said about information. We ought to publish an overall projection for energy and net zero. I would not call it a plan—it is too uncertain and far away for that—but it should be something that shows us how the Government believe we can get there, including what the steps will be, what the consequences will be and what the experience will be like. It should be open, moving, discursive and, above all, truthful. That would make a good base for good policy. The current darkness, for which the previous Government must accept some responsibility, is not a constructive background.
I would also like to see open information rigorously applied to the availability and state of charging points, so that anyone can find out the state of any charging point and where they might go in the hope of finding it, rather than it being balkanised into little sets of information for people who subscribe to particular networks. I would really like to see people being able to rent out their own home charging spaces to other people. Apart from not having an electric car and the ability to charge it, I cannot see why I should not be able to have someone else’s car on my drive and charge it there. The prices charged for on-street parking are ridiculous. I could make a very nice little turn, as I might do from selling my surplus strawberries, by selling a bit of electricity and thereby keeping everybody’s price down.
Lastly, I would like to see us pay serious attention to resilience—getting ourselves into a position where we can genuinely support a manufacturing industry. The key thing that I would like to see us do is put money into battery research. We cannot continue— it is totally impossible—to rely on the rare materials that find their way into current batteries. We have to do better; there are signs that we can do better. If we find ourselves at the forefront of a really effective sodium battery development, we will have a chance to create that industry or a share of it here, but while we rely on old materials and rare materials, we really must keep here the materials that get here. We must have an effective recycling industry so that what comes here stays here and we can use it to make new batteries.
Lord Whitty (Lab)
My Lords, I will try not to repeat too much, but I repeat noble Lords’ words of appreciation to the noble Baroness, Lady Parminter, for her introduction to this debate and her chairing of the committee’s report. It was a truly remarkable effort. I couple with that my praise to the committee for making a coherent, if not universally supported, report; and I praise the staff for making sense of such a vast area of different expertise.
There are multiple markets in this area: the company car market, which differs from the private car market; the used car market; the leased market; and the commercial vehicle market. They are all different markets but, actually, the issues involved here are much wider than that. Surface transport, and road transport within that, makes a big contribution to our carbon emissions. Unless we resolve that, we are not going to be anywhere near our targets for the transition to net zero. The Minister who is about to reply is from the net zero department and therefore has a considerable strategic interest in this issue but, of course, other departments— the Department for Transport and His Majesty’s Treasury—are going to make the key decisions here.
The range of topics which impinge on this go from what you can do with a lamp-post outside your house to what are effectively geopolitical issues—namely, what form of trade we will encourage with China, with the transfer of technology and therefore the cost, and possible production here, of what are in China relatively cheap electric vehicles.
The timescale for the last propulsion switch in transport modes, from reliance on horsepower to the internal combustion engine, was about 40 or 50 years; we are attempting to make a very dramatic change in six years. That requires very real focus by the new Government on all aspects in all departments, and I join in the call for a Statement from them at an early stage on how they will deliver this key part of our net-zero ambition. Incidentally, in terms of timescale, roughly 120 years ago the main means of propulsion may have been electric. The world speed record was held in the 1890s by an electric car. Unfortunately, we took the wrong decision at that point, and the consequences are still with us. We must address all aspects of the road system, the traffic system and the taxation system, to get this delivered.
I agree with my noble friend Lady Young on the need for misinformation to be countered by the Government as well as the advertising industry. That is very important. There has been a lot of misinformation in this area. Regarding the point made by the noble Lord, Lord Lilley, I do not disagree that the subsidies and encouragement have been misplaced. Where I do disagree is that you can avoid a significant degree of taxation, manipulation or subsidy to meet our objectives. The big misapplication has been, as he says, that the main subsidy in recent years has been to the company sector. That has a double problem: it means that the pre-existing subsidies to the private sector and individual owners of cars has been dropped, and those need to be restored.
However, the bigger effect is the recent slowdown in the move to electric vehicles, which has been completely dominated by the fleet schemes and affects both ends. Within the companies, those who switched to electric vehicles for their fleets four, five or six years ago are now trying to sell them off on the second-hand market, but the cars are too big and too expensive for the second-hand market, and not the kinds of cars which most car-owning households want. As a result, the price that the companies get for second-hand cars is not what was forecast, and they are therefore slowing down the take-up even of fleet cars at this point.
Therefore, we need action on both fronts. We need to focus largely on the markets in which individual car owners operate. This includes second-hand and upfront costs of new cars, because there is a virtual equalisation of a total lifetime cost already while the upfront cost is still deeply prohibitive for a lot of potential owners. We need to change the economics for the fleet cars so that they produce smaller fleets and therefore solve their problem in five or six years’ time of producing cars in the second-hand market which they can sell at a price that most car owners will be prepared to pay. To switch the subsidy and the tax incentive while at the same time addressing all the different markets that are involved is quite a complex thing to do.
On top of that, we have the problem of disincentives. The biggest disincentive to buying an electric car has been anxieties about range. Those are gradually diminishing, but the fact remains that the number of charge points available to that 40% or so of the population who cannot connect their car to a charge point from their own home means that there is a social division among people who can afford electric cars, over and above the price differential. It means that the cost of running an electric car for those people who live in flats or terraced houses, or any kind of house that fronts straight on to the street, is substantial. The taxation differential aggravates that.
There are a lot of things that need addressing. Some are being addressed, but most, as yet, frankly, are not. We are behind even the targets we set ourselves for motorway stations, so those who use their car for work and transport are faced with higher prices than those using them for pleasure or for short-term purposes. All these things can be addressed, but they need to be addressed across government pretty rapidly. I would like to hear from the Minister how, and over what timescale, we will see progress on this front.
There are three things we decided not to tackle, but which we will need to tackle. They are not in the report, but I hope that some of them are at least in the new Government’s strategy.
The first is the question of hybrids, and I declare an interest as a hybrid owner. The previous Government more or less said—and I think this is the general view—that hybrids will be phased out, and that they are, in effect, a dead-end technology. Yet people who bought hybrids hoped, by and large, to contribute towards saving carbon. They at least need to have some way of transferring into the full electric mode within the next few years.
Secondly, we need investment in manufacturing, as my noble friend Lord Woodley said. I disagree with his analysis of where the money should go, but I do not disagree with him that we need a strategy for UK-based production. We also need a strategy for battery production. We need more than a strategy; we need to recognise that battery production will have to become more sophisticated and that we will have to address in that same context, both in the UK and worldwide, the whole question of scarce mineral resources, the availability of lithium in particular, and the Chinese control of large parts of the lithium supply chain.
Finally, we will have to face the fact of how we change motor taxation, as Norway already has as the most successful adopter of new electric vehicles. The switch to EVs, with the failure to raise fuel duty, has meant that the Treasury’s income from motor transport has diminished and will diminish even more drastically. At some point, the Government will have to face the issue of how we tax road transport in future. It might well be that the issue of road mileage taxation comes back on to the agenda.
I remember, some 25 years ago, as a Minister in the Ministry of Transport, we produced a worked-out plan for a partial mileage taxation. I was quite convinced by this and went to see my old boss, John Prescott. He said, “Don’t be so bloody stupid”. I understand the politics of it, but it is no longer stupid. We need to ensure that we have a basis for motor taxation that meets the needs of making a major contribution towards reducing our carbon emissions. That requires a new and imaginative approach to road taxation.
The Earl of Leicester (Con)
My Lords, my noble friend Lord Lucas referred to various members of the committee, which was excellently chaired by the noble Baroness, Lady Parminter. Indeed, my noble friend Lord Lilley referred to himself as the grit in the oyster that makes the pearl—not to worry, because he was replaced by my noble friend Lord Frost. I was mildly hurt that he did not mention me, but I am certainly not of the sort of magnitude of those two honourable Peers—maybe the grit in the cockle. I have just joined the Environment and Climate Change Committee for the methane inquiry, so I was not present for the EV inquiry, but it is something that particularly interests me. Then, when I was just nipping out to spend a penny, I saw all the clerks, past and present—some of them have left, thankfully. It was somewhat intimidating that they, of course, had been involved in this inquiry.
I declare my registered interests as a landowner and farmer in Norfolk, where I have invested in every single form of renewable energy under the sun except for wind. We run EVs in our business, including mine. Before I had an electric vehicle, I had no idea of their phenomenal acceleration.
I welcome the general direction of progress towards full decarbonisation, but I remain sceptical about the Government’s net zero by 2050 policy. I want to talk about this aim to accelerate grid decarbonisation and what that will do to electricity prices and, therefore, the cost of charging an EV. Indeed, I fear the pressure applied on the United Kingdom’s economy through this drive to achieve net zero in such a short timeframe will have significant detrimental consequences across multiple facets of our economy while much larger and more polluting countries merely pay service to net zero.
This Government’s aim is to decarbonise the entire electricity grid by 2030—five years ahead of the target set by the Conservatives and just six years on from Labour taking office. The Secretary of State, the right honourable Ed Miliband, says he will do this by eliminating natural gas—currently the largest source of UK electricity—and expanding wind and solar power. Nuclear power is also carbon free, but no new reactors are expected to come online until 2031, so his plan relies entirely on renewables and, as we know from bitter experience, reliance on renewables means sky-high energy prices.
In the 1990s, renewables accounted for 2% of Britain’s electricity. In 2022, a couple of years ago—a record year for renewables—they produced only a third of Britain’s electricity. Electricity prices have more than doubled in the past 30 years, leaving the UK with some of the highest in the developed world. The shutdown of Ratcliffe-on-Soar a fortnight ago represented the closure of Britain’s last coal-fired station. In this symbolic moment, I invite the House to reflect on the speed at which such changes are occurring and whether we should make such performative closures at a time when we are so far from the destination of net zero.
My view is that our national energy policy should consist of a huge mix of energy sources with, yes, a healthy and increasing blend of multiple renewable options. The Secretary of State’s plans to continue the growth of the Great British Nuclear project are particularly welcomed, as nuclear power should be a key tool for reaching emissions targets. Additionally, we should not neglect other energy sources that can help soften the blow on the economy while our country transitions towards its decarbonising targets. Many colleagues across both Houses would not be opposed to a few cheaper alternatives involving oil, gas and, yes, one or two coal-fired power stations. This would benefit those who face a difficult winter ahead, those whose plight has been exacerbated by the Government’s decision to scrap the winter fuel payment policy, and those 40% of EV users who have to pay 20% VAT on the electricity to charge their car.
In a recent BBC report, the leader of the GMB union claimed that Labour’s green policies are costing jobs and hollowing out working-class communities. This came after plans were announced to shut down the Port Talbot coal-fuelled furnace, thus making 2,500 of the 4,000 workers at the last steelmaking plant redundant. The Government’s plans to decarbonise through deindustrialisation will be very costly to workers across the country working in similar industries with a heavy demand for power.
Another core element of the Government’s net-zero objectives is the subject of this debate: the transition from internal combustion engine cars—I will refer to them as ICE—to electric ones, despite issues surrounding affordability, end-of-life management and charging accessibility. I must stress that I welcome the transition towards electric passenger vehicles. I have one, and I love it, but its capital cost is not cheap, and it was purchased on a company scheme—as we have heard from a number of Peers—that is heavily subsidised. Indeed, without significant progress in this sector, we will lag behind our international counterparts and not fulfil our expectations of reducing carbon emissions.
The noble Lord, Lord Woodley, who is not in his place, mentioned manufacturing. The only EVs manufactured in the UK are the Aston Martin Rapide in Wales, the Nissan Qashqai and a series of vans made by Stellantis on behalf of Vauxhall and Opel—the Combo—Peugeot, Citroen and Fiat, which makes the Doblò. From 2026, we will have new Nissans—Juke, Leaf and Qashqai—and a new Jaguar Land Rover factory in Merseyside, but the Mini EV that was made in Oxfordshire has now moved to Leipzig and China, Ford is in Cologne and GM is in North America.
It is also my view that the Government’s plans to ramp up penalties and restrictions on ICE cars are an alarming sign for the UK economy. As the EV strategy report by the Environment and Climate Change Committee indicates, the UK EV market remains concentrated around high-value cars and SUVs. It proceeds to stress the importance of providing affordable options for consumers, most of whom are currently priced out of making the leap to electric cars. I fear the Government have not understood the economic magnitude of such a purchase for the average consumer in the UK.
The end-of-life management of EVs is a similarly relevant issue. The EV strategy report claims that with an increased number of EVs expected in circulation, more must be done by the Government to display the process of waste management and recycling of EV batteries.
Along with agriculture, transport accounts for the largest proportion of emissions in the country. We are discussing EVs—cars and light vans—but there is no way in the foreseeable future that HGVs will be electric-powered. For cost and practical reasons, it is not possible for HGVs, which are essential to our economic output and are designed to cover long distances within a deadline, to be battery-powered. Indeed, I read somewhere that one-third of the weight of a big HGV would be the weight of the batteries, so they would become even more inefficient. If one considers that 56% of What Car? readers surveyed cited the lack of charge points as the reason preventing them going electric, simply imagine the costs that running electric HGVs would have for business and the economy.
We heard about charging. I am lucky; I am able to charge at home and drive down to London, on the occasions when I do not take the train, and then I can charge at my block of flats, so I have not used a public charge point for probably three months. I have had my car for four years. I thought the battery life would deteriorate. In fact, it is still going strong after 40,000 miles.
There was talk about range anxiety. I personally quite enjoy the frisson of dropping down. In fact, my record is getting down to minus three miles. It was 10 pm. My wife was not amused, particularly when the internal lights and the music went off, but I was able to get to the top of a hill, cruise down and regenerate enough electricity to get home.
That was not repeated when I was driving to Plymouth in the winter, because I could, in my EV. I knew I was going to have to fill up with electricity twice. On the second occasion, I was six miles from Exeter Moto services—and in a very useful attendance at the APPG for EVs I had heard the chief executive from Moto say that it had doubled the number of charging stations there from 28 to 60 or so—so I thought, great, I am going to be fine. Interestingly, he said that when all 60 charging points are being utilised, that was equivalent to half the power requirements for the whole of the city of Exeter, which was quite a statistic.
Anyway, I had six miles’ range and, of course, my car stopped one mile away from the services. The recovery vehicle came remarkably quickly and had to do lots of different things as there is no neutral in an electric car. He took me the one mile to the service station and I asked him how many other EVs he was doing this for. He said a lot of his call-outs were to collect people like me who take a rather relaxed view of range anxiety. It is for that reason, too, that I have retained my big diesel SUV, which has a 600-mile range and if I am driving across the continent or up to Scotland, that is what I will take, with four children and maybe towing a caravan or something.
Finally, I want to say that I resent the scaremongering tactics of politicians and lobbyists on the matter of net zero. Trying to exact change through inciting fear among consumers and the electorate is no way to govern. I invite the Government to reconsider their methods for imposing this set of policies on the public. There will no doubt be notable economic repercussions if these policies are forced through in such a constrained way. We must remember that even the Climate Change Committee has said that by the time we reach net zero in 2050, we will still derive 25% of our energy from hydrocarbons. This is why it is called “net” zero and I think a lot of people rather forget the net bit.
Lord Grantchester (Lab)
I also would like to start my remarks on the progress of the electric vehicle transition by thanking the noble Baroness, Lady Parminter, for chairing the committee on this important inquiry and for introducing the debate today so comprehensively. I also thank all the clerks who help the committee so ably. I declare my interest as serving on the committee and thank the many organisations and people with an interest in the motor industry and climate change for all the submissions I have received.
Needless to say, the report was produced and responded to by the previous Conservative Government. It cannot go unremarked that the rather confused state of the transition away from the internal combustion engine was in no small measure due to mixed messaging and lack of leadership from the Conservative Government. The announcement in September last year to delay the phase-out date for new petrol and diesel vehicles from 2030 to 2035 did immeasurable damage to consumer confidence and demand, adding to the misinformation surrounding EV ownership.
The second-hand market is in disarray. The emphasis on cost without including benefits led to declining private sales over the next quarter. I am pleased to learn that throughout 2024 sales have recovered, reaching 20.8% of new vehicle registrations in September and putting within reach the first ZEV mandate of 22% for 2024, on the pathway towards the phase-out date. Will my noble friend the Minister, replying to this debate, outline the new approach of this new Labour Government? Can he confirm that the phase-out date will be restored to 2030?
In this context, further clarification as soon as possible on the phase-out of hybrid vehicles would also be very helpful to the industry. While hybrids can help consumers move towards EVs, the cost to manufacturers of tooling and dual-system production is considerable. A fresh communications strategy is a key recommendation of the report and a clear opportunity for the new Government to arrest the decline in private sales resulting from misinformation.
The car industry is fluid at present, backing EVs while simultaneously making internal combustion engine vehicles and looking to the development of hydrogen engines—mainly for trucks, construction and agriculture —and hydrogen fuel cells, which also have zero emissions but are still very expensive until there is mass manufacture. BMW and Toyota have just started collaborating on fuel cells. Porsche has just announced new technology to “save the ICE” by patenting a six-stroke petrol engine with reduced emissions.
It is an industry under severe challenge, with many competing developments, especially in the various export markets. Can my noble friend the Minister outline the current position of investments in battery technology and factories? I understand that many plans have been downsized and Northvolt is considered to be in difficulty. The challenges of EV transition resulting from weight issues and recycling still need to be faced.
Misinformation feeds off these negative aspects and brings into sharp focus the other clear recommendations in the committee’s report. The previous Government’s response was similarly unclear in its approach to taking many of the issues forward. A feature of Conservative Governments is often to fiddle with the on/off switch of consumer incentives, prematurely phasing out grants to help bring about price parity between new purchases and existing disparities on costs. I urge my noble friend the Minister to bring forward new approaches to support new technologies and developments that will support the transition to lower transport emissions. Transport remains the UK’s highest-emitting sector.
In addition to the committee’s many recommendations on costs and tax, I mention the possible extension of the delay to introducing vehicle excise duty for electric vehicles. While the forthcoming Budget will signal new approaches for the economy, it remains a challenging time for public expenditure and possible new approaches to road taxation. The committee’s report has made detailed recommendations on the EV charging infrastructure and I would welcome my noble friend the Minister’s response to the many comments other speakers have made.
Many of the several “black holes” in charge points exist in rural areas. I emphasise the need to update and modernise the grid, which crosses over into the energy market and the distribution of energy throughout the UK. There are important developments and costs associated with securing national grid connection and, in this context, the charge points, especially for high-speed recharging. Can my noble friend the Minister give your Lordships’ House any insights from his other responsibilities into the plans ahead? Can he say how the new announcements on carbon capture and storage investments will help capture carbon dioxide in the atmosphere from e-fuels, and help their development?
Finally, I mention the need for an urgent reset of how planning permissions operate for upgrading infrastructure and grid connections. This extends from high-point connection infrastructure to supporting measures that tackle the charge-point divide that exists for those with no access to driveway home recharging.
These are the key initial steps that a reset needs to take to restart the transition from high-polluting ICE vehicles towards achieving the important legal challenge of meeting the net-zero goals by 2050.
Lord Fuller (Con)
My Lords, this is an important debate at a pivotal moment for the personal mobility that underpins our economy and growth. The report explains in great detail that the choice of an electric vehicle affords much greater driving pleasure, greater acceleration, lower maintenance costs for home chargers, competitive daily charges and, thanks to direct-drive motors, the consignment of the grinding of gears to the history books—but if only this mode shift were that simple.
The market for EVs was already stuttering when the report was published in February. Since then, there have been further dramatic changes, as the growth as a proportion of the whole market has stagnated. We are literally at a fork in the road for electric vehicles. The report highlights a number of things that must be done for us to get back on track.
Before I talk about the rollout of chargers, I thank my noble friend Lord Leicester for his comprehensive list of electric vehicles that are made in this country. He missed out one that is close to home for us both, in Norfolk, because Lotus Cars is shortly to be manufacturing its Type 135 in our great county.
To return to the provision of charging infrastructure, the report makes it clear that it is much easier for the market to provide charging points along the motorways and main roads, while there are few incentives on the B roads and in out-of-the-way places. As a council leader back in 2018, I recognised that it was really important for the council to take a lead in the provision of this public infrastructure. Our approach was grounded in the understanding that not every motorist has a long gravel drive; many live in flats or terraced homes, and simply do not have anywhere to park outside their home—a point that other noble Lords have made. Our council understood that we would never get the wide uptake of EVs unless we democratised the opportunity for anybody to charge a vehicle close by, so we invested in the fat cables in our car parks to serve the first generation of fast chargers, with better app support. We have now extended the number of installations in our leisure centres and other public buildings with a second generation, taking advantage of government funding and adding our own resources to decarbonise.
However, we still needed to drive forward, having done our bit to begin with. Two years ago, we made a big offer to each of the 120 town and parish councils in our district. We would procure, install, maintain and manage an electric charging point in the grounds of their village hall or bowls club car park; all they needed to do was find that space. We would hook it up to the mains, and the app would ensure that any electricity consumed by chargers would be refunded, with a margin for themselves.
A third of our population lives in rural villages, and we wanted all residents and their visitors to be able to charge, especially as we had lost so many rural petrol stations. We would provide a real choice of mobility technologies for everybody in the countryside—and, of course, by putting the capital costs of these chargers on to the local council tax payer, those amortisation costs would then not fall in a surcharge on the pence per kilowatt hour on the public charges, which the noble Baroness, Lady Parminter, and the report have enumerated. We did not want to discriminate against those who could not charge at home.
These parish councils are valued partners and make an enormously positive contribution to our national life, but, two years on, I regret to say that only a single installation has been made under our offer to the villages. Although there are a few in the pipeline, our offer ran flat. Yes, the market will provide on the highway and, yes, urban authorities can upgrade their lamp-posts, but we can and must do more in the countryside.
I want to relay some of the reasons why our parish councils did not take up our offer. Some parishes simply assumed that there was not enough electricity, notwithstanding that we were going to have a survey as part of the offer. The offer was rejected on the basis of hearsay, rather than evidence. Some market towns felt that taking a lead locally and installing charging points was a service—a service that, on principle, they did not seek to provide. Others felt that they were not going to get used, so why bother? A few cited the lack of mobile coverage in the countryside as an issue; unless you have a mobile connection, you cannot connect to the app and download the code, and so the electric charger would not work—but that is of course notwithstanding that most village halls in most parish councils now have wifi.
There were cases where the parish council wanted to learn more but could not persuade the village hall committee to get on board. Some were just simply unrealistic. Sometimes in rural areas there is just not the oomph in the network to provide the sort of rapid charging found at a service station. They were rejected on that basis, and therein lies a real case of the excellent being an enemy of the simply satisfactory. Finally, and notably, most local councillors just did not want people hanging around the village hall. I was disappointed. There was a pocketful of excuses.
I tell these disappointing stories because they are part of my real-life experience, and if there is to be a plan for more electric cars, we will need a national strategy that takes some of these concerns into account. As the SMMT has observed to me, just making the plan is worthless unless the market participants can look beyond defeatism or prejudice. Having a plan is one thing but delivering it is another. Only when we have leadership across the whole of the public sector—that includes some of our 9,000 parish councils, as well as principal authorities—will we get universal, not just urban-based, coverage.
It is important to make progress quickly because, unless we start to address some of these headwinds, we will never get progress. I was pleased that the report makes it clear that home-based charging is nearly always cheaper, but home-based charging is just one of the costs. It has become clear to me, especially since February, when the report was written, that, leaving the simple energy cost per mile to one side, the total cost of EVs is now rising fast, and is making the internal combustion engine even more competitive once again.
Although electric cars are now subsidised by manufacturers, as the noble Lord, Lord Woodley, said, the upfront purchase costs are still more expensive—especially when taking into account the interest payments, which are not the same as when interest rates were 0.5%. There are also insurance costs: a function of providing a like-for-like replacement, plus some astonishingly risk-averse repair quotations for minor prangs in the car park that see write-offs, are now driving premiums to eye-watering levels. Depreciation is ruinous. It has destabilised the motor traders, who have been trying to catch a falling knife on the impaired value of their stock. The private motorist, as we have heard, is at a serious disadvantage to the corporate purchaser, with no tax incentives or opportunities for salary sacrifice and other things. Of course, battery range is not what it was thought to be—my noble friend made that point so clearly.
I will not dwell further on the 20% versus 5% VAT level, but it is discriminating against people who live in flats and do not have the long gravel drive or large diesel 4x4 to fall back on. We know from the SMMT that the fiscal drag is bringing electric cars into the luxury super-charged tax rate, at another £500 per year. Who would buy such a car with their own money? The costs, over and above the mileage costs, are running away.
We hear now that road charges have been mooted. I can understand why the noble Lord, Lord Whitty, mentioned this, because it is a truth that we will have to grip. Not only is the total cost of ownership of electric versus combustion becoming much more significant but, if we then end up with road pricing, it will be the nail in the coffin. It would dramatically increase the cost of running an electric car.
I am not going to dwell further on the increasing proportion of electric vehicles against internal combustion engines in sales, but the policy is destabilising UK motor dealers, and undermining European and domestic manufacturers, by encouraging a flood of Chinese imports of uncertain quality and with concerns over embedded IT. This well-intentioned regulation is undermining our economic stability and electronic security, delegating production and wealth creation to parts of the world with lower environmental standards. Given the importance of cars to the global economy, we cannot ignore this global context. We must approach EVs and our policies as part of economic security, which in turn is part of our national security.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, there has been a bit of chuntering so I should explain that the Clock was wrong; the noble Lord has not taken more than 15 minutes.
Lord Fuller (Con)
I thank the noble Lord, Lord Hunt. I noticed that it was showing eight minutes when I started, so I think I have some more time.
I was talking about the role of electric vehicles and our treatment, in trade and tariffs, of our economic and national security. A dilemma is around the corner. After the US elections, will we follow the Canadians with a 100% tariff on Chinese EVs, or will we pursue a more EU-aligned strategy that combines a less aggressive tariff approach with tighter regulation—but at the risk of hobbling UK production? Informed commentators know that the upcoming UK policy choices on such matters as tariffs and trade are being watched closely in Beijing and Washington, as well as by our new friends in Brussels, who are the subject of a renewed charm offensive from London.
Whether it is America, China or Europe, the trade treatment of EVs here in the UK will set the tone for global trade negotiations in a much more complicated trading environment in an unstable world. One thing is for sure, though: if we side with our allies on protectionist tariffs, this will drive up the costs of UK electric vehicles still further, which will increasingly aggravate the move to electric. But if we side with China, this could kill off our industry anyway and leave us reliant on imports for ever. These are big dilemmas.
There is nothing more democratic than the freedom to get about. This report has made an important contribution to this important market at a single point in time, but it is a fast-moving target. I wish the noble Lord, Lord Hunt, well in navigating this complex macroeconomic, security and environmental situation. My view is that the fiscal approach, our environmental regulations and government policy targets need to be urgently tweaked—not done away with—to ensure that customer preference for electric vehicles is maintained, not further undermined with our economy damaged. This is not a market that can afford to go into reverse but, unless there is a change in tone, gears will continue to grind. Let us hope the engine does not seize up completely.
Baroness Randerson (LD)
My Lords, I congratulate my noble friend Lady Parminter and the members of the committee on an excellent and comprehensive report. This has been an important debate because it is about our future: the future of our planet and our health. As the report says, transport is our highest-emitting sector, with passenger cars responsible for the majority of those emissions, so it is a pity that we have had to wait nearly 10 months since the report was published to have it debated in the House.
Although the consensus represented in the report has not substantially changed, there have been some significant fluctuations within the industry and in sales levels, as several noble Lords pointed out. The automotive industry has certainly experienced increasing frustration that the ZEV mandate, which I regard as the stick, has not been matched by sufficient carrots to encourage the take-up of EVs by private individuals, companies and the public sector. Sales have, frankly, flagged. The SMMT has pointed out that, since the previous Government’s change of policy, which I will refer to later, private new car demand has declined by almost a fifth. This is despite the visible proof that EVs are lovely cars—I know because I have my second one, so I declare what I regard as a keen interest. They are quiet, clean and smooth, and they have wonderful acceleration. Once you have had one, it is difficult to go back. Diesel and petrol cars are noisy, clunky and very smelly—even the modern ones.
So why the problems with EV sales? Many noble Lords have tackled these issues. Fundamental is the lack of consumer confidence. The committee emphasised that the Government need to do much more to stimulate and encourage consumer confidence. There have been serious and mounting problems. The previous Government, following the Uxbridge by-election, decided that they were not just the motorist’s friend but the unreformed motorist’s friend, scorning lower speed limits and traffic calming measures as well as championing the old internal combustion engine. Hence we had the change of date from 2030 to 2035 for the end of internal combustion engine sales. That fundamentally undermined the ZEV mandate, as the two dates no longer matched and the buyers felt no sense of urgency.
Alongside this, there was a sustained media campaign. My noble friend Lady Parminter referred to it as a blatant campaign, and I agree with her. It was largely but not exclusively in the right-wing press, and there were degrees of misinformation and anti-EV stories that built up on a weekly basis. To give one example, the Luton Airport fire in the multi-storey car park was initially and wrongly reported to have taken place in an electric vehicle but actually took place in a diesel vehicle. That misreporting got repeated on a regular basis. As noble Lords have said, EVs are not more likely to catch fire, and are actually rather less likely to catch fire, than internal combustion vehicles.
There has been a knock-on impact on insurance premiums, and the noble Baroness, Lady Young, referred to fairy stories being peddled about battery life. I sold a seven year-old BMW, a very early EV, and there had been no discernible deterioration in the battery and its range in those years, over hundreds of thousands of miles travelled. What should have happened in response to all this misinformation was a formal and co-ordinated campaign, led by the previous Government along with the auto industry and the fire and health authorities, to rebut misinformation, lead with positive stories and provide a database of reliable information for potential buyers. We needed government leadership. Will we get that leadership now? Will we get that co-ordinated campaign? It is very much a case of better late than never.
We also need the Government to lead by example with the transformation of the government car fleet. The committee made recommendations on that, and the original government response to those recommendations simply noted them. We need a totally EV or hydrogen government car fleet in the very near future—by the end of 2025. I would give the noble Lord that length of time for that transformation. It should be possible by then.
Of course, this is about very much more than just supportive government rhetoric. Previously the Government took their foot off the pedal—I am sorry about the pun, but one finds it very difficult to talk about transport without analogies—far too soon on financial incentives to encourage the uptake of EVs. Those vehicles are still noticeably more expensive to buy than internal combustion engine vehicles. It is important to emphasise, however, that they are very cheap to run. They are not just cheap to refuel, they are also cheap in terms of the amount of maintenance they need. They are a very good investment in that respect.
The SMMT points out that our neighbours and competitors across the world largely have incentive schemes. France, Spain, Italy, Hungary, Canada, Australia and many US states have incentive schemes. Norway has more EVs now than internal combustion vehicles. It has worked the incentive schemes brilliantly. I therefore very much hope that, in the Budget on 30 October, we will see a new approach. If we do not see some changes from the Government, EVs will remain the preserve of the better-off and that is not socially acceptable.
We do not just need purchasing incentives; we need grants, because the cost of EV charge point installation is considerable. We need to avoid EVs being classed as luxury vehicles in terms of vehicle excise duty. Very importantly, we also need to reduce VAT on public charging points. Otherwise, those with drives will always have an inbuilt advantage over the 40% of our population who have no access to vehicle charging facilities—the noble Lord, Lord Woodley, made this point. So I urge the Government to be bold on this. The amounts of money involved are relatively small at a UK level.
My noble friend Lady Parminter referred to “black holes” in the availability of charge points. The report goes into detail on this, and motorway service stations have been talked of by other noble Lords. The committee report refers to other problems, but I want to go further. Many decades ago, a previous Government regulated the way we buy petrol and diesel. The nozzle shape is different; it is impossible to get confused between a petrol and a diesel nozzle. The display of prices is regulated, so they are calculated in a way that enables customers to compare them from one location to another, and they are visible and so on. There are a huge number of associated safety regulations. A roof is almost always a feature of a filling station—you are protected from the sun and from the rain. But EV owners appear not to be entitled to this. The noble Lord, Lord Birt, made reference to that.
The method of plugging in varies from one type of car to another and from one provider of EV services to another. There is no roof, so you cannot see the screen very often, or you are standing there in the pouring rain. The charge point is very often in the back corner of a large car park, where you feel vulnerable after dark. You very often do not know how much you are going to pay until after you have used the facility, and it is also difficult to know how you can pay. Very often, you have to charge up a card with £5 or £10, using a provider that you know you will never use again, so you will never get your money back in a future charging. Why is it that we cannot have a standardised system, so that people feel reassured? It is not just range anxiety, it is being able to charge up—it is charging anxiety when you get there.
It is time that the industry woke up to the brave new world and provided the very best facilities. The people at Shell are my heroes because they are beginning to do just that. It is essential, for example, that everyone can pay by credit card. The noble Lord, Lord Lilley, did not think we should have subsidies, but I say that subsidies are a well-worn path for new industries—we smooth out their birth pangs—and I urge the Government to look not just at reinstating targeted subsidies but at simple, inexpensive, practical measures, such as standardised signage on motorways to show where you can charge your car. The report covers other key issues such as grid connections, the need to change the planning approach and so on, but those are things that will have to come, whatever happens about electric vehicles.
Finally, we have a new Government and, I hope, a new attitude and a new determination to stimulate this important industry. It will bring jobs, better health and a greater hope for the future of our planet. I hope that the Government will match any measures with reinstating the 2030 date for ending sales of internal combustion cars.
The Earl of Effingham (Con)
My Lords, I thank all noble Lords on the Environment and Climate Change Committee who dedicated their time and effort to create what is a first-class report. My warm thanks go also to the witnesses who gave evidence; the appendix list reads like a Who’s Who of the motor industry. Their contribution provided the laser focus required to really understand the issues at hand.
The Government are committed to net zero emissions by 2050 and, on the basis that surface transport is the country’s highest-emitting sector, making up 23% of total UK emissions, it is clear that electric vehicles have a role to play in the UK’s progress towards net zero. As with all types of markets, whether that be financial markets, housing markets or indeed autocar markets, consumer confidence is the foundation stone. If people have confidence in the sector, it will grow, thrive and be a positive asset to the UK economy, and that is exactly what we need to instil confidence in the EV market. We are asking people to change the habit of a lifetime, and habits can be very difficult to change without the amount of support and messaging.
The importance of clear communication to consumers on the use of EVs should not be underestimated. As the Government continue their work in this area, they must work with and consult the automotive industry to ensure that they are taking a practical and workable approach to these targets. Automotive companies understand the problems and know consumer buying patterns. We will not succeed if we do not embrace a partnership with them. It is in both our interests and theirs to make this work, and that is exactly what we did with our “plan for drivers” policy and our work with the industry.
I ask the Minister to tell the House which motor industry representatives the Government have recently consulted, in particular about strategic approach and messaging changes, and what the outcomes were of the consultations. While it is easy to highlight the benefits of EVs, the fact remains that new models are expensive relative to their petrol and diesel counterparts. That is why we introduced the advanced manufacturing plan and battery strategy. We worked closely with investors, local authorities, businesses, trade associations and industry experts.
Our goal must be to ensure that the UK continues to lead in the development and deployment of clean and digital manufacturing technologies. If we show we are committed to the longer-term success of the sector, we will create a circular economy, we will support market-led investment in innovation, research and development, we will build our own UK supply chain resilience and create thousands of new jobs. This will reduce costs, remove barriers to boost competitiveness and guarantee investment from international investors in the sector.
We injected £1.5 billion in funding via government grants to support the growth of the early electric car market, which proved vital in supporting the industry in its nascent days. We were well on track to put a new electric vehicle within the reach of many people and, by doing so, advance towards our net-zero target. We worked closely with stakeholders to understand the potential barriers to the uptake of used electric vehicles, and we developed the global technical regulation on EV batteries to set minimum durability and lifespan standards in the hope that this would instil confidence in the second-hand market to drive adoption.
We would therefore be keen to hear what strategy the Minister will now employ to guarantee the continued success of what we built and ensure a Great British-built EV will be a realistic purchase for everyone in both the new and used market. We are seeing a trend towards reliance on foreign imports of EVs, and we must counter this. It will not help the UK economy or our own climate change ambitions.
I also ask the Minister: what assessment have the Government made of the impact of their changes to electric vehicle policy on consumer costs? Will their policy drive up bills for hard-working families?
Messaging and purchasing measures are no use if we do not have the infrastructure in place to put the wheels in motion. EV drivers must be confident they can enjoy stress-free journeys. Between March 2023 and March 2024, we oversaw a 47% increase in the number of public charge points available in the UK. We established the £381 million local electric vehicle infrastructure fund to help local authorities deliver a step change in the number of on-street charge points. We established the £70 million rapid charging fund for the delivery of charge points at motorway service areas. We introduced the Public Charge Point Regulations to improve the consumer experience, and we set up the workplace charging scheme and electric vehicle infrastructure grants to support schools, businesses, charities and many different types of residential properties.
Given the progress we made in government, I hope the Minister will be able to tell the House more about this Government’s intentions for the future. I would particularly like his feedback on whether the Government are engaging with infrastructure funds to inject private capital and what the plans are for rural areas. We must unleash our rural opportunity—that is key to growing the economy as a whole—so what is the Government’s public charging plan for the countryside? What steps are the Government taking to ensure energy costs are affordable for those who own and run electric vehicles?
End-of-life care for EVs also plays a crucial role. We must be able to provide a full front-to-back service which will finish with the recycling and disposal of EVs. What are the Government doing to ensure we have the capacity to facilitate this? If sales and production of EVs are set to increase, so must our ability to safely take them out of service and reuse whatever we can as part of our net-zero aspirations.
We provided £2 billion to support the transition to electric vehicles. That funding focused on reducing barriers to the adoption of EVs, including offsetting their higher upfront cost and accelerating the rollout of charge point infrastructure. We legislated to ban the sale of new petrol and diesel vehicles from 2035, to give consumers independence to make the choice for themselves because of the higher upfront costs and to allow the domestic auto industry to develop further. We introduced the Public Charge Point Regulations, which made sure that everyone could locate public charge points to suit their needs, compare prices between those charge points and enjoy ease of payment in the confidence that the points would be in good order.
The Government are planning to bring forward the ban on new fossil-fuelled cars to 2030. How will they guarantee that they can bring down the price of EVs to an affordable level and why are they moving away from the 2035 deadline, which mirrors that of the EU? A 2035 deadline will allow the UK industry to be far more advanced in the production of electric vehicles and will, as a result, provide a greater benefit to the UK economy and consumer. Decarbonising the grid will incur material investment costs, so any reduction in the cost of electricity is unlikely to be seen in the short term. To be clear, the move to EVs has a role to play in progress towards our net-zero targets, but is it realistic for 2030?
We on these Benches will always put the British people first. If the cost of the Government’s new target is shown to drive up the cost of buying and running electric vehicles, will the Government do the right thing, reconsider their approach and put hard-working consumers front of mind?
Lord Hunt of Kings Heath (Lab)
My Lords, it is a great pleasure to respond to what has been an excellent debate. I thank the noble Baroness, Lady Parminter, for her opening speech and the many members of the Select Committee, and other noble Lords, who have spoken today. I very much agree with the tributes paid by the noble Baroness, Lady Randerson, and the noble Earl, Lord Effingham, to the noble Baroness, Lady Parminter. Her opening speech without notes was a remarkable effort that set the tone of the debate.
She outlined the main themes in the Select Committee report, which were clearly built on in the debate. She spoke of this being a critical challenge for the Government and the need for the Government to take a lead. Her committee said that the transition to electric vehicles was “essential” if the UK is to meet its net-zero emissions target by 2050. Her report said that EVs could provide “dramatic reductions” in emissions, in addition to improved air quality, but that “concerted Government action” is required.
In the debate, we heard about a number of the key measures. I think that there is a pretty broad consensus among noble Lords about what needs to happen, including the issues around upfront costs, charging infrastructure and affordability, and the grid and planning regulations. VAT and the vehicle excise duty were also raised, which I am afraid I will completely duck and say are a Treasury matter, although I have noted noble Lords’ comments on them.
The committee and the noble Lord, Lord Birt, said that, to ensure the transition to EVs, it was necessary to decarbonise the electricity used for charging. The report—as well as the noble Lords, Lord Lucas and Lord Grantchester, and the noble Earl, Lord Leicester—also said that we need to review urgently progress on EV and battery recycling facilities.
An important matter that a number of noble Lords raised, including the noble Baroness, Lady Randerson, as well as the committee, is that consumer confidence is critical to secure a successful transition and that the Government need to do more to convey a positive vision of EVs and to counter misinformation about the technology. Of course, there are many other things in the Select Committee report as well.
I was very interested in the noble Earl’s comments about what he thought the Government should be doing. He went through a list of actions taken by the last Government, which I readily acknowledge. However, he rather glossed over what the Select Committee had to say when it was particularly critical of the September 2023 speech by the former Prime Minister, Rishi Sunak, in which he pushed back the petrol and diesel phase-out date from 2030 to 2035. The noble Earl had a go at defending that, presenting it as a positive asset in terms of consumer choice. However, I think—and the evidence is here in this debate today— that it had a dampening effect on industry and consumer confidence. That is a reflection of the fact that Mr Sunak told the public that achieving
“net zero is going to be hard”.
He had emphasised the costs of EVs while failing to stress the benefits. So, coming back to the issue of growing confidence, this is clearly a role I believe government has to take, and it is one that we readily accept.
There was a very interesting discussion about costs and subsidy. The noble Lord, Lord Lilley, was articulate as ever in relation to that matter. He has a debate in a week’s time looking at the whole relationship between what we seek to do in terms of energy net zero and the cost of it, and of course his speech during the King’s Speech debate reflected his views on that.
The noble Lord, Lord Lucas, also raised the issue of costs. Of course, costs and subsidies are involved, and the Department for Transport is engaged in discussions with our friends in the Treasury on Budget and spending review decisions. I recognise that noble Lords have asked me to give precise dates about when announcements will be made and how policies will be taken forward. The fact is that I cannot say, because many of these are bound up in the current spending discussions. However, I can say that I have noted the issues that have been raised today, as will the Department for Transport, and they will of course be considered by the department in taking these matters forward.
Costs and subsidies are involved; equally, my noble friend Lady Young made the very important point that the cost of not taking action also has to be taken into account in terms of the impact of climate change. As the noble Baroness, Lady Jones, said, that is not some distant threat but is with us now, and we are seeing the consequences.
I also agreed with the noble Baroness, Lady Jones, on the question of decarbonising our energy network. That is why it is one of the five key missions of the Government. I know that noble Lords have asked me to set out how we will get there, first to clean power 2030 and then to net zero. We have asked NESO, the new body, to provide us with advice on the precise path to 2030.
I accept that the noble Baroness, Lady Jones, also mentioned the need for a coherent approach across government. In a sense, I hope that the fact that I am here at the Dispatch Box responding to this issue is a reflection of that. However, I acknowledge, as my noble friend Lord Whitty said, that the policy lead for electric vehicles rests with the Department for Transport.
I was disappointed that the noble Baroness, Lady Parminter, said that the Government had not made sufficient progress since the election. That has not been for want of lack of energy, emphasis and importance. Of course it is very important but, as I said, so much of this is tied into spending review and budgetary issues, and it is difficult for me to give the kind of responses she seeks. However, I can say that the Government see this as being a very important policy area, and we look forward to making a series of announcements in the next few months when we are clearer about the financial situation and the other issues that we need to take forward.
I turn to the manifesto commitment, which is clear. We said that we would support the transition to electric vehicles by accelerating the rollout of charge points and giving certainty to manufacturers by restoring the phase-out date of 2030 for new cars with internal combustion engines. I say to the noble Earl, Lord Effingham, that we are of course actively engaging with the industry on these matters. We are also supporting buyers of second-hand electric cars by standardising the information supplied on the condition of batteries.
I say to my noble friend Lord Grantchester that it is our firm intention to phase out the sale of new cars powered solely by internal combustion engine by 2030. All new cars and vans will need to be zero-emission by 2035. I say to my noble friends Lady Young and Lord Birt that we do believe that this is doable. We are not being spooked by the adverse comments we occasionally see in the media.
As noble Lords know, the zero-emission vehicle mandate will increase from 22% this year to 80% in 2030, while that for vans will rise from 10% this year to 70% in 2030. As the noble Earl, Lord Effingham, said, following extensive consultation with vehicle manufacturers, a number of flexibilities were built into the ZEV mandate which vehicle manufacturers can use to be compliant with the legislation. These include reducing the CO2 of non-ZEVs to earn additional ZEV credits, borrowing from future years and trading with other manufacturers. We think the targets are within reach.
We then come to the matter of cost, which a number of noble Lords, including the noble Baroness and the noble Earl, Lord Effingham, raised. I know from looking at the media reporting on electric vehicles in the last few months that there is a sense that production and the whole policy have stalled, but it is worth pointing out that the number of electric vehicles sold in the UK continues to rise. So far, 270,000 battery electric cars have been sold this year, 13% higher than last year. The September figure is particularly encouraging; one hopes—I certainly do— that it is a sign that consumers and the industry now have greater confidence in our making progress on the targets we have set, and that this will be the start of an acceleration in interest in and the purchase of electric vehicles.
On the used car market, there is some evidence that electric cars are now priced similarly to their petrol and diesel equivalents. Obviously, this provides a more affordable route for drivers to purchase an EV; none the less, I accept that cost is a key barrier to EV uptake. We know that, in the end, everyone should benefit from the transition to EVs and the cheaper running costs that can occur, but the Government are going to continue to review demand incentives to make sure that we strike the right balance between value for money for the taxpayer and support for the transition to electric vehicles. So, this is very much a work in progress.
It is the same answer, really, in relation to charging infrastructure and costs. We know that to give the public confidence in making the switch to electric vehicles, they must be confident in their ability to charge those vehicles. The noble Earl illustrated the point very well indeed.
I take on board the comments made by the noble Lord, Lord Fuller, about the democratisation of charging —as he described it—the potential contribution of parish councils, the lack of uptake and the issue of rurality, which I will make sure the department gives full consideration to, as I recognise that this is very important. He talked about parish councils, but we know that the performance of local authorities generally is patchy. In souping-up the policy going forward, we must look at how we can encourage local authorities, including parish councils, to take up the charge rather more enthusiastically.
Obviously, charging at home works for many people. One of the benefits of the election was campaigning, during which we knocked on doors and talked to people who had home chargers. My perception was that people who have them are very happy with them, but clearly it cannot be for everyone. Noble Lords have raised a number of problems for those people who do not have access, as well as the issue of renters. Clearly, we need to reflect on what we can do to improve the situation. Public charging provision has increased by 42% since last year, and the noble Earl referred to that as well. We need to look at what we can do to encourage ever-more increase in the charge point provision.
I take note of the well-made point from the noble Lord, Lord Birt, on service stations and rapid charging points. My understanding is that we now have 960 open access rapid and ultra-rapid charge points at motorway service areas, with many more on or close to our key A roads. The rapid charging fund is piloting and funding a portion of the cost of upgrading the electricity grid at motorway service areas where it is currently not commercially viable. We are looking at applications for the fund pilot at the moment and will be coming forward with further information in due course—to use the phrase beloved of government departments.
The noble Lord, Lord Birt, referred generally to the need for a reliable charging network. The Public Charge Point Regulations were introduced in November last year, meaning, in effect, that charge point operators will be required to offer 24/7 access to a free helpline, share open data, increase the provision of contactless payment options and be 99% reliable across each rapid charging network. We are definitely not complacent on this; we know that more needs to be done. We also recognise the importance of what the right reverend Prelate the Bishop of Oxford said very well in relation to fairness.
The noble Lords, Lord Whitty and Lord Lilley, mentioned road pricing. I must say from the Dispatch Box that there are no current plans to introduce a system of national road pricing. However, we recognise that motoring tax revenues in general need to keep pace with the changes that are being brought about by the switch to EVs, while keeping the transition affordable for consumers.
A number of noble Lords made important points about manufacturing, recycling and the battery supply chain. I have listened to those very carefully indeed. To the noble Lord, Lord Lucas, and the noble Earl, Lord Effingham, I can say that we are going to work closely with investors, via the automotive transformation fund, to build a globally competitive EV and battery supply chain in the UK.
I ought to turn to the issue of communication, because this is such an important area. A number of noble Lords—the noble Lords, Lord Lucas and Lord Whitty, the right reverend Prelate and my noble friend Lady Young—particularly raised the problem of misinformation about electric vehicles. This is something we need to be concerned about and not be complacent. I recognise that we as the Government have a clear duty and responsibility in terms of giving clear information to consumers on the benefits and use of electric vehicles. We need to work closely with industry in terms of correcting this misleading coverage and delivering factual communications to consumers on the many benefits that electric vehicles provide. We are already taking proactive action to counter inaccurate information presented by the media on the subject of EVs when this arises. Today’s debate has reinforced my view of the importance of doing this and I know that my colleagues in the Department for Transport will be listening very carefully to what has been said in relation to the role of government here.
To summarise the Government’s view, we welcome this report. I know that it was published in February and here we are in October, but none the less I can reassure members of the Select Committee that the report has informed, and is informing, the Government’s policy now about the way we need to go forward. I have said already that there are a lot of areas where I cannot give precise answers in terms of what we will do and what the dates are, because it is very much dependent on the spending review and budgetary discussions. Let us be frank: the public finances are particularly challenging and I will not hesitate to remind the party opposite of the public expenditure hole that they left us in. Clearly, that is a factor as well. But this is an important policy area; electric vehicles play a major role in the journey towards net zero and we know that it is important that we come back with some of the answers to the questions noble Lords have raised today.
In conclusion, I again thank the Select Committee and its chair for the extraordinary, valuable piece of work that they have done.
Baroness Parminter (LD)
My Lords, I will briefly thank the Minister for putting on record how important this policy area is to the Government, for confirming that they accept their responsibility to grow confidence in this market and for saying that they have heard the calls from around this House on the issues of the costs and subsidies that will be necessary if we are to grow this market. The Budget is coming very soon—we will see whether the warm words we have heard tonight will be translated into the necessary action. I beg to move.