EV Strategy: (ECC Committee Report)

Debate between Lord Hunt of Kings Heath and Lord Fuller

Wednesday 16th October 2024 Lords Chamber

[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.