EV Strategy: (ECC Committee Report)

Lord Whitty Excerpts

Wednesday 16th October 2024 Lords Chamber

[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.