Ultra Low-Carbon Emission Vehicles

Andrew Gwynne Excerpts

Tuesday 10th May 2011 Westminster Hall

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to see you in the chair, Mrs Riordan. I congratulate the hon. Member for South West Bedfordshire (Andrew Selous) on securing this debate, and concur with much of what he said. Clearly, he speaks with a lot of knowledge of the issue. It is a pleasure to speak on the subject; it makes a change from buses, trains and trams, which is the policy area on which I lead for the Opposition. My hon. Friend the Member for Barrow and Furness (John Woodcock), who leads on the issue, is serving on the armed forces parliamentary scheme today, so I suppose that I have drawn the short straw in speaking for the Opposition in this debate.

The hon. Member for South West Bedfordshire referred to the scheme in Israel, which, as a matter of interest, I had the opportunity to see. The ambition is impressive, but like him, I am not sure that it could be exactly transposed to the United Kingdom. However, it is certainly worth looking at, and the operation of the scheme is interesting. Knowing what works well and what does not may be of some benefit to the Department.

This debate is incredibly timely, coming as it does after two reports on the Government’s commitment to making change on the scale needed to tackle the threat of climate change and the role that a shift from dependence on oil to low-carbon alternatives in motor vehicles could play in meeting that challenge. Climate change is a threat that almost everyone now recognises we must treat seriously.

It was a surprise to read in the media that three Departments, including the Department for Transport, have raised objections to the new carbon budget proposed by the Committee on Climate Change. A leaked letter from the Business Secretary stated that accepting the carbon budget would endanger the competitiveness of British industry—that hardly says much for the Transport Secretary’s green credentials. As has been mentioned, rising fuel prices have led to a growing recognition of the need for change, not only among environmental campaigners or the political elite, but across the country. We know how the volatility of oil supplies impacts on the price at the petrol pump, causing misery for drivers and contributing to the costs facing families who are already feeling a squeeze on their incomes. The decision to increase VAT on petrol has added to the burden facing motorists, and the hon. Member for South West Bedfordshire mentioned those increasing costs in his contribution.

The goal of cheaper, greener motoring should unite everyone, as I believe it does. The public need the possibility of cheap, reliable transport, and the Government need efficient and clean transport networks that rely on secure energy supplies. Businesses must look to remain profitable and competitive at a time when the economy is under strain and environmental concerns are ever more pressing. Transport—primarily road transport—is a major contributor to greenhouse gas emissions, and the hon. Gentleman spoke about the need to use clean energy because as much as one fifth of all emissions come from road transport.

We can take two major steps to tackle the problem. First, we can make the alternatives to travelling by car more attractive. The significant investment in our rail network over the past decade led to a rise of over 43% in rail use during that period. The possibility of faster journey times on new high-speed lines, and the improvement of existing routes through electrification and more advanced trains, will continue to help achieve that shift from road to rail. The risk, however, is that such progress could be set back by the Government’s decision to hike up rail fares by 3% above the retail prices index of inflation for the next three years, meaning that fares will rise by over 30% on many vital commuter routes. In opposition, the then shadow Transport Secretary, the right hon. Member for Chipping Barnet (Mrs Villiers), warned that fare rises that were lower than those now proposed would

“price people off the railways”—[Official Report, 17 July 2007; Vol. 463, c. 149.]

I fear that her prediction will now become a reality, thanks to the decisions that she has taken since the election. Similarly, the decision to cut local government transport funds so much, so quickly, is having a devastating impact on bus services, inevitably reversing the progress that has been made in getting people out of their cars and on to public transport.

Secondly, we can do more to promote alternatives to travelling, and I welcome the Minister’s championing of initiatives ranging from the use of new technologies such as video conferencing to the promotion of working from home or remotely. Such initiatives, however, will amount to little unless there is proper financial support from the Government to back up the Minister’s enthusiasm. In reality, the car is for many the only realistic way to travel, particularly in rural areas. My constituency is in an urban area of Greater Manchester and is far from rural. Most of my constituents, however, do not travel by public transport; they travel by car, which for them is the only realistic mode of travel.

When in government, we recognised that a step change was needed if we were to move away from our dependence on oil and embrace and incentivise ultra low-carbon alternatives such as electric vehicles. Of the 20% of emissions that originate from our roads, 16% comes from cars. If it were more affordable to use electric vehicles, that would have a significant impact on emissions. Such initiatives must, of course, go hand in hand with a credible strategy to increase the amount of energy generated from renewable sources—a point made by the hon. Member for South West Bedfordshire—so that when there is increased use of electricity as a result of the roll-out of electric cars, that electricity is from green sources.

I am sure the Minister shares my concern about the report published in the past few days by Jonathon Porritt, the former chairman of the Sustainable Development Commission. His damning report marks the anniversary of the Prime Minister’s commitment to lead the UK’s “greenest Government ever”, and states that

“the likelihood of the Coalition Government living up to its “Greenest Government Ever” pledge is vanishingly remote.”

The report finds that more than three quarters of the Government’s commitments have shown little or no progress, and judges 29 of those commitments to be “moribund”, with a further 29 seeing “limited progress.” The decision to prevent the green investment bank from borrowing funds until at least 2015, and the watering down of feed-in tariff rates, are two examples of the Government’s backtracking on low-carbon initiatives. In his report, Mr Porritt states:

“The fact that David Cameron has no personal vision for the Green Economy provides all the permission that is required for piecemeal decisions across the rest of Whitehall working against any notion of becoming the Greenest Government Ever.”

The report concludes that it is

“depressing to see just how rapidly things have gone backwards since May 2010.”

Significant hurdles must be overcome to achieve the mass roll-out of electric vehicles that is needed to make a difference. We need the development of a recharging infrastructure that offers the assurance wanted by potential buyers—namely that they will be able to recharge their cars wherever they are in the country. That point was made eloquently by the hon. Member for South West Bedfordshire. We must also bring down the retail costs of electric cars. Although we can argue that they are cheaper to run and offer the potential for huge savings across the lifetime of the car, that is little use for someone who simply cannot afford the up-front cost. At the danger of breaking the consensus that has developed during the debate, the zeal with which the hon. Gentleman made his contribution put him in danger of sounding a bit like an over-enthusiastic car salesman—he certainly had me sold on a number of vehicles that he described. I am not sure whether that is a better job than being a Member of Parliament in the general hierarchy of things, but his knowledge has certainly benefited the debate.

We must work in partnership with industry to support the up-front research and development costs of new technologies—the hon. Gentleman and other hon. Members made a compelling case for investment in skills. It is a high-tech sector and important to the future of the manufacturing industry in this country, and it will undoubtedly play a major part in rebalancing the British economy. I represent a constituency that is still heavily dependent—perhaps disproportionately so—on manufacturing industry, and the desire to see investment in those new technologies transcends political divides.

I am proud of the steps that we took when in government to address some of the barriers to the mass take-up of electric vehicles. The £2.3 billion of assistance provided by the Labour Government to the automobile industry during the recession was tailored to help British industry become a world leader in the manufacture of low-carbon vehicles, and aimed to promote research and development of that technology. It also helped companies such as Jaguar Land Rover to access the European Investment Bank’s clean transport facility.

Labour made a commitment to make electric vehicles more easily available for consumers, and the then Transport Secretary, Lord Adonis, worked on trial electric vehicles. An investment of £250 million was made to make electric hybrid vehicles more affordable for consumers, and funding was provided for the largest trial of electric vehicles in the world. That scheme was launched in July 2009, and 340 vehicles took part. It is hugely disappointing that the Government do not recognise the importance of supporting British manufacturing at a time when investment is necessary to protect British jobs and ensure that we set the pace in the development of green technologies.

[Mr Marcus Jones]

The shadow Minister is making a case for the support given by the Labour Government to the automotive industry. I am quite shocked by his comments, because many of my constituents who work for Jaguar Land Rover were very concerned in 2009 at the lack of support that the Labour Government gave Jaguar Land Rover in its time of need. A long, long delay nearly saw many departments of Jaguar Land Rover close facilities in the UK. I am glad to say, and I hope that the hon. Gentleman will acknowledge this, that the regional growth fund has supported substantial investment in Jaguar Land Rover, which will create more than 6,000 jobs in the west midlands.

[Andrew Gwynne]

That is not quite how it happened. What the hon. Gentleman says about the regional growth fund is certainly welcome, if it is the case, for Jaguar Land Rover. However, I have to say that it is a pittance compared with the funding that was available through the regional development agencies. If that company is benefiting from the regional growth fund, that is good news for it, but I know of many companies that were to receive funding through the regional development agencies that are not so fortunate.

[Mr Jones]

The shadow Minister mentions the regional development agencies. In the west midlands, private sector employment fell while the regional development agency, Advantage West Midlands, was in operation, despite it having spent far more money than the regional growth fund, so I suggest to him that perhaps he should look for outputs rather than inputs, and at what we can achieve for our money.

[Andrew Gwynne]

I am glad that the hon. Gentleman acknowledges that the budgets of the regional development agencies were substantially greater than that of the regional growth fund, notwithstanding the points that he makes about employment growth. With regard to the funding that was made available previously, it is hugely disappointing that the present Government do not recognise the importance of supporting manufacturing. It is crucial to ensure that we are setting the pace in the development of green technologies.

I appreciate that the Minister has at least sought to take forward the work that Labour started when it was in office in developing an infrastructure for recharging. The Department for Transport claims that 9,000 electric vehicle charging points will have been built by 2013, yet research by the BBC published last week found that only 704 are currently available. It is estimated that 8,600 electric vehicles will have been sold by the end of this year, which will require 4,700 charging points to be completed before 2012.

It is a real worry that greater progress is not being made, and there are real doubts that the Government are treating the issue with the urgency needed to ensure that even their own claims will be achieved. There are also concerns about the progress being made in supporting the sale of new electric cars. The Minister has said in a parliamentary answer that just 534 cars were registered to receive the plug-in car grant in the first third of this year. The real concern, however, is that the funding for that initiative is being ended by the Government next March. As the Minister will know, Labour committed £230 million to the scheme, yet that has been reduced to just £43 million, turning the grants into a one-off scheme when what is needed is long-term, sustained support for this emerging industry.

I will therefore ask the Minister for some assurances. Can he reassure the industry and those for whom the cost of an electric car is simply out of reach that funding will be made available to continue the subsidy beyond the current financial year? Given that the comprehensive spending review was supposed to be a three-year settlement, why has he set this budget only for the current year? Are we providing enough support to the automobile industry to research and develop new low-carbon and ultra low-carbon vehicles? What more can be done to ensure that the UK is in a good position to become a market leader in this field?

Is the automobile industry putting sufficient investment into improving the efficiency of conventional petrol and diesel vehicles? Does the Minister believe that biofuels should play as prominent a role as they have been given in the past in making conventional vehicles greener? What progress are we making towards setting a new EU-wide target of 100 grams of carbon emissions per kilometre from new cars?

Finally, I would like to ask the Minister about the Government’s carbon plan. Can he update the House on the commitment to

“Consolidate existing support mechanisms for low and ultra-low emission vehicle research and development”,

which had a deadline of April 2011? Can he confirm that the commitment to developing a

“nationwide strategy to promote the installation of electric vehicle infrastructure, including a decision on whether to use an energy Regulated Asset Base and/or changes to planning/building regulations”

will be delivered on time—by the end of June 2011? What progress has been made on the commitment to review the

“strategy to support transition from early ultra-low emission vehicle market to mass market”,

which the Government have said is under way?

More environmentally friendly forms of transport, including electric cars, could play a larger role in the coming years in this country. I certainly look forward to what the Government will say about meeting that challenge.

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I am grateful for the opportunity to respond to the debate. I congratulate my hon. Friend the Member for South West Bedfordshire (Andrew Selous) on the topic that he has chosen, on his enthusiasm for it and on the large number of entirely pertinent questions that he asked during his contribution. I will try to answer as many of those as possible, which means that my response might be slightly more bitty than would otherwise be the case.

It is worth pointing out to start with that the two objectives of the Department for Transport are to help to create growth and to cut carbon. Of course, developing and promoting electric vehicles fits in exactly with those two objectives, showing that helping the environment need not be—in fact, should not be—contrary to economic development and the generation of growth for this country. If we can move that agenda forward, it will certainly be in all our interests to do so. That is why we have taken action to position Britain as a global leader in the design, production and use of electric and ultra low-carbon emission cars. Cutting spending does not have to be incompatible with a low-carbon agenda. Some low-carbon choices already offer outstanding value for money, so our future goal is a market for green vehicles that makes economic as well as environmental sense.

We have heard about alternatives to car transport. Let me deal with that issue briefly. Of course, a rounded transport strategy has to take into account alternative forms of transport. That is why we have prioritised the local sustainable transport fund to develop alternatives for shorter journeys; two thirds of car journeys are of 5 miles or less. To answer the shadow Minister, the hon. Member for Denton and Reddish (Andrew Gwynne), that shows the commitment of the present Government to dealing with the environment, because not only is it a big way of dealing with carbon emissions in the short term, but £560 million for those areas is more over this four-year period than the last Government provided over the last four-year period, notwithstanding the difficult economic circumstances in which we find ourselves. That is a real commitment from the Treasury to this agenda.

[Mr Edward Leigh in the Chair]

The shadow Minister also mentioned rail. I was having some difficulty in following his logic, because he said on one hand that people were being priced off the railways, but on the other hand that a record number of people were using the railways. Those two statements do not seem to be entirely compatible. Also of course, the last Government changed the RPI arrangement so that every year, rail fares went up above inflation. To that extent, we are simply talking about a continuation of the policy inherited from the last Government.

[Andrew Gwynne]

When the Minister looks at the record of the debate, he will see that the quote about pricing people off the railways came from his right hon. Friend the Minister of State, Department for Transport, who is responsible for the railways.

[Norman Baker]

The point that I am trying to make is that, if increasing rail fares above inflation prices people off the railways, which I think was the argument developed by the hon. Gentleman, the policy has been singularly ineffective so far. The policy pursued by the last Government of pricing fares above inflation has led, according to his own figures, to record numbers of people on the railways.

[Andrew Gwynne]

I realise that the debate is not about railways, but perhaps the Minister will look at some of his right hon. Friend’s written parliamentary answers, which show that the Government’s own projections make it clear that price increases of 3% above RPI over the next three years will see the growth in rail passenger usage fall.

[Norman Baker]

As the hon. Gentleman says, the debate is not about railways, so we should not spend too much time on this, but the Department for Transport’s projections show increasing numbers of passengers on the railways. Only this week, record numbers of rail passengers were announced, not least because of the price of fuel, which my hon. Friend the Member for South West Bedfordshire mentioned.

I am glad that the Opposition spokesman mentioned high-speed lines in a positive sense, and I look forward to the Opposition confirming that they have retained the last Administration’s position of supporting high-speed rail. It is important that there is cross-party agreement on the issue, and I am disappointed that the hon. Gentleman’s boss has so far been unable to say definitively that high-speed rail would continue if there were a Labour Government.

Let me turn in more detail, however, to the subject before us: electric and low-carbon vehicles. Notwithstanding the comments about railways and low-carbon transport locally, the fact remains that most journeys are undertaken by car, and that will remain the case for the foreseeable future. The reason is that cars are a convenient means of getting from A to B and are the only practical alternative for a great many journeys. Yes, people can take a different means of transport if they are in a city centre, and they can use the railways if they are going from one city centre to another, but the car is the only alternative for most journeys. We must therefore ensure that it is in a good place to contribute sensibly to our environmental and economic objectives. As I said in opposition, and I am happy to say again in government, the enemy is the carbon, not the car, and that is what we should focus on in our attempts to move forward on transport policy.

In the short term, the majority of CO₂ savings from road transport will come from improvements to conventional technologies, and that is broadly acknowledged across the House and across industry. I have been impressed by car manufacturers’ ability to tweak—that is perhaps an understatement—or adjust their technology in a productive way to deliver reduced carbon emissions from conventional engines, and one of the models mentioned competes favourably with a hybrid engine. EU regulations on fuel efficiency have helped to drive that process. Similarly, the manufacturing industry’s competitive will has helped to respond to the general environmental challenge that we all face. We will continue to work with manufacturers and our EU partners to squeeze more fuel efficiency out of petrol and diesel cars and vans because that will provide the biggest short-term gain. However, we are also preparing for the more revolutionary change that is the subject of the debate.

Of course, the take-up of ultra low-carbon cars may be slow at first, and nobody should be surprised by that. Whenever a new technology is introduced, there is always a slow take-up and then a rising line on the graph as people get used to the technology and gain confidence in it. The price then starts declining because the market is developed, and part of the Government’s strategy is to help to ensure that the market is kick-started and developed. There should be no concern about the number of electric vehicles that have been sold to date, because the trajectory is the one we would anticipate and is entirely consistent with our significant ambition for four years ahead, to which I will return shortly.

We are putting in place the incentives we need to establish a market for these pioneering technologies, which will be supported by measures such as enhanced capital allowances, low benefit-in-kind taxation and variable vehicle excise duty. I am happy to say that we are joined in our effort by a number of private and public sector organisations. To respond to one of the points that has been made, the Royal Mail is undertaking trials with electric vans. Sky is seeing what the plug-in Toyota Prius is like to live with. In my Department, the Government Car and Despatch Agency is testing five plug-in Toyotas and a Smith electric van, so we are doing what we can.

To support the development of the market for low-carbon vehicles further, we need to ensure that the right infrastructure, specialist supplier base and customer incentives are in place, and that is exactly what we are doing. We have confirmed our support for a range of research and development programmes across the green vehicle sector. Through the Technology Strategy Board’s low-carbon vehicles innovation platform, we are working with key partners to deliver a strategic vision for automotive R and D. Last year, we announced that a further £24 million was being awarded to six winning consortia from the latest competition, which makes a total of £52 million with contributions from business.

All of that will make a significant contribution to greener vehicle development in this country, to pick up the point rightly made by my hon. Friend the Member for Nuneaton (Mr Jones). That development includes hybrid technologies, composite materials and engines that recover waste heat energy. The vehicles that will benefit include plug-in hybrids from Nissan, Lotus and Jaguar Land Rover, extended-range electric cars and a lightweight hybrid refuse collection vehicle. Through the plug-in car grant, we are helping to lower the up-front costs of such vehicles. There are nine eligible cars, which are, and will be, on our roads, with more than 500 orders already placed under the scheme, as has been mentioned.

Our objective has always been real grants for real cars: cars that are safe and reliable, that meet the needs of real motorists and that provide a motoring experience that is as good as, if not better than, that provided by the conventionally powered vehicles people currently drive. It is important that the new generation of cars have that consumer confidence and that their performance is similar to, or better than, that of existing vehicles. If we are to have uptake, we absolutely must have that. Fifteen or 20 years ago, I did some work on green washing powders, which, quite frankly, were not as effective as normal washing powders, so the uptake was limited. If green technology is to take off, we must get its performance up to the level of that of existing technology.

The scheme was launched in January, with buyers receiving a grant of 25% of the price of a green car, up to £5,000. That, of course, also applies to business buyers. The scheme has been well received by the public and by business. We have shown our strong commitment to supporting the market by confirming support for the grant for the lifetime of this Parliament. To pick up the point raised by the shadow Minister, it is right that the sum involved is £43 million until March 2012. The spending review has confirmed the provision of about £300 million to support consumer incentives for the life of this Parliament. The hon. Gentleman can have confidence that this is not a stop-start arrangement, but something we will see through to make sure that there is confidence in the market.

Through these initiatives, we want to encourage motorists to embrace cleaner and greener vehicles. By encouraging demand, we will stimulate investment in mass production which will, in turn, bring down costs and further boost demand. That is what we have seen with all new technologies, whatever the field, and things will be no different with electric vehicles.

Let me turn now to some of the points raised by my hon. Friend the Member for South West Bedfordshire. He mentioned the carbon reduction from an electric car powered by the existing grid, and he is right to draw attention to the need to change the grid mixture. Indeed, when we came into the Chamber at the end of the previous debate, my next-door neighbour, the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), was responding to a debate on that very matter. The Government are well seized of the need to develop a cleaner, greener grid, which will undoubtedly increase further the advantages of electric cars. Even if the existing grid is used with a new electric car, however, there can be up to 40% carbon savings. There are also further benefits in terms of reducing air pollution from tailpipes and so on. We should change the grid, but even if we do not, there are still many good reasons to pursue electric vehicles, which is what we are doing.

My hon. Friend the Member for Nuneaton referred to the regional growth fund, and I can assure him that the Department for Transport is drawing the attention of other Departments, including the Department for Business, Innovation and Skills, to the advantages of transport investment, including in this field. He will know of the Transport Secretary’s enthusiasm for these issues, and he can rest assured that my right hon. Friend will not lose an opportunity to advance them in discussions with fellow Cabinet Ministers.

My hon. Friend the Member for South West Bedfordshire asked about the 2020 target, as it were, for electric vehicles. There is no doubt that we want a big uptake of these vehicles. The figure achieved will be determined by external factors to some extent, for example the price of oil. If the price rises dramatically, it will, I suggest, hasten the development and uptake of electric vehicles, but if the price declines, it will make it less attractive to move forward on that trajectory. Therefore, some outside factors mean that it might not be sensible to set a target. We should say, as we have said, that we must decarbonise road transport if we are to make serious inroads in our carbon emissions in the transport sector.

We should and we have done stuff on rail and encouraged cycling and walking in urban centres, but ultimately the big gain will come from decarbonising road transport. We must put in place high-level objectives for carbon reduction and economic growth and the mechanisms to deliver the outcome we want, which, in this case, is a big uptake in electric vehicles. We must then monitor the uptake without necessarily setting arbitrary targets for how many vehicles there should be by 2020. Having said that, “The fourth carbon budget” report has made some recommendations and we appreciate the efforts made in that regard. We have not formally responded to them, but we will publish our views in October, and we might be able to give more detail on the number of electric vehicles we could achieve when we publish that.

My hon. Friend the Member for South West Bedfordshire referred to the incentives for purchasing electric vehicles, and I am grateful that he welcomes the £5,000 grant. The economics are not quite as negative as he might feel. On current petrol prices, an electric car such as a Nissan Leaf could save the average motorist up to £1,000 a year in running costs, so, taking account of the plug-in car grant and the vehicle excise duty benefits, even now someone could get a payback in seven years. I accept that that could be better and we want to make it better, but there is a sensible payback period for people to consider when they invest in such vehicles.