Ultra Low-Carbon Emission Vehicles

Andrew Selous Excerpts

Tuesday 10th May 2011 Westminster Hall

[Andrew Selous (South West Bedfordshire) (Con)]

I am delighted to serve under your chairmanship this morning, Mrs Riordan, and I am particularly grateful to Mr Speaker for granting me this debate on the Government’s policy on ultra low-carbon emission vehicles.

There are four main reasons why the issue is so important and matters for the future of this country. The first reason is about tackling climate change. We know that the Government are committed in law to a 34% reduction in emissions by 2020 and an 80% cut by 2050. Clearly, ultra low-carbon emission vehicles, including electric cars, will be part of the solution to helping to reduce emissions, but we also need to have low-carbon electricity. It is no good just reducing the tailpipe emissions if the electricity that powers ultra low-carbon vehicles is fossil fuel and dirty. That is a given. I do not know whether Professor David MacKay is still advising the Government, but he has made that point very powerfully in his book, “Sustainable Energy—Without the Hot Air,” and it is important that we mention it when introducing the debate. As I say, doing something about climate change is the first reason the issue is important, as ultra low-carbon emission vehicles are clearly part of that.

The second reason is that the whole sector has massive potential to create growth, wealth, jobs and employment for this country. Just under 2.5 million of our fellow citizens are looking for work, and ultra low-carbon emission vehicles are part of a massive industry of the future. Shai Agassi of Better Place has spoken of a $2 trillion-a-year industry. If the United Kingdom can increase its percentage share of that even by a few percentage points, many more jobs across the country will be created for all our constituents. Low-carbon growth and the jobs that come from it are absolutely vital.

The third reason why the issue is important is that ultra low-carbon emission vehicles are a crucial part of the United Kingdom’s response to a world with less secure energy supplies. We have only to look around the middle east at the moment to see that that is very much the case. The fourth reason the matter is vital, which will probably speak most strongly to our constituents, is that it will allow us to do something about the absolutely exorbitant cost of going to a petrol station and putting petrol or diesel in a car. Our constituents—and, indeed, we—are all paying cripplingly high prices to drive around. If we can sort out the generating issues, ultra low-carbon emission vehicles provide the potential for much cheaper motoring. If any of us were looking for a slogan on which to be elected at the next election, “Cheaper motoring” must be high up the list and would resonate strongly with our constituents. I have given four powerful reasons why the issue matters incredibly. Two reasons I would particularly pick out are the wealth and jobs we need to create, and the cost of motoring to our constituents.

To give credit where credit is due, the Government have been active in this area. The Office for Low Emission Vehicles was set up under the previous Government and is a collaborative effort between the Department for Transport, which is the Minister’s Department, the Department for Business, Innovation and Skills and the Department of Energy and Climate Change. It has a combined budget of more than £400 million. There is also the Technology Strategy Board, which is a non-departmental public body sponsored by the Department for Business, Innovation and Skills, and the plugged-in places grant, which is designed to provide the necessary infrastructure. I will talk about that grant in a moment. In addition, the industry’s own automotive innovation and growth team led to the creation of the Automotive Council UK, which is a joint industry and BIS body.

There clearly has been action and there is cross-Government co-ordination, as there should be because one Department on its own cannot make this happen. That is excellent. I am glad that the people who need to be talking to each other in Government are doing so. My central question to the Minister, who I suppose is answering on behalf of all the Departments involved, is: are we being ambitious enough for the United Kingdom? I very much want the United Kingdom to be a success story at the heart of this massive and soon to be hugely growing global industry.

Let us consider where we are at the moment. The Department for Transport’s figures show that there are only 57,000 vehicles in vehicle excise duty band A, which is the lowest emission category. That figure is, in fact, double the number of vehicles that were in the category in 2009, so the industry is clearly growing fast. However, I remind hon. Members present this morning and those who will read the transcript of the debate that there are 28.4 million cars in the United Kingdom and that 57,000 is therefore a fairly small number.

The Government’s Committee on Climate Change has recommended that we should aim to have 1.7 million electric vehicles by 2020. Will the Minister say if that is what the Government are committed to achieving and how the numbers will stack up in increasing the 57,000, which we have in 2011, to the 1.7 million, which the committee says that it wants in 2020? There will need to be very sharp increases over the coming nine years to get that far. The figure of 1.7 million cars is just under 6% of the 28.4 million cars in the United Kingdom at the moment. In the excellent Parliamentary Office of Science and Technology note attached to the debate pack, I was interested to read that Japan has set a target of 20% of next-generation cars by 2020—the same date.

[Mr Marcus Jones (Nuneaton) (Con)]

I congratulate my hon. Friend on securing the debate; he is making a strong and compelling case. The benefits that low-carbon vehicles can have in reducing CO₂ and helping the environment are undoubted, but does he agree that the research and development and manufacture of such vehicles in this country is a real chance for us not just to broaden our manufacturing base once more, but to rebalance the UK economy?

[Andrew Selous]

My hon. Friend is absolutely right. We are already strong in a number of the areas he mentioned in his question. We start from a good base, but he is absolutely right that the potential is massive. My prime purpose in initiating the debate is to allow us to play our role as parliamentarians in holding the Government to account and to ensure that we do not lose out on the potential for us to benefit fully from what he is talking about.

[Neil Carmichael (Stroud) (Con)]

This is a very important debate for the reason noted by both my hon. Friends: the opportunity the sector offers to manufacturing. However, a problem that needs to be solved is the supply of the skills necessary to develop the technology that we have. In this country, an insufficient number of people have skills in the automotive sector that relate to electronics. That must be put right because that area will make up a larger part of any future vehicle designed to meet very strict low-carbon emissions. We must address the skills issue in the sector.

[Andrew Selous]

My hon. Friend is absolutely right. If he will bear with me, I intend to touch on exactly the issue of skills that he has, properly, raised. He is not the only one raising that issue. The Institution of Mechanical Engineers and others are very concerned that we are behind where we should be in the number of qualified technicians, the people who understand the new technology and the training of apprentices in this important area. The issue goes back even further than that to the number of physics teachers that we need in our schools; the number we have is far too low. It will be difficult for the Minister when he responds to the debate, because that issue touches on such a wide area of Government policy, but my hon. Friend is absolutely right.

I was making the point that, were the United Kingdom to be as ambitious as Japan—I do not see any reason why we should not be, as the industrial revolution took place in this country, we were the workshop of the world and I believe we can be again—that would lead to a figure of 5.7 million ultra low-carbon emission vehicles on our roads by 2020, rather than the 1.7 million that the Government are aiming for. My question for the Minister, therefore, is: why are we being less ambitious than Japan?

It is true that the United Kingdom has had some notable successes; for example, Sunderland’s anticipated production of 60,000 electric vehicles a year, starting in 2013. I would note again, however, that those 60,000 vehicles a year are equivalent to some 2% of the 3 million internal combustion engines that the United Kingdom currently makes every year. That is not to say that we cannot make greater progress with the efficiency of the internal combustion engine—I will say a bit about that towards the end of my remarks—but I think that colleagues will appreciate the scale of the challenge that we face to even get to the Committee on Climate Change’s figure of 1.7 million electric vehicles on our roads by 2020.

When we look across the Atlantic ocean, we see that the United States is investing some $2.4 billion to support the next generation of electric vehicles. We know that in China there is massive investment in new battery technology—I am thinking of companies such as BYD, which stands for “Build Your Dreams”. Warren Buffett already has a 10% stake—normally a sure-fire sign of a company that will do well. That is the competition that the United Kingdom is looking at around the world.

[Mr Marcus Jones]

Does my hon. Friend agree that Ministers from the Department for Transport need to make substantial representations to the Department for Business, Innovation and Skills, regarding where the regional growth fund is spent, in order to try to support our low-carbon industry, particularly in the automotive sector?

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[Andrew Selous]

My hon. Friend is absolutely right. The automotive sector is very important to the United Kingdom not just for the cars we produce, but for the number of engines, the number of smaller engineering companies, the suppliers, and the technology and engineering base that supports that. It is vital to the country’s economic future. I indicated earlier that I am reassured that those lines of communication across Government are there, but we need to see delivery from those conversations, as he has rightly pointed out.

I will continue looking at what else is happening around the world a bit longer, because it is important to put what the United Kingdom does in context. As far as I can see, Israel plans to be the most ambitious of all. It intends to rid its entire road transport sector of dependence on oil by 2020. That is massively ambitious if one thinks about where Israel is in the world and its geopolitical relations with some of its neighbours. I think that we can all think of particular reasons why Israel is going down that route, but none the less it is deeply impressive.

Israel is choosing a different model, I think it is fair to say, from that of the United Kingdom. It is looking to sign up to the Better Place concept, which will largely involve changing the engines in cars—engines will be swapped over. The depleted battery is taken out of a car and in under a minute, I understand, a new, fully charged battery supply is put in and one can carry on driving. In less time, therefore, than it currently takes to fill up with petrol at the pump, the car can be on the road again—a fully-charged vehicle that will travel another 100 miles.

It is worth mentioning the context of the debate, because of Israel’s scale and ambition. The Minister will probably have good and valid reasons, which I would accept, to say that it is probably not right for the United Kingdom to go down that particular route. For various infrastructure reasons, it is probably right that we do not. If we are not going down that route, however, how do we in the United Kingdom achieve that level of transformational change? How do the Government envisage United Kingdom companies, some of which were mentioned by my hon. Friends, taking advantage of the £1.3 billion loan scheme for the development of low-carbon technologies that is available from Europe? We need to ensure that we receive our fair share of that money.

When new technology comes to the fore, initially it is clearly expensive and there is low take-up. I think that if we are honest, at the moment electric cars are—perhaps I am slightly parodying—for rich idealists. Frankly, the economics do not quite stack up at the moment. I illustrate that by looking at the on-the-road cost of the new Nissan Leaf, which will be produced in Sunderland. That is an excellent vehicle. I was privileged to see one close to Parliament recently. It is a five-door hatchback—a very nice-looking car. It will be made in Britain, which is fantastic. Its on-the-road price, however, is £30,990. The Government’s £5,000 plug-in car grant, which is an excellent initiative that I commend, brings the price down to £25,990 but, for me, that is a very expensive car. I do not know what sort of cars my hon. Friends drive, but to me that would be an awful lot of money. I expect that for many of my constituents that would be much more than they would spend on a car. Frankly, I do not think that they would get the payback from the cheaper costs of motoring after that level of investment.

There is, however, a tipping point that comes with the introduction of new technology. When there are the advantages of economies of scale—mass production and so on—prices come down as new technology comes in. More people buy these things, so they are cheaper to produce and so on. Shai Agassi, in a speech that I read recently, anticipates a tipping point around 2015 when the economics start to stack up. If that is the case, things could change very quickly, which is why I raise the issues of scale and whether the United Kingdom will be able to meet the level of demand that I anticipate. If, for all of our constituents, an ultra low-carbon emission vehicle is cheaper than a conventional fossil fuel internal combustion engine, we will all want those vehicles straight away, because we will be fed up with paying the higher costs of motoring. Those issues of scale, and whether the United Kingdom is able to provide that amount of cars and make money from those huge levels of sales, will be a significant issue.

What is the Government’s view on the economics of investing in their own fleets across various Departments? Examples might include NHS delivery lorries or Royal Mail vans that go back to the same place every night, where they could be recharged; they might have a set route or series of routes and are excellent cases for conversion into electric vehicles. What progress are the Government making in ensuring that their commercial fleets in particular consist of ultra low-carbon vehicles—whether the electric or the plug-in variety?

[Mr Marcus Jones]

I thank my hon. Friend for giving way again. He makes an important point about Departments, local authorities and so on investing in electric vehicles. Does he agree that it is extremely important that, where practicable, we procure such vehicles from British manufacturers?

[Andrew Selous]

I very much agree. I, too, am passionate about home-made British production. We ought to buy British as often as we can. We are all subject to the so-called OJEU rules—named after the Official Journal of the European Union—under which public bodies must go through strict and unbiased procurement procedures. Sometimes, therefore, we have our police driving around in Volvos or other foreign-made cars. When I go to France, Germany or Italy, however, I hardly ever see French, German or Italian police officers in anything other than a car made in their home country—likewise for fire-fighting equipment and so on.

I postulate to the Minister that this country might be a little too rigorous in applying those OJEU rules. We have a fine automotive industry that makes excellent vehicles and, frankly, the police will catch no more criminals by driving around in Volvos and BMWs rather than in fine, British-made cars.

We digress; I will hastily return to the point, before you bring me back to it, Mrs Riordan. However, I am grateful for the intervention of my hon. Friend the Member for Nuneaton.

The Department for Transport asked whether 2011 would be the year in which the electric car takes off. There is certainly increasing interest, which is tremendous, and I commend the Government for the excellent £5,000 subsidy. My view of the economics is that we are not quite at the right point yet, but we will be very soon. Lewis Booth, the chief financial officer of Ford, has asked for how long Governments will be subsidising electric vehicles. If the Minister can shed any light on that issue, that would be helpful. In this early phase, private industry needs certainty for the future, particularly in planning.

Philippe Varin, the chief executive of Peugeot, has said that the European Union’s research and development support for electric vehicles is too cumbersome and complicated, which is a concern. If we are to compete against Japan, China and America, we in the European Union and this country need to get our act together in research and development funding.

I was delighted to read that the Minister for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), said in a departmental press release that the UK was Europe’s leading producer of ultra low-carbon vehicles. That made fantastic reading. I have already spoken of the production due to start shortly, or in early 2013, at the Sunderland plant. I hope we can maintain that position.

I am conscious that France, with Peugeot and Renault, is also ambitious in the area of ultra low-carbon vehicle production. The country has a plentiful supply of low-cost nuclear electricity, and it views itself as having a chance to challenge the dominance of the Germans in the European automotive industry. I repeat that everyone here is ambitious for Britain; we were the workshop of the world, and the industrial revolution took place here. I want us to be right at the front and centre, not running behind any other European country in this massive industry of the future.

I move on to the whole issue of charging points. It is all very well having an ultra low-carbon, electric vehicle—whether a hybrid or a pure electric one such as the Nissan Leaf—but if there is nowhere to plug it in when on a longish journey, the problem is that it will grind to a halt.

Again, the Government are active on that issue, and I commend them for that. We recently had the announcement of a £20 million plugged-in places grant to provide more than 4,000 charging points in the midlands, Greater Manchester, the east of England, Scotland and Northern Ireland, building on an earlier scheme in London and Milton Keynes. Yesterday, I checked with my own local authority and found that my constituency of South West Bedfordshire does not include a single charging point. That will change, however, because we are in the east of England and will receive some of the charging points from the plugged-in places grant. Colleagues from areas that I have not mentioned might want to ask the Minister what the plans are for those areas.

Currently, London has 250 charging posts. Transport for London is aiming for 25,000 charging posts by 2015—a level of transformational change that might need to go further, but is a significant increase. Some 90% of the 25,000 posts are intended to be in workplace car parks and 250 will be fast-charge charging points, which are important for longer journeys, when someone does not want to have to stop for eight or six hours to recharge the battery fully. We need to get the mix of charging points right for the future, so that this technology takes off. In Newcastle, Sunderland and Middlesbrough, near the Sunderland car plant to which I referred, 1,300 charging points are being installed.

Smart-meter, low-cost charging can also greatly reduce energy costs. If cars can be charged when there is much less demand on the national grid, that is much cheaper. That reduction in the energy cost can be important, and it is where smart meters come in. I am interested in whether the Minister will be able to enlighten us further on that aspect of Government policy.

I am concerned about the lack of standardisation of charging points in the European Union. Indeed, why can we not have standard charging points around the whole world? In the past, technologies have battled things out. With the video or the DVD, a common format for one worldwide product was arrived at eventually. That should be the case for charging points, in Europe at least. Many British people will want to drive their electric cars to France or elsewhere in Europe for summer holidays, skiing or whatever, and they need to be able to charge while they are there. The European Union could do something useful and practical for our constituents. What representations is the United Kingdom making to ensure standardised charging throughout Europe?

Earlier, my hon. Friend the Member for Stroud (Neil Carmichael) rightly mentioned training the work force. None of what I have been discussing will happen unless we have the skilled technicians in this country; unless we get it right, we will lose out to other countries that have invested more and have an appropriately trained work force. The Institution of Mechanical Engineers is worried about the lack of apprentices with the skills to work on electric vehicles, particularly in smaller businesses that may not be able to afford to train apprentices. How will that be rectified? It said that about 10,000 additional apprentices are needed in this area of electronic manufacturing to take advantage of and to satisfy the demand that is surely coming.

I am interested in the Government’s attitude to hydrogen-powered vehicles. I read carefully the note from the Parliamentary Office of Science and Technology, which states of hydrogen fuel cells:

“This is a low-carbon form of transport if the hydrogen is generated using electricity from low-carbon sources.”

I made that point at the start of the debate, and I want to check whether that is the Government’s view. Professor David MacKay, who was a Government adviser—I should be grateful if the Minister told us whether he is still advising them—and who is an eminent professor of physics at Cambridge university, wrote “Sustainable Energy—Without the Hot Air”, to which I referred. His take on hydrogen is that hydrogen vehicles make our energy problem worse rather than better. I do not know whether he is right, but I would be interested to know the Government’s view. I know that one large UK motor manufacturer, which I contacted before the debate, was keen to obtain clarity on the Government’s view of the future of hydrogen-powered vehicles.

I have driven a hydrogen-powered vehicle round the Cranfield test centre in Bedfordshire. It drove extremely well, as did the Vauxhall Ampera, which I have also driven and which will be on sale in the United Kingdom from next year. I hope that it will be made in Ellesmere Port. I wish that it was being made in my constituency at Luton in Bedfordshire, but it would be fantastic if it was made in the United Kingdom. That, too, drives extremely well, and all the evidence is that when people get into an electric vehicle and discover that it has a nice feel and good acceleration, and is not sluggish, they are enthusiastic and keen to adopt the new technology. We just have to get over some of the financial issues to which I alluded at the start of the debate.

I should like to know the Government’s view on the use of biofuels for vehicles. There is concern about the sustainability of biofuels and the fact that we may be inappropriately using land for biofuels when it should be used to produce food. What is the Government’s view on that? Likewise, where does liquid petroleum gas fit into the Government’s view of the new technology that we have been talking about?

We must pause to consider the improvements that can be made to internal combustion engines. We have 28.4 million cars on our roads, and Britain makes around 3 million car engines every year. They are becoming more efficient and lighter, and the technology is improving. I noted from the Volkswagen website that the Blue Motion Polo—unfortunately, it is not made in this country—emits 91 grams of carbon dioxide per kilometre, compared with 89 grams per kilometre for the Toyota Prius, which I guess may occasionally ferry the Minister around; the Prius comes in at just under, but it is very close. An expertly engineered internal combustion engine produces only 2 grams of carbon dioxide per kilometre more than a hybrid vehicle. We must differentiate between different types of internal combustion engine, because new technology is advancing swiftly.

[Mr Marcus Jones]

My hon. Friend talks about research and development, and innovative design of combustion engines. Many of my constituents work for Jaguar Land Rover, which is near my constituency. It is doing a fantastic job in changing how it produces its engines and how its vehicles are constructed—to be lighter and more fuel efficient. Does my hon. Friend agree that policy across Government should be to encourage through the taxation system not just the production of vehicles that cost less to run, but their ownership?

[Andrew Selous]

I thank my hon. Friend for his further intervention. I am glad that he mentioned Jaguar Land Rover, which has not been mentioned so far in the debate. It is doing excellent work on producing an electric hybrid Range Rover, which is fantastic, and it is co-operating fully with the Government on some of the bodies that I mentioned earlier. My vision is that all British-based manufacturers will be at the front and centre of the new technology and will supply the demand that will come down the track surprisingly and frighteningly fast in a few years’ time, when we reach the tipping point at which it becomes more economic to drive such vehicles rather than pay the exorbitant and cripplingly high prices that we have to put up with at petrol stations at the moment.

The United Kingdom has a history of inventing, but then not commercially exploiting, new technologies. I do not want us to repeat mistakes of the past. If we can seize the opportunities that I have outlined, we can protect our environment, provide jobs, increase our energy security and give our constituents a low-cost motoring future. I believe that they would thank us for that.

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[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.

[Andrew Selous]

I thank my hon. Friend the Minister for the serious way in which he is responding. What he has just said is, in some ways, the most important thing that has been said in the whole debate, and I am grateful to him. The fact that the payback could be within seven years is very welcome news. He has told us about it here, but it is probably rather a well kept secret at the moment, so we need to publicise it slightly more. I ask him to do that.

[Norman Baker]

They always say that if one wants to keep a secret, tell the House of Commons. It is worth pursuing that issue further and I am grateful for my hon. Friend’s suggestion. My officials are here and we will see what we could usefully do to promote the scheme further.

I mentioned the need to ensure that the performance of electric vehicles is satisfactory, but if we are to make progress, we also need to ensure, as far as possible, that the economics are satisfactory. Once those two things are in place, people will embrace the new technology in a welcome way. People want to be green, provided that they can afford to be and that their vehicles do not lack performance as a consequence.

Those who have contributed to today’s debates raised the issue of the infrastructure. We are determined to roll out an effective infrastructure for electric vehicles, hence the inclusion in the coalition agreement of a commitment to mandate a national recharging network. Our plugged-in places programme is helping to do just that. The scheme will provide valuable data on how and where people recharge their cars, so that we can get the national network right. To help achieve that, we are working on a strategy for promoting the roll-out of charging infrastructure, and we will publish it this summer. More details will be available then.

In December last year, as my hon. Friend the Member for South West Bedfordshire knows, we announced five more plugged-in places: Northern Ireland, central Scotland, Greater Manchester, the midlands and the east of England will all receive match funding to install electric vehicle recharging infrastructure. Those projects join the schemes in London, Milton Keynes and the north-east of England, which the previous Government began.

The programme is real and happening now. Charging points are already appearing on our streets—the most visible sign of the growing market—and will soon, I hope, become a common feature on streets and in homes, workplaces, and private and public car parks, so consumers can charge their cars easily, safely and conveniently. To pick up the point made by my hon. Friend, they will have confidence that they will not be left stranded somewhere without a power source. That concern is also addressed by the development by manufacturers, who are pushing at the boundaries, of increasing range for electric vehicles.

This is a new market and these are new technologies. The projects will test a variety of business and operating models and different technological approaches. The knowledge that we gain will inform the developing national strategy for infrastructure. Of course, we want the UK to benefit from the business and competitive opportunities of ultra-low-carbon cars. We want green growth and we want it here. We want UK businesses to seize commercial opportunities in the sector and are supporting them to do so.

The move to ultra-low-emission vehicles presents opportunities to support the economic recovery, green growth and the creation of high-tech, low-carbon jobs. The automotive sector is already our No. 1 manufacturing export, directly employing around 156,000 people in the UK and a further 150,000 in the supply chain. The sector is worth nearly £6.5 billion to the UK economy in terms of gross value added, so as the automotive sector goes green, the UK is well positioned to reap the benefits. I can assure my hon. Friend the Member for Nuneaton that the Department for Transport, the Department for Business, Innovation and Skills, and the Treasury are working together and are closely focused on doing that.

The Nissan Leaf will be made in Sunderland from early 2013, with production growing to 50,000 vehicles per year. Nissan will assemble battery packs for the Leaf on the same site, starting in 2014 and growing to 60,000 units per year. Those are real, green jobs, and they are helping to create growth and cut carbon—the two objectives of the Department for Transport.

I turn to the other questions that were raised. I dealt with the length of the subsidy for electric vehicles. There is competition from Europe—there is no doubt about that. France has aggressive plans for infrastructure and vehicle uptake, but the UK has been allocated the largest number of Nissan Leafs in Europe, which demonstrates that we are seen as a leading market, and we are working to position the UK to take advantage of the business opportunities that the market brings.

To be frank, the standardisation of charging points is a difficult issue and not one for which there is an immediate solution. The International Electrotechnical Commission has developed international standards for electric vehicle recharging and there are discussions in the EU to get progress on a standardised charging system. However, the national interest sometimes has a role in the consideration of the best way forward, as my hon. Friend will understand.

[Andrew Selous]

Does my hon. Friend the Minister agree that this is one area in which the EU could play a useful role? Many people think that getting some form of standardisation is exactly what the EU is for.

[Norman Baker]

I entirely agree, and I hope that the EU comes up with a solution that does not reflect national interest, but European interest, and makes sense for manufacturers and consumers by keeping costs down. That would be an entirely sensible outcome for many EU discussions. I assure my hon. Friend that we are using our influence, as far as we have any, to push for exactly that outcome.

[Norman Baker]

I agree that we do not want to leave ourselves in a position where, to be blunt, we are outflanked. We must try to achieve a consensual arrangement for a single recharging solution that everyone can embrace. That is clearly the desired outcome, and it will ultimately be to the benefit of all countries in the European Union and more widely. Indeed, as we heard earlier, the best solution will be an international one, as it will keep manufacturing costs down and therefore the cost to the consumer down, too. We are seized of the need to make progress, but the House will appreciate that it is not entirely within our control.

The matter of apprentices was raised, especially the fact that we need a sufficient number with the skill to work on electric vehicles. I am happy to reassure the House that the Department for Business, Innovation and Skills, the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs are working together to identify the necessary skills and to consider how the demand-led further education system will deliver them. We are talking to the sector skills councils and the Commission for Employment and Skills about ensuring that the demand for green skills is shared with further education colleges and other providers. We plan to maintain a strong cross-Government focus on the STEM subjects of science, technology, engineering and maths.

[Andrew Selous]

The Minister is being generous in giving way, which I appreciate. What he said about schools is critical. To be blunt, if people do not have a GCSE in physics, they will probably not even make the starting gate. However, there is a chronic lack of physics teachers. I know that this is stretching the Minister’s departmental responsibilities, but it is important that we join these things up. Nothing will happen unless schools have the basic physics that will lead people on.

[Norman Baker]

As suggested, the number of physics teachers may be slightly beyond my brief at the Department for Transport. However, I have some sympathy for the point being made by my hon. Friend. The mindset in some areas and among some people is that manufacturing is an old-fashioned dirty business, and that people who want to progress in life should get white-collar jobs. That is unfortunate, and the Government are trying to change that mindset. Manufacturing is most important to the country, and it is a skilled task. Anything that schools can do to help promote it is entirely to be welcomed. My officials and I will ensure that my hon. Friend’s comments are drawn to the attention of the relevant Minister at the Department for Education.

Before I run out of time, I shall deal with the other points that were raised. Hydrogen was mentioned. I return to the Government’s objectives, which are twofold—to create growth and to cut carbon. I do not want to get into the business of picking winners in the technology that finally emerges. It may be that what emerges is not an overarching technology; there may be different solutions for different vehicles, with the solution for council refuse collection vehicles being entirely different from that for the car that takes people to visit their aunts and uncles.

We should be careful not to impose Government solutions, or to guess which way technology is taking us. We should specify the outcome that we want—that of decarbonised road transport—and invite manufacturers, those involved in research development and others to come up with a way of achieving that objective. It is not for us to second-guess things, although it is tempting. I do not mean that as a criticism of the previous Government, but they started promoting liquefied petroleum gas in 2001-02. They had good intentions, but it turned out that the environmental benefits were less than they thought at first. To some extent, people were being led up the hill and back down again, and we need to avoid such outcomes.

We have a similar situation with biofuels, which were referred to today, and we must be careful to avoid the same problem. Biofuels were originally seen as the big solution, the silver bullet. Pressure groups were pressing the Government to do more with biofuels, but then did an about-face, saying that biofuels were terrible and had awful consequences. Biofuels, too, went up the hill and down again.

Biofuels are within my brief, but it is taking time to get the issue right. We believe that they have a role in transport, but they must be sustainable. They must also demonstrate carbon saving and show that they do not have unwanted consequences for the environment through indirect land use or in any other way. If we get the foundations right, we can build on them, but we cannot have the biofuels industry being built on sand or we shall run into environmental difficulties in the years ahead. That is why we are taking more time. We are consulting on the renewable energy and the fuel quality directives, and people have the opportunity to feed in comments. I hope that the Opposition will get involved in those consultations, to ensure that our policies on biofuels are right.

I turn to the comments of the hon. Member for Denton and Reddish. He spoke about fuel duty and VAT on fuel. It might have been fairer if he had referred to the fact that the Chancellor cut fuel duty by 1p in the Budget; he might also have referred to the fact that the Chancellor abandoned the above-inflation increases that the previous Government intended to introduce. There is an argument to be had about where the price of fuel should be, given its impact on the environment and the economy, and it is perfectly legitimate to engage in that argument, but we should have the facts before making the necessary judgments.

The hon. Gentleman spoke about our being the greenest Government ever, but the time to judge that will be at the end of this Parliament; only then will we be able to see whether the policies that started off down the track have been enacted and where they ended. I, for one, am determined that the aspiration should be turned into reality. I want us to be the greenest Government ever, and I have no reason to think that other Ministers take a different view. I believe that the Prime Minister, too, is committed to that objective. The time to judge us will be at the end of this Parliament, and I hope that we will have an overwhelming case to demonstrate that we have achieved that challenging objective.

As for the green investment bank, it did not exist under the previous Government. Whether or not it is allowed to borrow is a moot point. We created the bank and we have given it borrowing powers, which is a substantial departure from normal Treasury policy. It does not start until 2015, but it is a major achievement, and I hope that the hon. Member for Denton and Reddish will acknowledge that; rather than painting everything as a glass half empty, he should recognise that the glass is half full—and getting fuller as time goes on.

[Andrew Selous]

I return, if I may, to what I believe is the most significant factor—the seven-year payback. Would the Minister be prepared to write to me, perhaps giving the matter further publicity, setting out the illustrative figures? I accept that they are illustrative and that they make assumptions about the price of fuel and so on, but that seven-year payback is critical. Would he be kind enough to set them out in a letter? I hope that he might also give the matter wider publicity, which could be critical in moving this vital industry forward.

[Norman Baker]

I am happy to give that assurance. I shall write to all Members present as a matter of courtesy. The Government will do whatever we can to promote electric cars and the uptake of low-carbon vehicles. We are committed to that agenda. That is why I am grateful to my hon. Friend the Member for South West Bedfordshire for introducing this important debate.