Vehicles: Purchase Price and Running Costs

Baroness Randerson Excerpts

Monday 24th October 2022 Lords Chamber

Asked by

[Baroness Randerson]

To ask His Majesty’s Government, further to the report by Fair Charge Driving Away from Fossil Fuels, published on 5 July, which found that if there were parity in purchase price and running cost, 100 per cent of drivers would choose electric rather than diesel or petrol cars, what steps they are taking to ensure that price parity is reached as soon as possible.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, while the upfront purchase price for electric vehicles remains higher than for their petrol or diesel equivalents, in many cases these vehicles are cheaper to own and run. Generous tax incentives are in place, which, alongside fuel and maintenance savings, reduce the total cost of ownership.

[Baroness Randerson (LD)]

My Lords, the Fair Charge report highlighted the discrepancies in VAT for private and public EV charging. As energy prices rise, the discrepancy becomes even greater in real terms. There is a realistic danger that EVs will be seen as too expensive, although the Government, of course, get a greater income from tax as energy prices have risen. I realise it is difficult for the Minister to know what government policy is likely to be later this week, but will she undertake urgently to press whoever happens to be running the Treasury to reduce VAT on public charge points to 5%, in order to encourage EV take-up among all sections of society?

[Baroness Vere of Norbiton (Con)]

I am very happy to outline what government policy is. As the noble Baroness will know, and as is always the case when taxes are referred to, all taxes are kept under review. It should be stressed that the reduced VAT on domestic supply reduces bills for households by £5 billion a year. Most people do not charge their electric vehicles exclusively at public charge points. However, I accept that that discrepancy exists and, as I said, we keep taxes under review.