Zero Emission Vehicle Mandate

Gareth Bacon Excerpts

Monday 7th April 2025 Commons Chamber

[Gareth Bacon (Orpington) (Con)]

Thank you very much, Mr Speaker. I will not embarrass myself by announcing how old I am, but it is far too old.

[Mr Speaker]

We have just checked.

[Gareth Bacon]

I thank the Secretary of State—[Interruption.] That was a very helpful intervention by the hon. Gentleman; he is completely right. I thank the Secretary of State for her statement, and for advance sight of it. The announcement by the United States of America that 25% tariffs will be imposed on UK automotive exports has understandably caused significant concern in the automotive sector. Automotive manufacturers now face tariffs of 25% on around £8 billion-worth of car and auto parts exports—a potentially devastating blow for the automotive industry. I assure the Secretary of State that we will support the Government when they do sensible things to reverse the impact on our already fragile economy. In that vein, I am glad that the Government have recommitted to negotiating a better deal with our closest ally and largest single-country trading partner, and I sincerely hope that they are successful in their negotiations.

However, on the substance of the right hon. Lady’s statement, I cannot share her enthusiasm for the rest of Labour’s plans. The reality is that today, Labour is simply trying to clear up the uncertainty that it has contributed to. When the previous Conservative Government reacted to sluggish automotive trade figures by making the pragmatic decision to delay the ban on new diesel and petrol cars from 2030 to 2035, aligning the UK with major global economies such as France, Germany, Sweden and Canada, Labour accused us of undermining the automotive industry. This morning, the Secretary of State criticised the previous Government for chopping and changing, and a consultation put out by Labour claimed that our policies caused “great harm” to the UK’s reputation as a leading nation in the EV transition by moving the goalposts. However, that is precisely what Labour did upon taking office by ideologically reversing the 2035 deadline. The plans announced over the weekend do not place the automotive sector in a better position than it was when we left office, despite some minor adjustments to the zero emission vehicle mandate.

What is more, this announcement will not undo the damage that this Labour Government have already caused. Their introduction of a £25 billion national insurance jobs tax in their first Budget was a major blow to businesses; we have warned for months that this tax will harm industries, and the automotive sector is no exception. The Secretary of State will know that US tariffs on UK car exports are set to cost the automotive sector £1.9 billion. Combined with the Government’s jobs tax—which is predicted by the Office for Budget Responsibility to put 50,000 jobs at risk, and is likely to cost the automotive sector an additional £200 million—that double whammy is going to be very difficult for the sector to absorb.

Indeed, despite today’s announcements, the Society of Motor Manufacturers and Traders has stated that zero emission vehicle mandate targets remain “incredibly challenging”. In its words:

“ZEV Mandate targets are incredibly challenging, especially with a paucity of consumer demand and geopolitical upheaval. Growing EV demand to the levels needed still requires equally bold fiscal incentives…to give motorists full confidence to switch”,

but that is not what the Government are offering. Instead of the “bold changes” that the Prime Minister boasted of at the weekend, what we have is mere tinkering at the edges. Allowing producers of luxury vehicles, such as Aston Martin and McLaren, to be exempt from the 2030 ban on the sale on new internal combustion engine vehicles is welcome, as is the news that all forms of hybrid cars will be available until 2035. However, this does not go anything like far enough. The Government are still proposing to increase the level of tax liability on the value of hybrid company cars by as much as 16%, which could potentially cost individual drivers thousands of pounds each. The reduction in fines for missing EV sales targets from £15,000 to £12,000 per vehicle is nothing to be celebrated—it is like drowning at the depth of 100 metres instead of 120 metres.

Over the past few months, we have heard from numerous businesses that they simply cannot cope with the ZEV mandate. In October, the chief executive officer of Jaguar Land Rover warned that the mandate was causing severe disruption to the new car market. Not long after, Vauxhall announced the closure of its Luton factory, citing the ZEV mandate as a key factor in making that plant economically unviable. More recently, uncertainty has surrounded Plant Oxford, the home of the Mini since 1959. Last year, excluding fleet sales, the fact is that only 10% of private purchases of new vehicles were electric. Far from doing retailers a favour, the Government’s offer to fine them a small amount less for failing to sell a product that consumers demonstrably do not want is a kick in the teeth to the automotive industry.

I must therefore ask the Secretary of State the following questions. With just one in 10 private buyers purchasing an electric vehicle in 2024, why are the Government still trying to force people to buy something for which there is limited consumer demand at present? Is she really pretending that any of the measures announced today were not already in train before the tariffs were announced? Will she commit to reversing the hike in the hybrid company car tax? Does she really think that reducing the fine for each car that fails to comply with EV quotas will be enough to mitigate the impact of tariffs? Does she not believe that, rather than chasing an arbitrary timeline, now is the time for a more gradual transition to electric vehicles, one that would allow the sector to mitigate many of the challenges it is currently facing? Finally, does she recognise that the combined impact of the ZEV mandate, the jobs tax and external tariffs is a perfect storm for the automotive sector, which is facing significant and exacerbated challenges because of the choices her party has made over the past nine months?

[Heidi Alexander]

I also extend my birthday wishes to the shadow Secretary of State. I hope he is grateful for the two birthday presents I have given him: not only a statement but a general debate, so that we can face each other across the Dispatch Box not once but twice today.

It is rich for the shadow Secretary of State to blame uncertainty in the automotive sector on this Government. I can only think that he has some sort of selective amnesia going on, because it was his Government who introduced this policy. They then delayed the phase-out date, tanking EV demand by 15% almost overnight. We had the spectacle of the previous Prime Minister, the right hon. Member for Richmond and Northallerton (Rishi Sunak) standing up to make a speech pushing that date back out to 2035. Almost overnight, we saw those sales tank. The shadow Secretary of State should be explaining to Britain’s car manufacturers why his party faffed about so much, costing them millions and arguably leaving the sector less resilient to the global economic headwinds it now faces.

The shadow Secretary of State claims that this is a moment when we are tinkering at the edges, but nothing could be further from the truth. This is a significant moment for industry. He quotes the SMMT, and I just gently say to him that Mike Hawes, its chief executive, said this morning:

“The government has rightly listened to industry, responded quickly to global dynamics and recognised the intense pressure manufacturers are under.”

The shadow Secretary of State is also right to raise Jaguar Land Rover, which is affected by the imposition of the global tariffs that President Trump announced recently. I point out to the hon. Gentleman that Adrian Mardell, CEO at JLR said:

“We welcomed our announcement of the increased flexibilities in the zero emission vehicle mandate, and the clear commitment from Government to incentivise electric vehicle uptake and invest in infrastructure.”

The shadow Secretary of State also said that consumers do not want to buy electric vehicles. He needs to do his homework; the UK is the third largest market for electric vehicles in the world, after the US and China. It is the largest market in Europe. Last year—[Interruption.] He can chunter as much as he wants. Last year, 382,000 EVs were sold. We have had record figures in February and March this year, where we have seen demand for EVs go up by more than 40% compared with the same month in the previous year.

The shadow Secretary of State claims that we were going to make this announcement anyway. Well, he is right that we have been talking to industry for a number of months, and we were always going to have to do something to clear up the dog’s breakfast of a policy left by his Government. Clearly, the announcement last week about US tariffs on the car industry has made it all the more important that we act with pace and urgency. It is completely right that we have provided the certainty and clarity for which the sector has been calling for years.

The shadow Secretary of State claims we are not going far enough. We are investing £2 billion in an automotive transformation fund, which will ensure we can build the battery gigafactories of the future, support the EV supply chain and ensure that those high-skilled jobs of the future are available in communities across the country. Between now and 2030, we are spending £200 million supporting the roll-out of charge points, backed by £6 billion of private investment. We are spending £120 million on plug-in vehicle grants, giving people who want to purchase a new van up to £2,500 and those wanting to purchase a larger van up to £5,000.

I say to the shadow Secretary of State that this Government are acting where his Government failed. We are giving certainty to businesses, protecting jobs in a critical industry, cutting carbon and fostering a competitive market to benefit consumers.