Plug-in Vehicles

Louise Ellman Excerpts

Thursday 25th April 2013 Westminster Hall

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I am pleased to serve under your chairmanship, Mr Robertson, and to introduce these two debates on reports by the Select Committee on Transport. The first is “Plug–in vehicles, plugged in policy?”, which we published last September. It focuses on Government policy to promote the take-up of electric vehicles, and I will concentrate on that issue in my remarks.

It is important to begin by putting the issue in its wider context. The UK has a target to reduce its carbon dioxide emissions to 34% below the 1990 level by 2020 and 80% below the 1990 level by 2050. Carbon emissions from cars account for about 15% of total emissions, so reducing emissions from cars is essential to meeting those targets. The Government are correct to be considering ways to decarbonise road transport. Carbon emissions from road transport have fallen in recent years. The use of biofuels—

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On resuming—

[Mrs Ellman]

Carbon emissions from road transport have fallen in recent years. The use of biofuels and the development of hybrid vehicles, which use electricity generated from braking as well as conventional fuel, have helped to deliver that decrease. However, the economic downturn has been a more significant factor in keeping road traffic down. Carbon emissions may well rise again when the economy begins to recover. There is much more work to be done to make road transport more sustainable. As 65% of emissions come from exhaust pipes, reducing carbon emissions from fuel is essential, and there are a number of ways to do that: lighter cars use less fuel; engine performance can be improved to use conventional fuel more sparingly; biofuels are becoming increasingly common; and new technologies, such as hydrogen fuel cells, are on the horizon. In addition to hybrid vehicles, various types of electric vehicle can be plugged into the electricity network.

To achieve the required reductions in carbon emissions by 2050, a significant shift from conventional fuel to very low or zero-carbon fuel is necessary. The Government have already said that they hope to achieve that and want UK industry to lead the way in manufacturing the necessary new technologies. The Department for Transport has said it would like its policy on reducing carbon emissions from cars to be technology-neutral

“to create the incentives for industry to develop the technologies that reduce emissions, work for consumers and make economic sense”.

Its main focus has been on starting a market for plug-in vehicles. The Government predict that by 2015 we should expect to see

“tens of thousands of plug-in vehicles on the roads in the UK”

and perhaps hundreds of thousands by 2020, if not sooner. They have chosen to back them, because plug-in vehicles are now a commercial technology and other technologies, such as hydrogen fuel cells, are still at the development stage.

The most eye-catching aspect of Government policy to promote plug-in vehicles is the plug-in car grant, which offers up to 25% off a vehicle’s price up to a maximum of £5,000, with a similar grant available for van buyers. Applications for the grant are increasing, but at September 2012 only 2,629 cars eligible for the grant had been registered—a fraction of 1% of total car registrations. The £30 million budget for plug-in vehicles for 2011-12 was significantly underspent. It would take a leap of faith to imagine that the number of plug-in vehicles will reach “tens of thousands” in just two years.

The Transport Committee heard that a lack of consumer awareness about the availability of the plug-in car grant, as well as concerns about the performance and range of the vehicles, has held back demand. The Department told us that it was gathering information about how people use plug-in vehicles and how they perceive them, which it said would help to make the case for plug-in vehicles “even more compelling”. It also pointed to specific initiatives to promote the vehicles, such as helping to draft a guide to electric vehicles. Those initiatives are not enough to meet our recommendation for the Government to promote public understanding of the infrastructure and support available. Is the Minister satisfied that the Government are doing enough to publicise plug-in vehicles?

The Committee’s report draws attention to some unexpected changes in the tax treatment of plug-in vehicles in the 2012 Budget, including the unanticipated removal of some financial incentives. Motor manufacturers were universally critical of the changes, because they make plug-in vehicles less attractive to purchase for commercial car fleets and because they reduce confidence in what was described as a “fragile, fledgling market”. The Department told us simply that

“tax issues are a matter for the Treasury”.

It would seem that either the Department and the Treasury did not discuss the issue before the Budget or the Department was ignored. There was a better outcome from this year’s Budget, with an announcement of tax changes to take effect in 2015. I hope that that signals a major change and that tax policy will support transport policy on plug-in vehicles in the future.

Most plug-in vehicles sold so far have been bought for fleets. Fleet purchasers are less likely than ordinary motorists to be put off by the up-front cost of a plug-in car, which can still be in excess of £20,000, even when the plug-in car grant is taken into account. The Government have certainly taken some steps to promote such cars to fleet purchasers, but a glance at the website of the Office for Low Emission Vehicles shows that most of its emphasis has been on promoting the cars to the domestic purchaser. Only relatively affluent motorists are likely to be able to afford a plug-in car. The Committee spoke to researchers from Coventry university, who warned of the risk that the grants could subsidise second cars for affluent households, noting that people who had driven plug-in cars saw them as a “support vehicle” rather than a main car.

The recent report from the Institute for Public Policy Research suggests that Government fleet purchases, on which £400 million a year is spent, are likely to be a more productive way forward. Does the Minister acknowledge that there is more potential demand for plug-in vehicles from commercial fleets than from ordinary motorists? Does he agree that the Government could do more to promote sales to fleet purchasers? For example, what has been done so far to persuade local authorities or even Government Departments to switch to plug-in vehicles?

The Government have said that they hope that the grant will stimulate domestic demand for plug-in vehicles. Indeed, the IPPR sees car manufacturing as a potential major benefit to the economy. If manufacturers can be tempted into the market, the price of the vehicles should fall, further encouraging demand. There are concerns that manufacturers are not convinced that the market for plug-in vehicles will rapidly expand. I note that the recent report from the Royal Automobile Club Foundation for Motoring Ltd also mentions that point. Nissan had suggested it would build 50,000 of its plug-in car—the Leaf—each year at Sunderland, but it has been reported recently that production volumes will be much lower. Will the Minister comment on manufacturers’ confidence in the plug-in vehicles market?

The Government are closely involved with the provision of infrastructure for charging plug-in vehicles. The Committee looked in some detail at the plugged-in places scheme, which has come to an end. The scheme encouraged the installation of charge points in eight places in the UK. Some plugged-in places were very successful; at the time of our report, 640 charge points had been installed in London and 399 in north-east England. In Manchester however, also a plugged-in place, no charge points had been installed. Can the Minister explain how the plugged-in places scheme has been evaluated and what lessons have been learnt from the less successful areas?

The Committee identified a number of issues with charge points: first, there is no national network; and secondly, the vast majority of charge points installed charge over a period of several hours. Charge points that can recharge a car in minutes are much more expensive and, as a result, less common. It would take considerable planning and a number of days to drive a plug-in vehicle from London to Newcastle, and that inevitably has an impact on the purchaser. Each plugged-in place developed its own payment scheme for charging cars, further complicating long-distance travel. There are also different types of infrastructure around the country. The quick-charge points use a Japanese protocol, which is incompatible with German cars. The Government told us they would look to the market to resolve the problems.

We also found that the national charge point register does not include details of all the charge points installed by the plugged-in places scheme. We were told that the Government remained

“committed to the idea of a single repository of comprehensive national chargepoint data”

that was available to all, but it is not clear what they are doing to achieve that aim, which is fundamental to consumer confidence. Will the Minister agree to ensure that the national charge point register includes all charge points whose installation has involved public expenditure? Will he do more to promote the register, to help to convince people that a national recharging network exists?

As a successor to plugged-in places, the Government recently announced that local authorities in England will receive £11 million over two years to fund on-street charging for residents and to install charge points on major roads. The Local Government Association has commented that the money will be spread thinly across 152 highways authorities. It will also mostly fund the cheaper slow-charge points, especially as the Government will cover only up to 75% of the cost. Can the Minister tell us how popular the new fund is proving to be?

If the Government are serious about promoting plug-in vehicles—and I think they are—they could do more to create a genuinely national network of quick-charge points on motorways and main roads, perhaps by paying for the infrastructure themselves. Will the Minister consider that? I understand that an application is being made for EU funding for 74 quick-charge points on strategic roads. Will the Minister support that initiative?

There are a number of other issues to consider. First, can the electricity network cope if there is a significant increase in demand for plug-in vehicles? Is it worthwhile promoting plug-in vehicles if the electricity they use is mostly generated by fossil fuels? Will an increase in the number of quiet plug-in vehicles make our roads less safe because pedestrians and cyclists cannot hear them approach? Can the UK become a world leader in the production of plug-in vehicles and their components?

In conclusion, the Committee broadly supports the Government’s aim of kick-starting a market for plug-in vehicles, to help to achieve carbon reduction targets and to support a fledgling domestic industry. In some ways, however, the actions have not been strong enough, although I am sure that the intent is strong. For example, we have ample numbers of slow-charge points in some parts of the country but none in others, and there are far too few quick-charge points to provide for plug-in vehicles to travel long distances. The Government could take further action in that area. We have also questioned whether it is appropriate to focus the plug-in car grant on the domestic market, when persuading the public sector to convert its vehicles from conventional fuel to electric would be more cost-effective.

I commend the Government on their actions in trying to kick-start a market, but policy on supporting ultra-low emission vehicles in general, and the plugged-in car scheme in particular, should be strengthened. I look forward to hearing the Government’s proposals.

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[Mrs Ellman]

I am encouraged by the Minister’s response, and I look forward to receiving reports on further progress.