Government reaffirms plans to restore 2030 ICE phase-out in Budget statement
Wed 30 October 2024
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The Chancellor has reaffirmed the Government's commitment to restore the 2030 phase-out of new cars relying solely on an internal combustion engine. Rachel Reeves' Budget statement also announced a continued freeze in fuel duty (for the fifteenth year in succession) while the £2 cap on bus fares is to rise to £3. The Budget said there will be £2bn to support the auto sector in increasing production of zero emission vehicles alongside the continuation of tax incentives to support their introduction.
The published Budget documents say that EVs are “crucial to decarbonising transport and will support growth and productivity across the UK”. To support this, the Budget confirmed long-term funding for growth-driving sectors as part of the Modern Industrial Strategy, including more than £2bn over five years to support the auto sector ramp-up production of zero emission vehicles.
Also announced was £2bn of funding for 11 green hydrogen projects, across England, Scotland and Wales.
The Chancellor said that the Government will continue to fund low company car tax rates beyond 2028 to encourage fleet take-up and EV salary sacrifice schemes. However, rates for hybrid vehicles will rise “to focus support on electric vehicles”.
Despite calls from across the automotive sector, the Budget did not include measures to specifically tackle private buyer demand for EVs, either new or used, or to equalise VAT on public and home charging.
Commenting on the Budget, Zemo's Managing Director, Claire Haigh said: "Confirmation of the restoration of the 2030 phase-out date is a positive signal and the support announced for the automotive sector to make the transition to EV production backed by ongoing tax incentives for buyers will help meet the target.
"However, it's surprising that the Chancellor chose to continue the long freeze in fuel duty (and to keep the 'temporary' 5p cut in place) while allowing bus fares to rise 50%. This sends an unhelpful signal in terms of modal shift."
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