The difficult task of decarbonising the road transport sector was highlighted in last week’s Budget as the Chancellor kept the freeze on fuel duty for a tenth year in a row.
Rishi Sunak said he was “mindful of the fiscal cost and the environmental impacts” of a further freeze on duty but added that “many people still rely on cars”. Fuel duty has now remained at 57.95p per litre since March 2011.
The Treasury’s Budget report states: “Future fuel duty rates will be considered alongside measures that are needed to help meet the UK’s net zero commitment.”
Sunak did announce a number of measures to encourage uptake of electric vehicles. He provided £403m to extend the Plug-in Car grant to 2022/23, and £129.5m to extend the Plug-in grants for vans, taxis and motorcycles to the same year.
The Treasury said the Government was “considering the long-term future of consumer incentives to support the transition to zero emission vehicles, alongside the consultation on bringing forward the phase-out date for the sale of new petrol and diesel cars and vans from 2040.” That consultation was launched last month (LTT 06 Mar).
The Chancellor also announced a £500m fund over five years to support the roll-out of a “super-fast” electric vehicle charging network.
A Rapid Charging Fund will help chargepoint firms with the cost of connecting high-powered charge points to the electricity grid, when the costs would prevent the private sector making the investment.
“To target spending from this fund effectively, the Office for Low Emission Vehicles will complete a comprehensive electric vehicle charging infrastructure review,” said the Treasury.
It also promised legislation in the Finance Bill 2020 to prepare for a UK Emissions Trading System (ETS), which could be linked to the EU’s scheme. “The Government will also legislate for a carbon emissions tax as an alternative carbon pricing policy and consult on the design of a tax in spring 2020.”
Commenting on the fuel duty freeze, Steve Gooding, director of the RAC Foundation, said: “The Chancellor clearly recognised that the coronavirus is creating unprecedented health and economic uncertainties and that because transport is the single biggest area of household expenditure any move to increase this burden would hit drivers’ wallets hard, especially those on lower incomes.”
Howard Cox, founder of the Fair Fuel UK campaign, gave a different interpretation, saying the Chancellor had chosen to freeze fuel duty “due to our intensive lobbying and backbench Tory pressure”.
“Rishi is hailed with a huge sigh of relief, by our 1.7 million supporters, motorists, motorcyclists, van drivers and hauliers,” said Cox. “But to all the anti-internal combustion engine over-reported voices, even with this insightful freeze, UK drivers remain the highest taxed in the world.”
Motoring groups such as Fair Fuel UK are increasingly concerned about the multitude of policies coming forward to restrict or charge drivers, such as clean air zones, parking levies and so on. Cox hinted at the possibility of motorists taking action in protest. “Any thought of future tax increases on hard pressed motorists, will result in a Drivers Rebellion,” he said. “Well done Chancellor, that for the moment is postponed.”
Claire Haigh, the chief executive of bus lobby group Greener Journeys, criticised the Government’s failure to put up fuel duty. “We are extremely disappointed that the Chancellor missed this golden opportunity to end the freeze in fuel duty, especially given the sharp drop in the price of oil,” she said. “As hosts of this year’s COP26 UN Climate Summit, the UK must show leadership on reducing greenhouse gas emissions. Ending the freeze in fuel duty would have sent a clear signal that the UK is serious about meeting its net zero target.”
Mike Childs, Friends of the Earth’s head of policy, was even more critical of the Budget generally, which saw Sunak announce a £27.4bn five-year budget for Highways England (see pp12-13). “This Budget contains a massive road-building programme that completely destroys any pretence of UK Government leadership ahead of this years’ crucial climate summit.
AA president Edmund King said the Government should have gone further to encourage electric car sales. “Had he followed our calls to scrap the VAT, it would have had an influential impact on drivers looking to change their car.”
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