21 November 2019

Newly elected Government told to back fleets with long-term plug-in grants and tax changes

Summary:

• There is a political consensus about the need to transition to a net-zero emission economy.
• The manifesto calls for an extension of the Future Mobility Zone funding for 2020-21.
• The BVRLA state there's no hard evidence that the grants are in danger currently, however understands there is a lack of certainty over future grants.
• Any changes in the grant must be gradual and give those involved time to act.

A manifesto for the newly elected Government to support the fleet sector has been published with long-term backing for plug-in vehicle grants and adjustment of carbon dioxide (CO2) emission-related taxes among the key issues to create a more stable environment to encourage investment in 'greener' company cars.

The manifesto, which will be delivered to the in-tray of the new Government following the December 12 election has been compiled by the British Vehicle Rental and Leasing Association (BVRLA), of which Activa Contracts is a member.

Meanwhile, IAM RoadSmart, has published a seven-point manifesto to ensure road safety and saving lives returns to the top of the new Government's political agenda. Among the key issues covered, it says: "Road safety at work is a critical health and safety issue that requires much higher priority at the Health and Safety Executive. It should be at the core of good corporate governance and procurement practice in the private and public sector."

The BVRLA's agenda 'Manifesto 2019: Delivering Sustainable Road Transport' focuses on three main areas: Accelerating the road to zero emissions, driving transport behaviour change, and tackling air quality and emissions today.

It says that there is broad political consensus about the need to transition to a net-zero emission economy and encourage more sustainable modes of travel and, as the operators of the 'newest, cleanest' vehicles fleets were in the vanguard to deliver that change.

However, fleets required support that within the new Government's first 100 days in office should include:

• Extension of the maximum £3,500 Plug-In Car Grant for 100% electric models and the maximum £8,000 Plug-In Van Grant to 2025
• Re-introduction of the Plug-In Car Grant for hybrid vehicles, which was axed 12 months ago, as a short-term measure while supply constraints for pure electric vehicles continued
• Adjustment of CO2-related taxes to create a more stable environment to encourage investment in 'greener' company cars that includes: A five-year company car benefit-in-kind tax roadmap; an increase in the Vehicle Excise Duty surcharge as the current £40,000 threshold was reducing demand for some electric vehicles; and review capital allowance thresholds to bring them into line with the WLTP-based company car benefit-in-kind tax regime
• Targeted additional funding for the fleet sector to help with the costs of installing electric vehicle charging infrastructure
• Establishment of a new Targeted Clean Freight Scrappage Fund to help upgrade vans and trucks operating within urban Clean Air Zones as they were established by local authorities.

Additionally, the manifesto calls for an extension of Future Mobility Zone funding for 2020-21 allowing for expanded trials of urban mobility credit vehicle scrappage schemes and creation of a Mobility Innovation Fund to help local authorities to develop new, integrated mobility services.

It also suggests that policymakers should:

• Set national targets aimed at reducing the use of older and more polluting 'grey fleet' employee-owned vehicles driven on work-related journeys in both the public and private sectors
• Develop a national road-user charging policy framework that supports cities and regions that want to implement local charging schemes.

On the Plug-In Car and Van Grants, the BVRLA acknowledges that it has "no hard evidence the grants are in any danger anytime soon", but adds that "we are conscious that there is still a lack of certainty over their future provision".

Last year, the Government axed the Plug-In Car Grant for hybrid electric vehicles and cut it for BEVs at short notice. That, said the BVRLA, led to a surge in orders for BEVs prior to the changes taking effect and lots of disappointed customers, many of whom chose a petrol or diesel car instead. As a result, the organisation said it was keen to ensure a similar situation was not repeated if the grant was eventually stopped.

Claiming that the grants played a "vital role in increasing electric vehicle uptake", the BVRLA said: "Business fleets buy over 50% of all new vehicles sold each year, including the majority of battery electric vehicle (BEVs). This transition to electric vehicles is at an incredibly fragile stage, with BEVs responsible for just over 1% of new vehicle sales in 2019."

The BVRLA has previously said: "The typical BEV costs around £10,000 more than its petrol or diesel equivalent. Running costs play a big role in reducing this gap and many fleets are persuaded by the long-term economics of going electric.

"But for many company car drivers or small business owners the most important figure is the monthly lease rate. The Plug-In Car Grant means that BEVs like the Nissan Leaf or BMW i3 can be offered at a monthly cost comparable to an equivalent petrol or diesel vehicle. Without the Grant, this monthly lease rate would rise by well over £100, or by 25% per month. As well as destroying any price parity that BEVs have, this increase would see BEVs removed from many company car choice lists. Hundreds of thousands of employees would lose the option of choosing an electric company car.

"Waiting times for some of the most popular BEVs are already at nine-or 12 months, and fleets need to know that a vehicle on order will still qualify for the Grant if it takes longer than nine months to arrive. Looking forward, any change in the Grant must be gradual and clearly signposted, giving customers time to act and vehicle manufacturers time to reconsider their BEV pricing."

The organisation in publishing its manifesto continued: "There are currently no concrete plans to continue this grant beyond next year, feeding anxiety within the market that the fund could be pulled at short notice. Until price parity is achieved with internal combustion engine (ICE) vehicles, the grant provides a vital affordability boost for those purchasing an electric car or van.

"As countries around the world compete in decarbonising their road transport, the BVRLA is urging the next Government to give a long-term Plug-in Grant commitment until 2025, gradually phasing out this support as progress is made towards parity with ICE vehicles."

Chief executive Gerry Keaney said: "In our manifesto, we have set out some clear, costed policy measures that will help tackle air quality, drive transport behaviour change and accelerate the road to zero."

The BVRLA's manifesto can be viewed at: https://www.bvrla.co.uk/uploads/assets/584e84f0-22b3-4995-8a744a200e50f6f4/e27a3baf-de03-4b4d-a6bde929bbc71840/bvrla-manifesto-2019.pdf

IAM RoadSmart's manifesto can be viewed at: https://www.iamroadsmart.com/media-and-policy/newsroom/news-details/2019/11/06/iam-roadsmart-s-manifesto-aims-to-put-post-test-training-and-human-behaviour-at-the-heart-of-the-road-safety-debate