Grants for cleaner vehicles cut by 30 per cent in 2004

05 March 2004 #SMMT News

Industry remains concerned over funding for Powershift grants

SMMT has reacted with some concern over Energy Saving Trust (EST) proposals, published today, which set out the funding schedule for cleaner vehicle grants in 2004. While the industry was prepared for cuts in both Powershift and CleanUp grants, SMMT believes that too little has been allocated to Powershift which part-funds new vehicle technologies that deliver the greatest environmental benefits.

Overall, funds have been cut by 30 per cent and EST proposes to split £14 million equally between Powershift and CleanUp programmes.

While the industry is pleased that EST has heeded industry concerns and will award Powershift grants only to the cleanest hybrid, electric and LPG new vehicle technologies, the reduction in their value remains a concern. By using more of the £7 million allocated to CleanUp, which funds the retrofit of systems to older vehicles, cuts would have been unnecessary.

The industry will repeat its message to the chancellor that he should tread carefully when announcing fuel duty rates for the next three years in his budget. Lower fuel duty is a key incentive for buyers of new cars powered by alternative fuels and any erosion of that benefit will damage momentum, making these models less attractive to consumers.

SMMT chief executive Christopher Macgowan commented, ‘We are pleased that EST has reacted to our concerns and set out grant funding for 2004. However, more priority should have been given to the Powershift programme which drives the development of the cleanest new vehicle technologies. Splitting funds down the middle seems to be an arbitrary compromise without thought of long-term goals.’

He added, ‘It also seems slightly bizarre that higher grant levels may be available for the same vehicles and equipment for programmes in Scotland and Wales. Surely it makes sense to have a level playing field across the UK?’

The EST proposals also include a quarterly review of grant allocation. The industry supports this measure which means funds will be more closely monitored throughout the financial year. Greater accountability should create more confidence in EST grants going forward and must prevent a repeat of 2003’s debacle where grant funding ran out without warning.

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