Chancellor snubs EVs in budget, retains 5p fuel duty freeze

Calls were made to cut the VAT on public charging from 20% to the 5% of home charging

Vauxhall boss says budget "has not delivered the acceleration needed" to stop EV transition from stalling

Chancellor Jeremy Hunt has snubbed calls from across the automotive industry to introduce incentives for electric vehicles in today's spring budget.

During his hour-long statement, no benefits were brought in to either incentivise buying or reduce the cost of ownership as the UK gears up to go EV-only in 2035.

This lack of EV incentives has been blasted by Vauxhall, a key player in the UK automotive manufacturing sector. Managing director James Taylor said the budget "has not delivered the acceleration needed to stop the UK’s transition to electric vehicles from stalling".

Calls for buying incentives have become louder since the government's introduction of the ZEV mandate, which legislates that car manufacturers must hit an EV sale target - 22% of their total sales this year.

Car makers argue that private buyers should get the same incentives as fleet buyers.

Taylor said: "Whilst there are strong incentives for company car drivers to make the switch to electric, including for those choosing luxury vehicles, the private buyer who wants a more attainable small or family car receives nothing.  

"If we are to meet the rightly ambitious targets laid out in the ZEV mandate, then there needs to be incentives for private car buyers to make the switch to electric, as there are in the majority of European nations."

The likes of Volkswagen UK boss Alex Smith and the SMMT have also called for a cut in the VAT rate of public charging from 20% to the 5% of home charging.

Taylor said: “If you can charge your electric vehicle at home with off-street parking, then you will pay 5% VAT on your electricity. If you don’t have a driveway and rely on public chargers, then you will pay 20% VAT on your electricity.

"We support the Fair Charge campaign for a fairer taxation on charging.  

“We would call on the Chancellor to urgently set up purchase incentives to stimulate the electric vehicle market and review the unfair taxation on public charging so that the UK isn’t left behind in the race to more sustainable motoring.”

The spring budget was also expected to bring an answer on the potential extension to the VED exemption of EVs, which will end in 2025, but Hunt said nothing about this. 

Hunt did, however, confirm that fuel duty will be kept at 5p for another year. He said the duty cut, introduced when fuel prices hit record highs in 2022, would “save the average driver £50 over the next year and bring total savings since the 5p cut was introduced to £250”.

He added: “Lots of families and sole traders depend on their cars. If I did nothing, fuel duty would increase by 13% [from] this month.”

Hunt confirmed this measure was still “temporary” and would again be looked at next year.

The announcement was welcomed by the RAC as “good news”, but the motoring organisation called on more to be done for the effects to be felt by drivers.

Head of policy Simon Williams said: “With a general election looming, it would have been a huge surprise for the chancellor to tamper with the political hot potato that is fuel duty in today’s budget. It appears the decision of if or when [fuel] duty will be put back up again has been quietly passed to the next government.

“But while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief, as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’. This has meant fuel prices have been higher than they would otherwise have been.

“What’s more, despite today’s positive news, it’s still the case that drivers are once again enduring rising prices at the pumps, sparked by the oil price going up. The average cost of a litre is already up by more than 4p since the start of the year.”

*This is a breaking news story that is being updated.*