The UK government has welcomed the recommendations made by the House of Lords Environment and Climate Change Committee in its “EV strategy: rapid recharge needed” report looking into electric vehicles and given its official response.
The report, published in February 2024, outlined recommendations that the committee felt would allow the UK to have ‘a successful transition to electric vehicles (EVs)’, which it deemed ‘essential if the government is to meet its legally-binding net zero target by 2050’.
For more information on electric vehicles in the logistics sector and a full Q&A with Baroness Parminter, chair of the Environment and Climate Change Committee at the time of the inquiry, check out this feature in the March issue of Logistics Manager.
The government agreed with several of the report’s recommendations. One such recommendation was that the government should be more proactive in communicating ‘clear, authoritative and trustworthy’ information about the positives of transitioning to EVs. The government acknowledged the importance of this and pointed towards guidance documents it has published on EVs, emphasising that it is is also ‘taking proactive action to counter inaccurate information presented by the media on the subject of EVs, when this arises’.
It also agreed with the sentiment that ‘to ensure maintenance costs remain reasonable, there must be enough skilled mechanics trained to maintain EVs’. In reponse, it noted that the number of EV-qualified technicians in the UK has ‘risen rapidly’, with over 52,000 individuals (22% of all technicians) already qualified to work on an EV, according to the Institute of the Motor Industry. It said it has endorsed schemes to train technicians to safely repair EVs and said that the ZEV mandate ‘will ensure the flow of new EVs into the UK market, providing certainty for businesses and individual mechanics to invest in upskilling’.
Furthermore, the government agreed that it should ‘set and communicate clear timelines and deadlines for the Local Electric Vehicle Infrastructure (LEVI) fund and provide sufficient time for application preparation’. It responded by saying it ‘endeavours to communicate clear timelines and deadlines as soon as practical’ and ‘has taken on board feedback from Tranche 1 of the LEVI fund and extended the time available for local authorities to apply to Tranche 2 of the fund’.
Amongst the recommendations that the government expressed disagreement with was that which suggested the government ‘explore options for equalising the VAT differential between public and domestic charging by reducing the 20% VAT rate applied to public charging to 5% in line with domestic electricity’.
Explaining its stance on the matter, the government said: “VAT is a broad-based tax on consumption and the 20% standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.
“In recognition of the fact that families should not have to bear all the VAT costs they incur to meet their needs, the supply of energy for domestic use, including electricity, attracts the reduced rate of VAT (5%). Whilst this relief was not designed or introduced for charging EVs at home, this relief applies for all uses of domestic energy. Electricity supplied at EV charging points in public places is subject to the standard rate of VAT (20%).
“Expanding the VAT relief already available would impose additional pressure on the public finances to which VAT makes a significant contribution. Although there are no current plans to change the VAT treatment of electricity supplied at public EV charge points, the government keeps all taxes under review.”
Following the government’s response to the inquiry, its chair, Baroness Parminter, said: “Whilst we welcome the government’s acceptance of some of the recommendations in our report, it is particularly disappointing that it is not committing to incentivising the purchase of more EVs, equalising the VAT differential between public and domestic charging, or addressing our concerns about barriers to charging in multi-occupancy buildings.”
She continued: “If implemented, these recommendations would help people to adopt EVs and ensure a smoother journey towards net zero. Peers will keep urging the government to do more, as otherwise the EV revolution is a non-starter.”
Baroness Parminter’s statement echoes some of the criticism that chancellor Jeremy Hunt faced from the logistics industry following this year’s Spring Budget announcement.
David Bushnell, director of consultancy and strategy at fleet management consultancy Fleet Operations expressed his disappointment that the VAT rate on public EV charging was not reduced, saying that the government had “missed a crucial opportunity to encourage EV adoption, especially electric vans”.
Click here for an in-depth look into the Spring Budget and how it could affect the UK logistics industry in the April issue of Logistics Manager.
The adoption of electric vehicles is an important part of the government’s strategy to reach its net zero target. Time will tell if enough is being done to encourage individuals and businesses alike that it’s worthwhile investing in an EV transition.
If you’re interested in decarbonising logistics and the feasibility of net zero targets, register now for Logistics Manager’s Sustainable Supply Chain Conference. This one-day face-to-face event will allow delegates to hear directly from industry-leading speakers how business sustainability can influence their bottom line.
