Budget expectations: VED reform and road pricing

Plus, one year later, is DfT about to publish cross pavement gudiance?

Hello, I’m Tom Riley, and welcome back to The Fast Charge, a British EV newsletter.

Top story today… With Labour’s first Budget just a week away, I explore what policies we could see and get some expert views.

Elsewhere… A service business for charging networks goes under, and one year after the Tories ‘Plan for Drivers’, is Labour preparing to publish promised guidance?

As ever, if you have any thoughts, please do get in touch via my contact details below or simply reply to this email.

Chancellor Reeves: What the EV sector can expect?

Summary: Next Wednesday the Chancellor Rachel Reeves will deliver the first Budget by a Labour government in 14 years. Briefings around the Budget feel like they’ve been happening for months, and most of them have not been uplifting. Who knows what kind of rabbits could emerge from the Treasury’s black hole (hopefully not this kind).

What to expect? While we’ll no doubt get more concrete ideas as the event creeps closer, what can the EV sector hope to see? I’ve been doing some research, spoken to experts, and believe there’s three areas we should watch: vehicle taxation, infrastructure, and sector acknowledgement.

1. Vehicle taxation…

There’s a couple of policies within this strand which can impact EV growth (Vehicle Excise Duty and Company Car Benefit in Kind). Taking VED to start with… This is a policy area that without change is broken.

Context… Back in the day, VED was reformed by Chancellor George Osborne. It meant that, from April 2017, all new cars registered were taxed annually based on CO2 emissions. Under this approach, EVs registered have been exempt from paying road tax (though this will change in 2025 when EV owners will start paying VED). However, the real kicker is, cars registered before 2017 are still taxed under the old VED system, which is more lenient on vehicles with low emissions, including some diesel cars.

Nonsensical… According to Ben Nelmes, CEO of New AutoMotive, this can result in diesel owners “still paying vastly reduced rates of road tax of £30 per year, meaning that they would pay a much higher rate of road tax to switch to an electric car.” The costs for switching to a new electric from April 2025 is going to get higher still, as the exemption for the Expensive Car Supplement is also ending. According to RAC, this means EV drivers with an 'expensive car' will pay up to £600 a year for road tax. Quentin Willson, Founder of FairCharge, rightly points out that it’s “not a good look for Labour” when it costs people more to tax a Tesla than some Bentleys.

Road pricing… This is another area that’s long been debated by politicians across the aisle as way to raise money when fuel duty falls. Yesterday, the Tony Blair Institute threw its views into the ring supporting the idea. This is significant, as the TBI is certainly influential for Starmer’s government. The former Prime Minister’s consultancy has said: “Rather than increasing fuel duty in the spring, introduce a simple pay-per-mile road-pricing system of 1p per mile for cars and vans, and 2.5p to 4p for heavy-goods vehicles.” The TBI believes this reform would be “revenue neutral compared with current plans to raise fuel duty but would be a crucial step in reforming the UK’s system of motoring taxation for the electric-vehicle era.” It might also mean Reeves can avoid bad headlines by not meddling with fuel duty.

Benefit in Kind… A final tax area is the status of salary sacrifice schemes. In recent Budgets, it’s been solid, but there are some who think it’s time may be coming to an end, particularly if Reeves goes after higher earners. Quentin expects Reeves to keep the scheme unchanged for EVs saying: “Salary sacrifice has been one of the most effective policy levers to get lower income drivers into EVs with many 20% taxpayers benefitting.”

Perhaps… One option for Reeves will be to follow VED and to create a roadmap to taper the tax benefits away, though this may be unwise. Arturs Smilkstins, Managing Director and Partner at Boston Consulting Group, made the point that “consumers are both price-sensitive and heavily influenced by the tax benefits they currently enjoy.” Commenting on the Budget he said that “any changes to this equilibrium will have a knock-on effect on EV adoption.”

2. Infrastructure…

Charger growth… While in the UK the nation’s operators are now really hitting their stride – having deployed more than 70,000 public EV chargers – there is still a long way to go. Arturs suggests this will be an area officials look at, saying “as we approach the Budget, the focus will be on whether the policies laid out will support this ambition.” On the back of the recent Investment Summit too, we already know the government is desperate to help remove barriers, so it would be unsurprising to hear talk of ‘planning reform’ by the Chancellor. However, the government has also only just published a consultation on its new Industrial Strategy, so whether she’ll have any specific answers for business by 30 October, maybe not.

3. Better understanding…

My own view is… EV policy remains a largely socially distanced area in this government. I’ve written previously about why this is – naturally, the trauma of previous years is not enviable – however, at some point, Labour does need to show its hand. As Quentin asks for this Budget, “I’d like evidence that No11 and the Treasury really understand about the challenges of EVs. Thus far, since the election, the government has been inexplicably silent on the subject. Let’s hope this isn’t a government that going to be focussed on just buses and trains.” 100%!

Thanks to my experts and I will of course provide a post-Budget update on anything that’s shared. Feel free to send me your thoughts too.

Coming soon? New guidance for cross pavement charging

Background: Take your mind back to one year ago. The Tories were still jubilant on the back of their shock Uxbridge win, and as such brought in a national ‘Plan for Drivers’ that would provide fuel to the anti-ULEZ voter. As part of this guidance, there included a commitment to, “provide guidance on the use of safe cross pavement solutions, and best practice to local authorities on relevant legislation, permissions and how to consider applications.”

You may remember… Back in January this year, I published an article about how three months after this promise, the guidance was still nowhere to be seen. This is problematic because trailing cables over pavements is a very murky area, often with differing advice depending on your council. Some offer EV-owning residents the ability to install gullies, while others like Chelsea & Kensington have wanted to protect their attractive high quality York Stone, darling.

Anyway… It’s now been a year since this guidance promise was made. And, obviously, there’s been a change in the ruling party. Though, whatever the political situation, this guidance is important for public EV charging. Not because companies (or local civil servants) don’t know what they are doing. But because guidance provides a helpful blueprint for cracking on – meaning more chargers get deployed for non-driveway owners.

The other benefits of guidance… will be to help those authorities that aren’t as familiar with the EV charging space, and provide a defence for when, inevitably, a parish busybody turns up complaining that “Kenneth at no. 22 is causing me a trip hazard”. In that instance, armed with a Whitehall guide, Jackie Weaver will have no problem in telling them to naff off.

The latest is… Last week, EV Minister Lilian Greenwood MP, answered a question in Parliament suggesting the publication of the guidance for authorities may still be on the cards - presumably meaning DfT is committed to delivering upon the promise made in the Conservative’s plan. Backing this up, I also understand that cross pavement guidance has been in the works recently.

I asked DfT about it, and a spokesperson told me: “To support best practice of the rollout of charging infrastructure, we will publish further guidance for local authorities on cross-pavement solutions as required.”

‘As required’… That bit confused me, so I sought clarification from DfT to see what it meant – because are they saying it might not be required? As I understand, DfT believes the market for new charging solutions presents ‘opportunities and risks that could require future guidance to be published’. However, that’s not to say they will publish further guidance, but where officials identify a need, they might.

Still unclear? That was my thought, but the inability of DfT to confirm suggests to me publication of new guidance may be close, but they just don’t want to mess up a pre-planned announcement. At least, I really hope after waiting a year that this is the case! I guess we’ll see.

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Seen elsewhere…

☎️ EVA Global, the European company that provides back-office support for numerous EV charging networks, has gone bankrupt. The company which boasts working with bp pulse, Fastned, Ionity and Fastned (amongst others) has said it will continue to operate while it works through its administration. One of the services EVA Global offers networks is a 24/7 helpline – which otherwise could be very costly for small networks to run – so this news is interesting timing ahead of the Public Charge Point Regulations coming into force in November. Read more.

🔋 A new campaign group has been set up to provide a voice for the battery storage industry. The 'Back Battery Storage' goes live next month at a launch event in Westminster on November 19^th. You can sign up for the event by emailing them.

📰 After lots of odd stories about the ‘return of diesel’ recently, it was a good result for the new industry group Electric Vehicles UK to get a mythbusting piece in The Times. More of that, please! Read more (paywall)

💷 This week the Transport Secretary, Lou Haigh, and Treasury Minister, Tulip Siddiq, announced they were creating a ‘car insurance taskforce’ to tackle rising costs by providers – this has been a particular issue for EV owners. On the news, James Court, Chief Executive of EVA England, said it was “welcome” and referred to the fact in some cases EV drivers have been “experiencing some 72% increases in premiums.” Read more.

😇 Yesterday DfT announced winners of the Transport Research and Innovation Grant. This is £1.4 million given to innovative projects and businesses, many of which are involved in EVs. One such winner is Charge Saint, which helps drivers flag bay blocking, such as ICEing, to networks and councils. I’m a huge fan of this idea - hats off to Euan McTurk for solving this problem.

🚨 Copper is an ever-pricey commodity, and this has led to many crooks often cutting cables from chargers to sell. On Monday, this happened to InstaVolt’s site in Elkesley, Nottinghamshire. Based on the reaction to the CEO, Devlin Lane, LinkedIn post, it certainly seems to have touched a nerve in the sector. See here.

🚗 New data from Auto Trader has not only revealed booming interest in EVs, but also that carmaker MG currently generates more than one in five (21%) of all brand-new EV enquires sent through its platform this month. The MG4 is particularly popular. Read more.

📉 Elsewhere, a new update from SMMT today suggests car output fell by -20.6% to 70,039 units in September. SMMT has said this reduction is due to factories preparing to make more EV models. Read more.

🤔 In a similar and interesting vein… Jim Farley, CEO of Ford, was on a podcast this week with Robert Llewellyn waxing love for his Chinese Xiaomi EV which he’s been driving in the US for six months. He said, “I don’t want to give it up.” See the clip here.

👏 And, finally, congratulations to Jarrod Birch who has joined ChargeUK from Shell Recharge to become its Head of Policy. Learn more about Jarrod’s new role.

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