Rachel Reeves has just made a ludicrous decision - and Ed Miliband will be furious. The Chancellor's latest tax plan is completely ludicrous. It could destroy the electric car market and alienate drivers at the same time - and that's just the start. Does she know what she is doing?
Reeves' plan to introduce a pay-per-mile road tax plan is nothing new; Tony Blair cooked up the idea in 2007, but he at least had the foresight to ditch the plan after public opposition. Reeves' new 3p-per-mile tax plan for EVs from 2028, with hybrids charged 1.5p per mile, has already drawn outcry. Yet Reeves plans to press ahead. Is this the hill she is willing to lay her sword on?
The latest data from Confused.com shows that almost a third (31%) of UK motorists have been put off owning an EV due to the proposed taxes. Road users certainly weren't going to welcome extra taxes with open arms, so this shouldn't really come as any surprise. What were Labour really expecting?
Ed Miliband's Fury
But there's one person sitting around the cabinet table who will be absolutely furious with the Chancellor: Ed Miliband. The former Labour leader has spent years putting together an energy plan for Britain and has been a major advocate for the transition to electric cars, only to see his work effectively torn to shreds in a matter of weeks.
If customers aren't yearning for EVs, then the UK's Zero Emissions Vehicle (ZEV) Mandate rules, which force firms to build battery-electric models, will surely become obsolete. The car market can't sell electric cars to customers who don't want them. There is already an expectation that the Government will water down the UK's electric vehicle sales targets. Ed's probably thinking he should have just stayed at home.
Labour's Contradictory Stance
Labour keeps saying they back the EV transition, but are putting obstacles in the way of natural market growth. The Office for Budget Responsibility (OBR) has previously estimated that Reeves' pay-per-mile plan will reduce EV demand by around 440,000 sales per year. How is that going to help?
The Government's argument is that an EV tax is needed to offset a loss of petrol and diesel fuel duty, and I am sympathetic to this. As more switch to battery models, something is needed to plug the hole. However, pay-per-mile in itself feels unfair as it targets those who rely on their cars most: workers, commuters, and parents.
Motorists already on the fence about buying an EV must look at Reeves' plan and think Christmas has come early. Their decision to forget about EVs has surely been made before they even leave their house and drive to the dealer. This has to change.
