Press Story

Embargoed: 00:01h Monday 15 April 2013

Britain now has the fifth most competitive automotive industry in the world, with the sector providing around one in 40 of all UK jobs, according to a new report published today by the think tank IPPR. But with two-thirds of the world economy now covered by low emissions standards, the report shows that demand for electric vehicles in the UK has fallen behind most other European countries and the US, despite the fact that thirty branded electric vehicles are scheduled to be available to consumers by 2014.

The report shows:

Two thirds of the global economy are covered by vehicle emission standards including the US, EU, China, Australia, Russia, Canada and South Korea.

Britain could miss out on opportunities for jobs, economic growth and exports to an expanding global market, if it does not support its own domestic market in switching to electric vehicles.

Ultra low emission vehicles could bring down motoring costs over time, particularly for organisations buying large fleets of vehicles. The government has the opportunity to lead in this area.

Will Straw, IPPR Associate Director, said:

"Britain is now in the elite of global car makers with the fifth most competitive automotive industry in the world, but demand for electric vehicles in the UK has fallen behind most other European countries and the US. Britain is on the starting grid but now it's time to get moving.

"Industry needs stability and support if it is to invest and make the UK a leading exporter of electric cars and other ultra low emission vehicles. We need a political consensus to guarantee funds to the end of the next Parliament and a commitment from all political parties that any underspend will be rolled over until those funds are exhausted."

The report urges the Government to support ultra low emission vehicles with an active industrial policy. It argues for the creation of a new advanced propulsion centre to encourage innovation funded through better targeting of existing grants, fees and R&D tax credits. The report also argues that existing policies, such as the 'Funding for Lending' scheme, have failed to support small businesses in the automotive supply chain. It therefore recommends the Government capitalise and give borrowing powers to a British Investment Bank to increase funding for SMEs. Finally, the report recommends that industry should do more to provide incentives for students to take up engineering courses and urges the Government to make it easier for high-skilled engineering graduates from outside of the EU to stay in the UK.

The report shows that the Government currently buys over £400 million worth of vehicles per year. The report argues that Government has the opportunity to lead demand for low carbon vehicles and recommends that by 2020, all new cars procured by central government should have emissions of 95g CO2 per kilometre or less. The report shows that a business or public sector owner could save £3,755 over a 4 year period by switching from a petrol fuelled Ford Focus Zetec S to an electric Nissan LEAF. The employee driving the vehicle could save £5,197 in fuel savings and tax benefits.

Notes to editors

IPPR's new report - 'Leading the charge: Can Britain develop a global advantage in ultra-low emission vehicles?' - will be available from here.

The 'revealed comparative advantage', an index of the relative advantage of a given country in a particular class of goods or service, of the UK automotive sector is fifth in the world after Japan, Germany, South Korea and Spain. It is higher than a number of countries that produce more cars than Britain including China, India, the US, Brazil, France and Russia. The UK's revealed comparative advantage has risen rapidly over the last decade.

Some ULEV production is already taking place in the UK. Nissan have invested £275 million in the production of their LEAF car model in Sunderland. Toyota are producing engines for the Auris hybrid and the British firm Axeon is Europe's largest independent lithium-ion battery system supplier.

The Government's flagship policies to stimulate domestic market in ultra low emission vehicles are the "plug in" grants. These are available until 2015 and cover:

25% off the cost of a plug in car, up to a maximum of £5,000; and
20% off the cost of plug in van, up to a maximum of £8,000

IPPR recommends that all political parties confirm that the money currently available for the plug-in grants will not expire in 2015, and that any underspend will be rolled over until it is exhausted.

In 2011 and 2012, 3,342 plug-in electric vehicles were registered in the UK. This amounts to 0.84 per cent of all vehicles registered over the same period.

IPPR's new report also suggests that the Government set up a "green badge scheme" to encourage the use of ultra low emission vehicles. The report suggests that the scheme should mirror the current 'blue badge' scheme for disabled drivers run by local authorities, and provide benefits for drivers, boosting UK demand for ultra low emission vehicles.

The report argues that green badge drivers should receive a range of advantages, including free parking in public car parks and areas where a permit is needed. The report recommends that local authorities finance these privileges using parking fees charged to drivers of traditional vehicles. The report also argues that green badge holders should be exempt from any city congestion charges such as the Durham congestion zone and be allowed to use toll roads, such as the, M6 Toll, the Severn Bridge and the Clifton Suspension Bridge, without charge.

Reducing carbon emissions from the auto sector will be vital to reaching the UK's carbon targets set under the Climate Change Act 2008, allowing Britain to reduce its carbon emissions by 80 per cent by 2050. The report calls for the British government to lead efforts at the EU level to agree an average carbon emissions target for new cars and vans registered in the EU in 2025.

Contacts

Richard Darlington, 07525 481 602, r.darlington@ippr.org

Tessa Evans, 07875 727 298, t.evans@ippr.org