Zero Emission Vehicle Mandate

With permission, I shall make a statement about the zero emission vehicle mandate. Today, this Government are giving British car makers certainty and support on the transition to electric vehicles, as we set out plans to back industry in the face of global economic headwinds. We have worked in close partnership and at pace with colleagues in the Scottish Government, the Welsh Government and the Northern Ireland Executive, whom I would like to thank.

The automotive industry is a cornerstone of our economy. It supports over 150,000 jobs and generates £19 billion every year. Today, with Government backing, it must negotiate the turbulence of fresh global economic challenges. For too long, the sector has been held back by a lack of long-term certainty. That changes now. This Government listen and act. We have listened to car manufacturers, large and small, from Sunderland to Solihull, and from Crewe to Coventry. Car makers have told us what they need to not just survive, but thrive. What they want is what we are delivering: practical, sensible reforms that will unlock investment, protect jobs and strengthen Britain’s leadership in the zero emissions transition.

Today, I can confirm that the Government are maintaining our manifesto commitment to phasing out the sale of new petrol and diesel cars by 2030. I can also reconfirm our commitment to all new cars and vans being 100% zero emission from 2035; there are no changes to the trajectory of the transition set out in the ZEV mandate regulations. We support the role of hybrid vehicles as a crucial stepping-stone in that journey; new full hybrids and plug-in hybrids will be on sale until 2035. That strikes the right balance. We are being firm on our climate commitments, but flexible on how we meet them, because our aim is not to impose change for its own sake, but to enable industry to make the transition in a way that matches supply with demand, and to support businesses, and the jobs that they provide, every step of the way.

We are significantly increasing the flexibility within the ZEV mandate. Manufacturers will have more freedom on how they meet targets, including the ability to sell more EVs towards the end of this decade, when demand is projected to be higher. We are also extending the ability to borrow and repay credits through to 2030, and the ability to earn credits for cleaning up non-ZEV fleets all the way out to 2029, so that companies can manage their pathways more effectively. This recognises the real-world challenges that British businesses face, and gives them the smoothest possible road to run on.

We are also reducing fines for missing ZEV targets from £15,000 to £12,000 per vehicle. Where fines are levied—for the vast majority of manufacturers, they will not be—the revenue will be recycled directly back into support for the sector, because this Government invest in solutions and do not punish ambition. Let me be clear: this is not a retreat from our ambitions on EVs—quite the opposite. It is right that the threat of fines remains, as it is an inescapable fact that the domestic transport sector remains the UK’s single largest carbon emitter, accounting for 30% of emissions in 2024. That is why we are doubling down on our commitment to the electric transition. There is more than £2.3 billion available to support industry and consumers. That includes funding for new battery factories, EV supply chains and charging infrastructure, and grants for zero emission vehicles.

The public are already leading the way. March saw a 43% increase in electric vehicle sales, compared to the same month last year. February was a record month too, with EVs accounting for one in four new car sales. That surge in demand shows that we are moving in the right direction, but it also shows the importance of maintaining momentum, so we will continue working with industry to ensure demand keeps pace with supply, building a sustainable market for the long term.

The infrastructure is growing, too. There are over 75,000 public charge points now available, and more than £6 billion of private investment is lined up for UK charge point roll-out by 2030. Today, a new charge point is installed every 29 minutes. That is more than 50 every day. Families charging at home can now save up to £1,000 a year, compared with petrol drivers. An EV charged at home overnight can run for as little as 2p a mile. That is putting money in people’s pockets while relieving pressure on the planet.

We know that one size does not fit all, which is why small and micro-manufacturers will be exempt from the new measures. It is why vans will have five extra years to go green, because we recognise their unique role in the economy and in giving businesses the time that they need to adapt. It is why we are making space for hybrid vehicles in the mix, not as a compromise, but as a contribution. Hybrids offer lower emissions today without requiring overnight shifts in driving behaviour or infrastructure. They build public confidence, support choice and ensure that no one is left behind in the transition.

This is not just a transport, environmental or economic policy; it is part of this Government’s plan for change. It is a long-term effort to deliver clean, sustainable and high-quality growth, creating new jobs in battery production, EV supply chains and infrastructure, anchoring manufacturing here in the UK and supporting skilled apprenticeships in clean tech and advanced engineering. With today’s announcement, British names such as Rolls-Royce, Land Rover and Vauxhall will have the certainty they need to plan, invest and lead. We are backing British businesses to succeed at home and abroad. These reforms are fair to manufacturers, reasonable for workers and right for the climate challenge ahead.

I know some people might retreat to tired arguments about a war on motorists, but this Government are focused on real challenges, not imaginary grievances. Most of us are motorists or passengers; we are all in this together. What we need is not division, but direction, and that is what we are delivering today by listening to industry, following the data and building a strategy grounded in evidence and ambition.

When we came into government, we promised to prioritise one thing above all else: growth—for industry; for clean transport; and for people, places and pay packets. With these bold, practical reforms, backed by the Prime Minister’s plan for change, that is exactly what we are delivering. I commend this statement to the House.

I think, on his birthday, we should hear from the shadow Secretary of State.

Thank you very much, Mr Speaker. I will not embarrass myself by announcing how old I am, but it is far too old.

We have just checked.

I thank the Secretary of State—[Interruption.] That was a very helpful intervention by the hon. Gentleman; he is completely right. I thank the Secretary of State for her statement, and for advance sight of it. The announcement by the United States of America that 25% tariffs will be imposed on UK automotive exports has understandably caused significant concern in the automotive sector. Automotive manufacturers now face tariffs of 25% on around £8 billion-worth of car and auto parts exports—a potentially devastating blow for the automotive industry. I assure the Secretary of State that we will support the Government when they do sensible things to reverse the impact on our already fragile economy. In that vein, I am glad that the Government have recommitted to negotiating a better deal with our closest ally and largest single-country trading partner, and I sincerely hope that they are successful in their negotiations.

However, on the substance of the right hon. Lady’s statement, I cannot share her enthusiasm for the rest of Labour’s plans. The reality is that today, Labour is simply trying to clear up the uncertainty that it has contributed to. When the previous Conservative Government reacted to sluggish automotive trade figures by making the pragmatic decision to delay the ban on new diesel and petrol cars from 2030 to 2035, aligning the UK with major global economies such as France, Germany, Sweden and Canada, Labour accused us of undermining the automotive industry. This morning, the Secretary of State criticised the previous Government for chopping and changing, and a consultation put out by Labour claimed that our policies caused “great harm” to the UK’s reputation as a leading nation in the EV transition by moving the goalposts. However, that is precisely what Labour did upon taking office by ideologically reversing the 2035 deadline. The plans announced over the weekend do not place the automotive sector in a better position than it was when we left office, despite some minor adjustments to the zero emission vehicle mandate.

I also extend my birthday wishes to the shadow Secretary of State. I hope he is grateful for the two birthday presents I have given him: not only a statement but a general debate, so that we can face each other across the Dispatch Box not once but twice today.

It is rich for the shadow Secretary of State to blame uncertainty in the automotive sector on this Government. I can only think that he has some sort of selective amnesia going on, because it was his Government who introduced this policy. They then delayed the phase-out date, tanking EV demand by 15% almost overnight. We had the spectacle of the previous Prime Minister, the right hon. Member for Richmond and Northallerton (Rishi Sunak) standing up to make a speech pushing that date back out to 2035. Almost overnight, we saw those sales tank. The shadow Secretary of State should be explaining to Britain’s car manufacturers why his party faffed about so much, costing them millions and arguably leaving the sector less resilient to the global economic headwinds it now faces.

The shadow Secretary of State claims that this is a moment when we are tinkering at the edges, but nothing could be further from the truth. This is a significant moment for industry. He quotes the SMMT, and I just gently say to him that Mike Hawes, its chief executive, said this morning:

“The government has rightly listened to industry, responded quickly to global dynamics and recognised the intense pressure manufacturers are under.”

The shadow Secretary of State is also right to raise Jaguar Land Rover, which is affected by the imposition of the global tariffs that President Trump announced recently. I point out to the hon. Gentleman that Adrian Mardell, CEO at JLR said:

“We welcomed our announcement of the increased flexibilities in the zero emission vehicle mandate, and the clear commitment from Government to incentivise electric vehicle uptake and invest in infrastructure.”

Today’s news on support for our automotive industry in the move towards electric vehicles will be welcomed by my constituents, including those who work for the nearby Toyota plant at Burnaston. Will the Secretary of State continue this encouraging level of engagement and responsiveness to industry concerns? Will she confirm that, to make sure that the transition is a success, this Government’s wider industrial strategy will further back British auto manufacturers?

I know that the Under-Secretary responsible for the future of roads, my hon. Friend the Member for Nottingham South (Lilian Greenwood), has visited the Burnaston plant in my hon. Friend’s constituency, and I understand what a critical employer it is locally. Toyota will benefit from many of the changes that we have announced today. We are allowing the sale of both full hybrids such as the Toyota Prius and plug-in hybrids after 2030, and Toyota will also benefit from the extension and expansion of the CO₂ transfer caps. Moreover, if it is ever in a position in which it needs to pay fines, it will pay them at a lower level—and we would, of course, reinvest that money in supporting the sector. I can give my hon. Friend the assurance that she and her constituents want: we will continue to support this vital sector.

I call the Liberal Democrat spokesperson.

I thank the Secretary of State for her statement, and for advance sight of it. Let me also congratulate the shadow Secretary of State on his birthday, and note that he is much younger than the Liberal Democrat spokesperson.

It is clear that the Government must take urgent steps to help the car industry make the switch to electric vehicles. Although increasing flexibility in the mandate is welcome, voices across the industry have made it clear that we also need to bolster demand by lowering the barriers for individuals and businesses to purchase electric vehicles. As the Secretary of State knows, the recent surge in demand to which she referred was a result of significant discounting to promote sales. It is crucial that, as well as improving the charging network, we end the inequality between public and private charging by bringing the VAT rate for public charging into line with that for home charging, at 5% rather than 20%. Not only is the present system damaging demand, but it is wrong to penalise those who have no access to private charging. Ministers should also postpone the increase in vehicle tax on electric cars, and explore the possibility of reintroducing the plug-in car grant.

As the Secretary of State made clear on the media round this morning, the spectre of Trump’s tariffs also looms large over the industry. If the Government are serious about protecting car manufacturing in the UK, the Prime Minister must continue to work with our allies in Europe and around the world on a co-ordinated response. The only way to tackle Trump is to negotiate from a position of strength, and to show that the UK is not alone and will not be bullied.

May I ask the Secretary of State three questions? First, what conversations has she had with the Chancellor about lowering the public charging rate to 5%, and what other measures are the Government considering to strengthen EV demand? Secondly, can she confirm that the measures announced today are a response to the ZEV consultation that ended in February, and tell us what, if any, additional measures are being considered in respect of the tariffs that have since been announced? Thirdly, will the Government start negotiations with the EU about the formation of a UK-EU custom union, to cut red tape not only for vehicle manufacturers but for all UK industries?

I assure the hon. Gentleman that the Government keep the VAT variation between public and private charging under review. The 20% standard rate to which public charge points are subject applies to most goods and services, with very few exemptions. We are trying to give people low-cost and affordable options for public charging by investing £380 million to roll out overnight chargers, which are cheaper and will be installed to help those without a driveway. Today, Brighton & Hove City Council confirmed that it had signed the contracts to deliver 6,000 of those chargers, and in February Midlands Connect announced that it was rolling out more than 16,000 across the midlands, helping drivers to charge their vehicles for less.

The hon. Gentleman asked me whether today’s announcement was a response to the consultation that we launched at the end of December, which closed in February. It is indeed a Government response to that consultation. As for the discussions that we will have with European colleagues, we will continue those discussions. Although the hon. Gentleman tried to tempt me into giving him a commitment to rejoin an EU customs union, I am afraid that that is not a commitment I can give.

On behalf of those of my constituents who work at JLR Halewood, I thank my right hon. Friend for the stability and confidence that she has given to our automotive industry; it will be enormously reassuring to them. The last Government confirmed through Mark Harper, the then Secretary of State, that it was already cheaper for drivers to switch to electric vehicles—he did so from the Dispatch Box this time last year. For those of us who are able to plug in at home, it is cheaper by up to £1,000 per family, as she said in her statement. May I encourage her to work with the Energy Secretary on reducing the cost of electricity more widely to benefit those of us who cannot plug in at home, and to improve consumer demand, which is so crucial to supporting our manufacturers?

I can assure my hon. Friend that I will continue to work across Government with colleagues in the Department for Energy Security and Net Zero, and in the Department for Business and Trade, in order to make the take-up of EVs as affordable as possible for individuals who want to make the transition. He is entirely right to point out that, compared with a petrol car, drivers can save up to £1,000 a year if they mostly charge at home, and that an EV can be run for as little as 2p per mile if charged at home. Half of all used electric cars are now sold for under £20,000, and there are 29 brand-new electric cars on the market for under £30,000.

I am proud to have Ford’s UK technical headquarters, which employs thousands of fantastic workers in high-quality R&D jobs, at Dunton in my Basildon and Billericay constituency, and elements of what the Secretary of State has announced today will certainly be very welcome. On the flip side, local businesses that rely on the Ford HQ—and, in fact, the entire automotive sector—saw a £200 million-a-year increase in national insurance kick in yesterday. Today, small businesses in my constituency, many of which work in London, face charges on the Blackwall tunnel for the first time ever and charges on the Silvertown tunnel, which means that many will face charges of £35 a day, just to operate in London. Will the Secretary of State raise those issues with her colleague the Mayor of London and the Chancellor of the Exchequer? Could she also tell us how long the plug-in van grant will be extended? We know it will be there in 2026, but for how much longer?

I was struggling to decipher a question in the speech that was forthcoming from the other side of the Chamber. The right hon. Gentleman asks me to comment on the opening of the Silvertown tunnel in east London. I suspect that a number of his constituents—regardless of whether they are driving for work or to try to reach friends and family—have been stuck in absolutely atrocious traffic north and south of the Blackwall tunnel. For the first time ever, London’s double-deck red buses will now be able to cross the Thames east of Tower Bridge. I hope that he might join me in congratulating both the Mayor of London and Transport for London on getting a new river crossing open, which is much needed.