Finance & Leasing Association25 June 2021
So just what is the Government’s commitment to Net Zero and how ambitious is it prepared to be?
Earlier this week, the Transport Minister, Rachel Maclean admitted to the Transport Committee that publication of the Government’s Transport Decarbonisation Plan had been delayed because some ministers felt it was not ambitious enough. This is some admission for a Minister and begs the question of whether this is a criticism of departmental officials, pressure imposed by other Government departments or a realisation that the issue is evolving at such a pace that its better to pause now to get it right.
The Government’s Ten Point Plan launched late last year to much fanfare included the promotion of alternative power sources and greener transport and accelerating the shift to zero emission vehicles. Within this is a pledge to end the sale of new petrol and diesel cars and vans by 2030, a decade earlier than originally planned. This is a laudable aim and demonstrates leadership but the detail on how we get there is lacking.
Existing measures to encourage the transition include plug-in grants (though eligibility has been tightened lately) and incentives to develop the charging infrastructure but more could and should be done to drive demand for low emission vehicles (LEVs). Committee members raised concerns familiar to the FLA about how conservative residual values impeded the development of a viable mass market of affordable used cars for consumers. The Minister argued that progress was being made and that price parity between petrol and diesel cars and LEVs would be reached by the middle of this decade. It feels like the Government trusts the market to achieve this but the reality is that the industry will only get there if the Government works with us to share some of the risk linked to how prices in the market will evolve.
The FLA is working with others, including the Green Finance Institute, to develop a Green Finance Guarantee for consumer and business assets, including vehicles, under which the Exchequer would underwrite a proportion of risk to funders. We believe that such a measure would provide the stimulus for the mass market in LEVs to take off alongside significant investment in a comprehensive rapid charge point network and fiscal measures that could be claimed by finance and leasing companies purchasing vehicles. If the Government announced such incentives ahead of COP26 with a promise that they would remain in place for a long period of time, this would undoubtedly provide the boost the market needs. We know the Government is open to innovative ideas – endorsing this approach would bear testimony to that.
Published 25 Jun 2021
