Following a recent consultation, the grant programmes will be reconsidered as the Government plans to move to a technology neutral approach - that would incentivise the cleanest cars regardless of the technology or fuel type. The Government will also adjust the programmes to ensure they comply with European rules on state aid.
The state aid rules limit the amount of grant that member states can offer for environmental initiatives. In some cases this will mean that future grants will need to be reduced to ensure the grants allocated do not exceed permitted levels. However, overall funding for the grant programmes remains at planned levels, enabling more grants to be allocated to more interested parties.
The timescale for introduction of the new programmes will be dependent on the process of reviewing and clearing new programmes with the European Commission. In the interim, the Department will honour all grant offer letters under the PowerShift and CleanUp programmes until 31st March 2005.
Manufacturers will now seek urgent clarification from DfT on a number of points that affect their development programmes and grants offered to new car buyers:
Commenting on the DfT announcement, Philip Sellwood, chief executive of EST says: ”Looking to the future we have a significant challenge ahead of us, if we are to meet Government’s target of 10% of new cars sold in 2012 to emit 100 grams or less of CO2 per kilometre. We will look to Government to provide continued and consistent support over the next seven years and to increase funding year on year to support the development of new technologies and incentivise market transformation to cleaner vehicles.”