While the industry was prepared for cuts in both Powershift and CleanUp grants, SMMT believes that too little has been allocated to Powershift, which part-funds new vehicle technologies that deliver the greatest environmental benefits.
Overall, funds have been cut by 30% and the EST proposes to split £14 million equally between Powershift and CleanUp programmes.
While the industry is pleased that EST has heeded industry concerns and will award Powershift grants only to the cleanest hybrid, electric and LPG new vehicle technologies, the reduction in their value remains a concern to the SMMT. By using more of the £7 million allocated to CleanUp, which funds the retrofit of systems to older vehicles, cuts would have been unnecessary.
The SMMT will repeat its message to the Chancellor that he should tread carefully when announcing fuel duty rates for the next three years in his budget. Lower fuel duty is a key incentive for buyers of new cars powered by alternative fuels and any erosion of that benefit will damage momentum, making these models less attractive to consumers.
SMMT chief executive Christopher Macgowan commented, “We are pleased that EST has reacted to our concerns and set out grant funding for 2004. However, more priority should have been given to the Powershift programme which drives the development of the cleanest new vehicle technologies. Splitting funds down the middle seems to be an arbitrary compromise without thought of long-term goals.”
He added, 'It also seems slightly bizarre that higher grant levels may be available for the same vehicles and equipment for programmes in Scotland and Wales. Surely it makes sense to have a level playing field across the UK?”
The EST proposals also include a quarterly review of grant allocation. The SMMT supports this measure, which means funds will be more closely monitored throughout the financial year.