The current PowerShift scheme run by the Government-backed Energy Saving Trust was plunged into crisis when it fell foul of EU laws on grant sizes and types. The laws limited the size of grants for environmental initiatives.
New grants are due to come into force on April 1, but there are serious concerns they won’t be ready in time.
European commissioners have halted the process while they consider whether there is an infringement of competition rules relating to state aid. This is because not all carmakers have models such as hybrids.
Manufacturers fear orders for such models could virtually come to a halt from April because grants to help reduce extra purchase costs for clean fuel vehicles, paid through the PowerShift programme, will not be available, and they cannot be backdated.
Transport secretary Alistair Darling recently revealed the extent of high level discussions at a Low Carbon Vehicle Partnership Conference. The LowCVP is a partnership of the automotive and fuel industries, the Government and other stakeholders. It promotes the shift to clean low carbon vehicles and fuels in the UK.
Darling says: "We are making representations to the EC to try to get this resolved as quickly as possible."
Pressed on how long it would take, Darling says: "I can’t say -– we are dealing with the EC."
Graham Smith, chairman of the Low Carbon Vehicle Partnership, said the industry was doing its best through the Society of Motor Manufacturers and Traders (SMMT) to make the EC aware of the urgency.
Smith is managing director of Toyota GB, which produces the hybrid petrol/electric Prius, a model which qualifies for a £700 PowerShift grant to the end of March.
Toyota also hopes for grants to be in place in time for future launches.