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Electric car grants are set to be slashed under Treasury plans, with Rishi Sunak embroiled in a Cabinet row over the Government’s green agenda just weeks before the Cop26 climate summit.
The Chancellor is currently locked in a battle with the departments for business and transport over proposed cuts to the “plug-in” grants aimed at encouraging motorists to switch from polluting cars.
With the UK set to ban the sale of new petrol and diesel cars by 2030, the Government has sought to bolster the green transition by offering grants of up to £2,500 on low-emission vehicles.
But The Telegraph has learned that the Treasury is now pushing to cut the generosity of the discount scheme as it seeks to shift focus on to electric charging infrastructure and other vehicles, such as taxis and vans.
According to multiple sources, the row has pitted the Chancellor against Grant Shapps, the Transport Secretary, and Kwasi Kwarteng, the Business Secretary, who both oppose the cut.
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There is also mounting concern that the cut, if enacted, risks overshadowing the UK’s environmental drive just days before world leaders are due to gather in Glasgow in November for the United Nations Climate Change Conference.
On Tuesday, a senior Whitehall source told The Telegraph: “Three weeks today is meant to be the world leader summit, all eyes in Whitehall are focussed on COP26.
“The only other thing people are talking about is the fuel and gas crisis - so this just seems the most extraordinary move with this in mind.
“The net zero strategy has to be published next week and we’re still nickel-and-diming at this stage."
It is understood that the Exchequer believes the grants can be reduced without harming the electric vehicles market, which recorded its best ever month for sales in September.
Shapps and Kwarteng unconvinced by proposed reduction
Treasury ministers also want to place greater focus on electric vehicle charging points and infrastructure, as well as the support available for electric vans, taxis and motorcycles.
There is said to be particular concern that the electric van market is lagging significantly behind consumer vehicles.
However, Mr Shapps, who drives a battery-powered Tesla and is the biggest advocate of electric vehicles in Government, is said to be unconvinced.
Mr Kwarteng believes cutting the scheme will have implications on consumer demand and the transition of car manufacturers towards green vehicles.
Although plug-in models are cheaper to run, the upfront sale price is seen as a key factor in people deciding to make the switch.
There are also concerns that pressing ahead with the plans will undermine the work of Alok Sharma, the COP26 President, who is currently flying around the world in a bid to convince other countries to take bolder action on climate.
But despite widespread opposition to the Treasury’s cost-cutting, Mr Sunak and his officials are said to be digging in as they seek to rein in government spending.
“It still isn’t resolved,” said one insider with knowledge of the dispute.
Approached for comment, a Treasury spokesman said: "We have invested a huge amount already, including £12 billion through the Prime Minister's Ten Point Plan.
“And we are a global leader in green finance, issuing our first Sovereign Green Bond to help finance projects that will tackle climate change and putting in place stricter rules so people can have a better understanding of the environmental impact of their investments."
Plug-in grant cut despite boosting electric car sales
Introduced in 2011, the plug-in grant has so far seen £1.3bn in funding handed out, supporting the purchase of more than 285,000 vehicles.
Under the conditions of the grant, eligible cars must have CO2 emissions of less than 50g/km and the ability to travel at least 70 miles without any emissions at all.
However, the generosity of the scheme has been steadily trimmed back, falling from £4,500 in 2018 to £2,500 last year as the electric vehicle market has continued to grow.
The upper limit of cars eligible for the scheme has also been reduced from £50,000 to £35,000.
Sources close to Mr Shapps sought to distance him from the row, telling The Telegraph he had acknowledged the grant would decline over time.
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