There is “no route to net zero” that ignores the real concerns of businesses, a cabinet minister has warned, as the government prepares to reduce financial penalties handed to carmakers not selling enough electric cars.
Ministers are also looking at how cheaper loans could be introduced to help people buy an electric vehicle (EV), after a wave of job losses and closures in which carmakers blamed the onerous fines they were facing.
Jonathan Reynolds, the business and trade secretary, stood by the government’s “cast iron commitment” to reinstate a 2030 ban on new cars that run on petrol and diesel. The deadline was dropped by Rishi Sunak a year ago. But he said the government had to be “clear eyed” in its effort to “keep the auto industry alive in the UK”.
“When this government says that decarbonisation must not mean deindustrialisation, we mean it,” Reynolds writes for the Observer today. “There is no route to net zero without backing British industries and workers. We are in no doubt at all about the global challenges the industry is facing and the need for us to play our part to support them.”
Labour sources said support for the 2030 target remains solid across government, including Keir Starmer. However, ministers are fast-tracking plans to review the fines for manufacturers who miss the EV quotas.
Carmakers have to ensure 28% of the cars and 16% of vans they sell are electric from January. If they fail, they currently face fines of £15,000 for each vehicle outside the target. Ministers are holding a consultation on how far the fines could be reduced.
Electric vehicles have very low carbon emissions and are considered to be vital in the bid to reach net zero. This is the point at which emissions across the planet have been reduced so much that these residues can be easily removed from the atmosphere, making it possible to halt the buildup of carbon in the atmosphere, the cause of global heating.
Reynolds blamed the setbacks on the last government, who he accused of waging a “culture war” with green targets - destroying certainty and investment in the process. He said he wanted to make EVs “affordable and accessible for working people and to boost the take-up of electric vehicles”. It is understood that officials are looking at plans to boost demand, including the use of cheaper financing deals.
It comes after a decision by Stellantis, the owner of Vauxhall, to close its van factory at Luton, putting 1,100 jobs at risk of being cut or relocated. The company blamed the UK’s economic conditions and the government’s zero-emission vehicle (ZEV) mandate. Days before, Ford announced it would cut 4,000 jobs in Europe, including 800 in the UK.
Car manufacturers are under financial pressure from EV sales quotas because public demand is lower than expected. Carmakers met Reynolds last month to warn of the economic pressures caused by the tough targets.
Ford UK boss Lisa Brankin warned last week that market challenges were making the financial regime around the move to electric vehicles “unworkable”. Brankin, chair and managing director of Ford UK, posted on LinkedIn: “The end goal is not in question, but current demand for electric vehicles is lower than expected and not in line with the mandated trajectory.
“For manufacturers like Ford who have invested billions in new technologies and advanced manufacturing, there needs to be greater flexibility built into the scheme and government-backed incentives to help encourage customers to make the switch.”
There are also concerns among the unions over the goals to ensure the UK reaches net zero by 2050. Gary Smith, the GMB general secretary, told the BBC in September that the government’s green policy were “hollowing out working class communities’.
Des Quinn, Unite national officer for the automotive industries, said that officials had introduced ambitious targets for EV sales, but had not provided the investment required for the charging infrastructure. He said he was optimistic there would be significant changes to the pathway for zero emission vehicles, but it had already caused economic damage.
“It’s inevitable there are going to be further job losses,” he said. “Some work on electric vehicles might not start, or at least be put back.”
Quinn said in addition to reviewing the current targets, there needed to be a detailed impact assessment of the cost to jobs of moving to EVs. He said most losses would be in the supply chain where components now being manufactured for petrol and diesel cars will no longer be required. “Car workers are going to be the new coal mining communities,” he said. “Thrown on an industrial scrap heap and left to get on with it.”
