Rachel Reeves finds £1.5bn to subsidise electric vehicles in net zero drive

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The chancellor will take on the climate sceptics in the Tories and Reform with a push to help people buy electric vehicles

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Rachel Reeves is set to announce a £1.5bn subsidy for electric vehicles in a bid to persuade motorists to turn their backs on fossil fuels.

The handouts to bring down the cost of electric vehicles comes though as the chancellor is expected to introduce a new pay by the mile tax on drivers of e-vehicles in a move which has already been criticised by the industry.

The revelations also comes as campaigners push for Ms Reeves to not raise fuel duty for the first time in 15 years.

A petition signed by 152,000 will be delivered to Downing Street on the issue on Tuesday by campaign group FairFuelUK.

But Ms Reeves decision appears to be a statement of intent in support of the drive towards net zero on carbon emissions after both the Tories and Reform UK made it clear they would abandon the goals.

Ms Reeves’ subsidy for e-vehicles also comes as she agrees to further subsidise rail fares with a freeze on ticket prices next year saving some commuters on busy lines £300.

The measures come in a difficult budget for the chancellor where she is widely expected to have to raise new taxes to close a spending black hole of at least £20bn and to give her headroom of more than £10bn to deal with unexpected economic shocks next year.

The EV funding drivers includes an extra £1.3 billion for the Electric Car Grant and extend the scheme by an extra year.

Since its launch in July, the Electric Car Grant has helped over 35,000 drivers make the switch to an EV by cutting upfront costs by up to £3,750.

Building on this success, the government is expected to announce an additional £1.3 billion for the Electric Car Grant in the budget – slashing prices for consumers, boosting growth in the sector and supporting the transition to zero emission vehicles.

To ensure drivers can charge their vehicles wherever they live or work, the budget is also expected to unveil an additional £200 million to accelerate the rollout of chargepoints across the UK.

This is on top of the £400 million already committed at the Spending Review and the almost 87,000 public chargepoints already available.

The proposed funding will support the creation of thousands of chargepoints and provide extra resources for local authorities to ramp up charging infrastructure on local streets - making it easier for everyone to access reliable charging, including those without off-street parking.

On top of this, the Chancellor is expected to publish a consultation on Permitted Development Rights to make it easier and cheaper for people without a driveway to charge.

This will help households without driveways to switch to cleaner vehicles and access reliable charging at and closer to home.

There will also be a review the cost of public charging to report back by Autumn next year. This will look at the impact of energy prices, including wider cost contributors, alongside options for lowering these costs for consumers.

A government source said: “The government is fully committed to the transition to electric vehicles , which is key to meeting our net zero goals and will drive growth and productivity across the UK.”

But with public finances tight, the Tories have questioned why the chancellor is promoting subsidies for electric vehicles which are bought mainly by the more wealthy.

Tory shadow transport secretary Richard Holden said: “Handing out £1.5bn in EV subsidies while hard-working taxpayers are squeezed dry is madness. Ordinary families are facing increased taxes and spiralling inflation under Labour, yet the Government’s priority is handing out discounts on new electric cars.

“This is exactly the kind of tone-deaf, big-spending nonsense that we expect from this Labour Government.

“Only the Conservatives have a plan to support all motorists, balance the books and grow the economy.”

The row comes as Ms Reeves is also set to a crackdown on employers who fail to pay the minimum wage and an £18 million package to revive playgrounds for children in England as part of a £5bn package to rejuvenate communities.

Ms Reeves is expected to tell MPs next week that outdoor play is crucial for children’s health and wellbeing.

An HMT source said: “This funding will breathe new life into play areas across England, creating safe, exciting spaces for thousands of children.

“It will enrich and empower communities – giving every child a place to play and grow, wherever they live.”

Ms Reeves is coupling this with an extra £5 million for books for schools in England.

She said: “Access to reading is vital for young people’s education, it boosts confidence, opportunities, and opens up the world beyond the phone screen.”

The chancellor is also expected to announce reforms to protect those on the National Minimum Wage, ensuring that no employer can exploit vulnerable workers.

As part of these plans, the government will introduce more regular naming and shaming rounds – publicly naming employers found to have broken minimum wage rules and clearing the case backlog inherited by the previous government.

These changes will mean businesses breaking the rules will have no place to hide, and those on the minimum wage will be further protected by this government.

Last month 500 employers failed to pay the minimum wage to around 42,000 of the country’s lowest-paid workers. Big name brands were among those forced to reimburse employees and faced fines totalling £10.2 million for breaking the rules.

An HMT source said: “This government is cracking down on unscrupulous employers to protect the country’s lowest paid workers and ensure fair pay for hard work.

“We are sending a clear message - those who short-change their staff will not be allowed to hide.”

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