Let the market decide on electric vehicles
After just two months in office, the Government is on course to wreck Britain’s car industry. In its manifesto, Labour promised to reimpose a ban on the sale of “new cars with internal combustion engines” in six years’ time. Now ministers are set to announce a climbdown, but only for hybrid vehicles, which use both petrol and electric engines.
By imposing the toughest target for switching to electric vehicles (EVs) of any Western country, manufacturers feel coerced into rationing the supply of petrol, diesel and hybrid cars, despite the fact that many consumers prefer them. So popular are hybrids, indeed, that Toyota, Volvo and other firms are stepping up production.
The arbitrary date of 2030 for the transition ignores a depression in consumer demand for EVs that is already causing European giants, such as Fiat, to slow down their rollout. Electric cars have a growing number of supporters, but many drawbacks remain for mainstream users, including cost, limited range and a lack of recharging points. On the supply side, such unattainable targets risk flooding the British market with cheaper Chinese electric cars.
Realising that the 2030 transition target was unattainable, Rishi Sunak pushed the ban on petrol and diesel car sales back to 2035. Now Sir Keir Starmer has reinstated the earlier date, but as a concession will allow hybrid vehicles to be sold until 2035. Yet even this policy is bound to cause confusion and distort the market.
By definition, not all hybrid vehicles have the same balance between the two types of motor. It is unclear whether the Government will allow all hybrids to be sold until 2035, or only some of them. Manufacturers will have to wait until the Ministry of Transport has completed a consultation before they are told what specifications of battery size will be required to qualify. Nobody in the Government seems in the least interested in what ordinary motorists want.
In this, as in so many other fields, Sir Keir is taking the country back to the paternalist socialism of his predecessors Harold Wilson and Clement Attlee, under whom the watchword was, to quote the Labour politician Douglas Jay: “The gentleman in Whitehall really does know better what is good for people than the people know themselves.”
There is only one sensible way to manage the difficult process of decarbonisation, and that is to allow the market to determine which technologies work best for consumers. In the car market, as elsewhere in the economy, the customer – not the minister – should be king.
Boarding school betrayal
Only now are the full consequences of Labour’s imposition of VAT on school fees becoming clear. The impact is being felt especially acutely by the Armed Forces. Service families depend heavily on boarding schools, for various well-known practical reasons.
However, the Government’s tax raid on private education ignores the military ramifications of the politics of envy.
As is already clear from the failure to carry out an impact assessment for the removal of the winter fuel allowance from pensioners, this Government seems heedless of the damage done by policies driven by ideology. Evidently none of those responsible for its vindictive tax on education made provision for children with special educational needs, let alone for military families. It is difficult not to conclude that they just didn’t care enough.
The Continuity of Education Allowance (CEA) to which parents in the Services are entitled does not cover the full cost of boarding school fees. Such parents are already expected to find up to £17,000 a year per child from their own resources.
A 20 per cent increase in fees may be unaffordable for military families living on comparatively modest salaries. While independent schools are doing their best to absorb the VAT hike, it is inevitable that some officers will be forced to leave the Armed Forces.
This is a hammer blow to morale at a time when the Army, the Royal Navy and the Royal Air Force are facing serious challenges in recruitment and retention. Ensuring stability for families, especially with children of school age, is one of the few ways in which the strains of life in uniform can be mitigated.
A side-effect of penalising those who educate their children privately will be to undermine the ability of our Armed Forces to attract and keep the best possible leadership material. In a dangerous world, this is sheer folly.
Under the Scrooge-like grip of Rachel Reeves, the Treasury is unlikely to countenance an exemption from the new VAT rate for military families. The least the Ministry of Defence should do is to raise the long-frozen CEA. The brave men and women who serve our country deserve no less.