Chancellor finds £1.5bn to subsidise electric vehicles

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.

- DAVID MADDOX

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

The revelation 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’s 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’s subsidy for EVs 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 includes an extra £1.3bn for the Electric Car Grant, extending 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.

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