EV buyers’ grant to get £1.3bn boost in Budget amid pay-per-mile speculation

Rachel Reeves will add £1.3 billion to a grant cutting upfront costs for buyers of electric cars in Wednesday’s Budget, just as she is expected to hit them with a pay-per-mile scheme.

The Chancellor will boost the subsidy that knocks up to £3,750 off the price of an electric vehicle (EV) as part of a package that will also see £200 million go towards the rollout of charging points.

The grant allows buyers of eligible EVs to get an automatic discount.

The Government believes this will help hundreds of thousands of motorists to switch to EVs over the next few years.

But it comes amid reports that Ms Reeves could also unveil an EV pay-per-mile scheme in her crunch Budget.

The Telegraph reported earlier this month that she was preparing to announce a 3p-per-mile charge for EV drivers, on top of other road taxes, which would kick in from 2028 after a consultation.

It is understood drivers would have to pay a fee on their estimated travel, with no mass electronic monitoring of their movements.

A Government spokesperson at the time called for “a fairer system for all drivers whilst backing the transition to electric vehicles”.

Duty on vehicle fuels, such as petrol and diesel, raised just under £25 billion in the 2024/25 financial year, with a switch to EVs risking a dent in the Treasury’s take.

The measures to be announced on Wednesday will come on top of the £400 million already committed at the June spending review and the almost 87,000 public chargepoints already available, Downing Street said.

Charging points

Thousands of new charging points could be created with the proposed funding, and drivers without off-street parking will benefit from more charging infrastructure on local streets.

Ms Reeves is also set to publish a consultation on permitted development rights to make it easier and cheaper for motorists without a driveway to charge.

A review looking into the rising cost of public charging will report back by autumn 2026.

“We’re backing the switch to electric with a £1.5 billion package to cut upfront costs, accelerate chargepoint rollout and unlock jobs and opportunities – making it easier for people to go green and boosting growth across the country,” a source said.

Shadow transport secretary Richard Holden called the move “tone-deaf, big-spending nonsense”.

He said: “Handing out £1.5 billion 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.”

Ms Reeves is grappling with weak economic growth, persistent inflation and an expected downgrade to official productivity forecasts as she prepares her statement.

Raise taxes

She is widely expected to raise taxes on November 26 in an effort to bridge a multibillion-pound gap in her spending plans.

Amid reports that the wealthy are fleeing the country, the Prime Minister stressed he wanted Britain to be the top destination for business.

Asked whether he wanted the rich to stay, Sir Keir told reporters in South Africa: “I want the UK to be the best place to do business.

“I’m optimistic about the future and I want to create the conditions in which we enable business to generate wealth and do as well as humanly possible in the United Kingdom. So yes.”

Pressed on whether he could guarantee future Labour budgets would not contain tax hikes, the Prime Minister declined to pre-empt Wednesday’s statement, but said: “Obviously I do want the Budget to focus on growth, stability, which is the two pillars that are really important.”

‘Balls’

With an extension of the freeze on income tax thresholds among measures rumoured to be coming in the Budget, Tory leader Kemi Badenoch said the Chancellor should “have the balls” to admit that such a move would breach a pre-election pledge.

She said: “Rachel Reeves has claimed that critics of her chaotic economic mismanagement are ‘mansplaining’.

“Well let me say this: if she freezes income tax thresholds she will, according to her own words in her own budget speech last year, be breaching the Labour manifesto.

“And she should have the balls to stand up on Wednesday and admit that to British taxpayers. Anything less will confirm that she is a coward who can’t take responsibility for her actions.”

Labour Party chairwoman Anna Turley MP said in response that the Conservatives have “zero credibility” when it comes to the economy and that a Tory government under Mrs Badenoch would “take us back to austerity” with £47 billion of cuts.