Motorists who buy an electric plug-in car from January next year will get a grant worth up to £5,000 from the government.

The project was announced by Labour but placed on hold by the coalition until the autumn spending review.

Now the Treasury has taken the highly unusual step of agreeing to ring-fence the money from any cuts.

Car makers had been putting pressure on the new government to announce what was happening to the electric car subsidy.

They had warned that without it, the UK would be significantly less attractive for new investment.

'Absolutely committed'

The sheer scale of budget cuts needed across government departments - with the distinct possibility that transport might fare worse than most - had placed the scheme in doubt.

Now the government says the £43m earmarked for the scheme will be protected.

It means that anyone who buys an electric plug-in car from next year will get a 25% discount up to a maximum of £5,000.

"The coalition government is absolutely committed to low carbon growth, tackling climate change and making our energy supply more secure," said Transport Secretary, Philip Hammond.

"We are sending a clear signal that Britain is open for business and that we are committed to greening our economy.

"This will ensure that the UK is a world leader in low emission vehicles.

"We will review the level of the incentive regularly to ensure that the UK remains competitive and taxpayers get value for money."

Barriers

The extra help is not expected to make up for the extra cost of the vehicle - which could be about £10,000 more expensive than its petrol equivalent.

However owners could save hundreds of pounds a year in running costs.

The subsidy will come into force at the same time as a rise in VAT.

The increase from 17.5% to 20% adds almost £640 to the cost of a £30,000 car.

News Source: bbc.co.uk

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