Fuel prices hit new highs as Government axes £1,500 electric car grant

Fuel prices hit new records as the Government scrapped £1,500 grants for purchases of new electric cars.

The average price of a litre of petrol at UK forecourts reached a new high of 185.4p on Monday, according to data firm Experian.

That is an increase of 6.9p in just a week.

The average price of diesel was a record 191.2p per litre on Monday.

The figures were released just hours after the Department for Transport (DfT) axed the Plug-in Car Grant.

Drivers could previously use the scheme to claim up to £1,500 towards the cost of a plug-in car costing less than £32,000.

The decision to kill off the grant for cars sparked an angry response from the automotive industry, but the DfT said it will “refocus” funding to encourage users of other vehicles to make the switch to electric.

The Competition and Markets Authority announced on Monday that it will carry out a “short and focused review” of fuel prices after a request by Business Secretary Kwasi Kwarteng.

Mr Kwarteng said drivers are “rightly frustrated” that the 5p per litre cut in fuel duty implemented by the Treasury in March has not stopped prices from soaring.

Recent analysis by green motoring consultancy New AutoMotive found that record pump prices mean the per mile cost of running an electric vehicle (EV) has sunk to around 80% below the bill for petrol and diesel models.

Announcing the end of the Plug-in Car Grant, transport minister Trudy Harrison said the Government is continuing to invest “record amounts” in the transition to EVs, but “funding must always be invested where it has the highest impact”.

She added: “Having successfully kickstarted the electric car market, we now want to use plug-in grants to match that success across other vehicle types, from taxis to delivery vans and everything in between, to help make the switch to zero emission travel cheaper and easier.”

Existing applications for the grant “will continue to be honoured”, the DfT said.

Sales of new petrol and diesel cars and vans in the UK will be banned from 2030.

The Government is also planning to adopt a zero emission vehicle (ZEV) mandate, which will require manufacturers to sell a certain percentage of those cars and vans from 2024.

Mike Hawes, chief executive of trade body the Society of Motor Manufacturers and Traders, said the decision the axe grants for new EVs “sends the wrong message” to drivers and the automotive industry.

“We are now the only major European market to have zero upfront purchase incentives for EV car buyers, yet the most ambitious plans for uptake,” he said.

“With the sector not yet in recovery, and all manufacturers about to be mandated to sell significantly more EVs than current demand indicates, this decision comes at the worst possible time.”

AA president Edmund King said the grants were “essential for many drivers making the switch from petrol and diesel”.

He went on: “The plug has been pulled at the wrong time on this important grant before many users, still waiting for delayed EVs due to global shortages, have made the change.

“Drivers, and indeed many fleets, planning to make the switch to EV, may now back out until they can find more cash.”

RAC head of policy Nicholas Lyes said: “We’re disappointed the Government has chosen to end the grant at this point.

“If (purchase) costs remain too high, the ambition of getting most people into electric cars will be stifled.”