The IPPR’s report provides a roadmap for the actions needed to develop the UK’s comparative advantage in the expanding international ULEV market.

The IPPR advocates a triple-pronged approach for industrial policy, focusing on:

• Ensuring that domestic firms in the automotive supply chain have access to the finance that they need.
• Providing greater public investment for the application and commercialisation of innovation.
• Adopting new strategies in higher education, immigration and apprenticeship policy to ensure that the supply of engineers keeps pace with demand from the automotive industry.

However, it adds that the development of a robust ULEV market in the UK is essential to maintain this comparative advantage and this requires that:

• Purchase incentives currently provided by the government should be more actively promoted, and guaranteed for longer periods to give greater certainty to buyers.
• Current usage incentives such as free parking spaces should be expanded, and other incentives such as free use of toll roads for ULEVs considered. A single ‘green badge’ scheme should be introduced to make it easier to identify qualifying vehicles.
• As a major procurer of vehicles, government should do more to drive demand for ULEVs by phasing in more stringent emission standards to the government buying standards for transport.
• Government should ensure that all ULEV buyers have access to safe charging point infrastructure for home, public, and private business use.
• New rapid charging stations should be placed at locally-identified strategic locations.
• Efforts to decarbonise the electricity system should be strengthened to ensure that drivers are not switching from dirty petrol-fuelled cars to dirty electricity-powered cars.
• The electricity network should be upgraded to meet additional demand from ULEVs.

The report has been welcomed by the UK's BVRLA, which was consulted during the drafting of the report and says it was particularly interested in the IPPR’s comments on the removal of 100% First-Year Allowances for lease cars. The association adds that the changes made in the 2012 Budget, which removed the availability of enhanced capital allowances for ULEVs to leasing and rental companies, have had a serious impact on the fiscal incentives available to support ULEV uptake, particularly by public sector bodies.

The BVRLA’s chief executive, John Lewis said: ‘We are delighted that this independent report has recognised the vital importance of the vehicle rental and leasing industry in driving the uptake of ultra-low emission vehicles, something that the Government has chosen to ignore.

‘We will continue to lobby for them to reinstate 100% First Year Allowances for our sector. Sales of new ultra-low carbon vehicles will not progress as everyone wants them to unless this happens.’