HAMISH MCRAE: A blanket ban on all non-electric cars by 2035? And one that catches hybrid cars? This makes no sense for a string of reasons
The Government says that it will ban sales of new petrol and diesel cars in 2035. That’s 15 years in the future. So what was the Government urging us to do 15 years ago in 2005?
It was pushing us to buy diesel cars instead of petrol ones. The Chancellor, Gordon Brown, had brought in changes in vehicle excise duty to encourage people to make the switch on the grounds diesel produced lower carbon dioxide emissions.
Well, that turned out well, didn’t it? The proportion of diesel cars sold soared from one in seven in 2000 to about half the market by 2017, but emissions of particulates soared too.
Going green: Soon the costs will come down enough that electric cars will be cheaper to make
It didn’t help that the German car manufacturers lied about emission levels and that the testing procedures were flawed. But the end result is that people who thought they were doing the right thing for the planet (and their bank accounts) by going diesel now find themselves vilified for polluting the air of our cities.
The obvious moral of this sad saga is that Government policies sometimes have perverse results. And so it may be with this petrol and diesel ban.
The world will switch to electric cars in the coming years because, quite aside from the fact that they produce no tailpipe emissions, they are simpler to make, cost less to service, and have less to go wrong. Soon the costs will come down enough that they will be cheaper to make too.
But a blanket ban on all non-electric cars by 2035? And one that catches hybrid cars, including plug-in ones?
This makes no sense for a string of reasons. It causes confusion. The timescale is too short. Plug-ins are a useful transition to pure electric cars, and for many people an ideal compromise.
And we may find that come 2035 the charging infrastructure for electric vehicles, plus all the other demands including home heating, becomes inadequate to cope with the burden.
Besides, the role of the car in developed countries is changing fast. Fewer young people have driving licences. People have stuff delivered instead of driving to an out-of-town shopping mall. Commuter patterns are changing.
Cars will not disappear, but the world may have reached ‘peak car’. The giant German motor parts manufacturer, Robert Bosch, thinks we may have already gone past it.
Output has fallen for three years on the trot, and the International Monetary Fund reckoned that the decline in the car industry in 2018 accounted for about 20 per cent of the slowdown in GDP and 30 per cent of the drop in world trade.
Common sense says that the world will move towards a lower-carbon economy. It is a move that the UK, along with other developed economies, have to make. But we will benefit from making the transition in a sensible, orderly way that is driven by economic sense. Not because we are told to by some here today, gone tomorrow politician.
Boris Johnson shuffles his Cabinet this week. But he can’t reshuffle the squeeze on the nation’s finances. The most recent figures show the fiscal deficit for the nine months to the end of December was £54.6 billion, up £4 billion on the previous year.
January is the biggest month for tax receipts, and we will have more of a feel for the year’s outturn next week. While the deficit numbers are acceptable at under 2 per cent of GDP, they are getting worse, not better. One thing might help a bit: the Boris bounce.
Business confidence has risen sharply, house prices have hardened, and the huge service industry sector is signalling it expects stronger demand. But the headwinds from weak demand on the Continent continue, with both the German and French economies declining in the fourth quarter. There will also be some sort of hit from the coronavirus.
Besides, we must be close to full employment and close to the top of the economic cycle. The only thing that might radically improve public finances would be faster overall growth. Sajid Javid, the Chancellor, thinks that the growth rate could be increased to about 2.8 per cent a year. Expect plans to that end in the Budget on March 11.
Realistic? Well, the economy has never consistently achieved that level of growth. Its long-term rate over the past 200 years has been about 2.25 per cent. I’d settle for that.