October 19, 2021

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Parliament ‘misled’ over cost of net zero target, say Conservative MPs

Parliament was “misled” over the cost of reaching the net zero target, Conservative MPs have said, as internal documents reveal that most small electric cars cost thousands of pounds more than officials claimed they would by 2021.

Data obtained from the Climate Change Committee (CCC), the official advisory body, following a legal battle shows that ministers based their estimates of the overall cost of the policy on assumptions that included a claim that the cost of small electric cars would plummet to £13,000 by 2021. In fact, most cost at least £20,000.

The disclosure comes amid serious concerns in the Treasury and among Tory backbenchers about the financial burden of the net zero target.

A mass switch to electric cars is seen as “essential” if the UK is to meet its target to reduce greenhouse gas emissions to net zero by 2050, and the CCC claims that it will eventually save some £275 billion.

But the Global Warming Policy Forum (GWPF), the climate sceptic think tank that uncovered the figures, said that the true cost of electric cars throws the Committee’s modelling into doubt.

Craig Mackinlay, who leads the new Net Zero Scrutiny Group of Conservative backbenchers and is also a chartered accountant, described the revelation as “scandalous”. He said: “We have been misled as a Parliament making potentially multi-trillion pound decisions based on flawed data.

“The Treasury needs to do some very high level and independent work to see what these costs truly are, because the CCC can obviously no longer be trusted to create these costs for government and Parliament to consider.”

A new briefing document circulated among members of the Net Zero Scrutiny Group states: “Across government there is an unhealthy over-reliance on numbers provided by the CCC, which has been reluctant to share its workings.”

Today, Ed Miliband, the shadow business secretary, is expected to announce Labour plans to adopt a CCC proposal to reach “near zero” emissions in the production of steel by 2035.

 ‘The CCC’s net zero costings were incomplete, biased, and grossly misleading’

In a report published in 2019, shortly before MPs passed legislation requiring the UK to achieve a target of net zero carbon emissions by 2050, the CCC claimed that the goal could be achieved at a cost of between 1 and 2 per cent of GDP – an estimate repeated by ministers in Parliament. Later that month, MPs voted to approve the net zero target.

In its 2019 report, the CCC cited the expected drop in the cost of electric vehicles as a key factor behind its claim that the overall cost of the policy would be “manageable”.

Following a legal battle, the GWPF, founded by Lord Lawson, the former chancellor, obtained the spreadsheet containing the assumptions on which the body’s calculations were based.

When The Sunday Telegraph questioned the Committee about the disparity, it initially claimed that the 2019 figures related to cars with small batteries, rather than small cars, despite the fact that the spreadsheet containing the modelling refers to “small cars”.

The CCC claimed that the vehicles “class[ed] as small by battery size” are no longer sold and therefore cannot be compared to small cars currently on the market. The claim was echoed by the Department for Business, Energy and Industrial Strategy (BEIS), which also said that some smaller electric vehicles cost as little as £16,000.

But after being questioned further over a series of emails, the CCC performed an about-turn, admitting: “Our analysis is based on the size of the car, not on the size of the battery.”

It then claimed that the £13,000 figure was a “social cost” which excluded any additional tax, subsidies or “increased profit taken by manufacturers” compared to costs attached to conventional cars – but admitted that manufacturers are only now “beginning to see profits” on electric vehicles.

With a VAT bill of approximately £2,600 and the Government’s Plug in Vehicle Grant providing a £2,500 saving for drivers, the impact of VAT and the subsidy would simply add £100 to the £13,000 figure.

Dr Benny Peiser, the GWPF’s director said: “It is clear that the CCC’s net zero costings were incomplete, biased, and grossly misleading. Parliament was, in essence, misled and net zero was mis-sold.”

Andrew Montford, the GWPF deputy director, added: “The CCC model suggests that the public should reap huge benefits from buying an electric vehicle, but the reality on the forecourt is that they are much more expensive, even after the subsidy.”

A CCC spokesman said: “Battery costs are actually falling faster than we thought which means overall costs of the transition in this sector are likely to be falling.”

A BEIS spokesman said: “Production and running costs for electric vehicles have collapsed in recent years, with some now costing as little as 1p a mile to run. Electric vehicles owners don’t pay excise duty and also benefit from lower maintenance costs. We expect to see even more affordable electric vehicles on the market for customers to choose from.”

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