PolicyLens

Green - Transport

Fund EV scrappage grants

Spend up to GBP 5bn a year on vehicle scrappage and electric-vehicle transition.

Last updated: May 2026.

Read the policy-specific methodology note

Policy baseline

Green transport plans include up to GBP 5bn yearly for vehicle replacement and cleaner transport. Deadweight subsidy is the main risk.

  • Targets car owners switching vehicles.
  • Higher-income drivers may capture grants.
  • Emissions gains depend on additionality.

Core trade-offs

The direct beneficiaries are drivers receiving grants and ev suppliers. The costs fall mainly on taxpayers and used-car buyers. The main economic question is subsidy may pay for purchases that would happen anyway.

  • Drivers receiving grants and ev suppliers gain most directly.
  • Costs fall mainly on taxpayers and used-car buyers.
  • Key risk: subsidy may pay for purchases that would happen anyway.

Fiscal impact by 2028-29

+GBP 2.0bn to +GBP 8.0bn. Central estimate: +GBP 4.0bn.

  • Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
  • Main channel is the scored tax, spending or delivery change.
  • Offsets depend on tax receipts, behaviour and pass-through.
  • Range reflects uncertain implementation and economic response.
  • This is not an official costing.

Economic impact by 2028-29

  • Jobs: Green construction and supply-chain jobs rise; fossil-linked jobs face transition risk.
  • Wages: Skilled retrofit and energy workers may gain; households gain only if bills fall.
  • Prices: Upfront costs are high; long-run energy bills may fall if delivery succeeds.
  • GDP / productivity: Potentially positive through lower energy imports and innovation; delivery bottlenecks can weaken returns.

Assessment

This is a real trade-off, not a free gain. Drivers receiving grants and ev suppliers benefit, while taxpayers and used-car buyers bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

  • Supply-chain limits: Skills, grid connections and materials can delay delivery.
  • Cost overruns: Retrofit and energy projects often face uncertain unit costs.
  • Weak additionality: Public money can replace private investment rather than add to it.

Safeguards

  • Publish project pipelines and unit costs.
  • Use competitive procurement where possible.
  • Report additional private investment mobilised.

Academic evidence

UK government evidence

Green Party of England and Wales, 2024

Green manifesto

The manifesto defines the tax, spending, climate, housing and public-service proposals modelled here.

Used to define the scenario, not as an official costing.

Manifesto for a Fairer, Greener Country (2024)

Climate Change Committee, 2025

Climate progress report

CCC reports persistent delivery gaps across buildings, transport, power and land-use decarbonisation.

Supports the need for investment while cautioning on deliverability.

Progress in reducing emissions (2025)

HM Treasury, 2025

Spending Review baseline

Spending Review settlements set the counterfactual for departmental capital and resource budgets.

Used to separate new spending from existing baselines.

Spending Review 2025 (2025)

Sources

Other Green policies

PolicyLens estimates are illustrative and should not be treated as official costings.