Spring Statement 2025: missed opportunities for motorists?

The 2025 Spring Statement was Chancellor Rachel Reeves’ first major fiscal statement since the October 2024 Autumn Budget.

The Chancellor presented an update on the UK economy following a new set of forecasts from the Office for Budget Responsibility (OBR).

They forecast that growth will be halved to 1% in 2025.

This, combined with the fact the Spring Statement is not a formal budget, meant no big automotive announcements were expected.

The Chancellor did not disappoint – with many in the automotive industry now labelling the Spring Statement a "missed opportunity."

The Chancellor "provided no update on some of the issues affecting the automotive retail industry," says auto retail trade body the NFDA while the UK Government "missed an early opportunity to give the transition to zero-emission vehicles some welcome support," says fleet and leasing organisation the BVLRA.

"Today’s Spring Statement failed to acknowledge or address the uncertainty and lack of confidence surrounding the electric vehicle market," says its chief executive Toby Poston.  

EV motorist organisation EVA England agreed it was a missed opportunity to "address the prevailing cost barriers preventing the everyday driver from switching to electric."

"We hope EVs, as a key sector for growth, will be at the forefront of the Chancellor’s priorities in the forthcoming Spending Review," says its CEO Vicky Edmonds.  

During the Spring Statement, the Chancellor confirmed a full Spending Review will take place in June, ahead of the Autumn Budget later this year.

Here are some of the missed opportunities automotive wanted action on – and now represent areas the industry will continue to lobby on in the months ahead.  

EV car tax

In the 2024 Autumn Budget, the Chancellor announced big changes for electric car road tax. Starting from 1 April 2025, EVs will no longer be exempt from VED road tax. In the first year, new EVs will be subject to a £10 rate, with the standard rate of £195 a year applying from the second year onwards.

What’s more, EVs will also be subject to the controversial Expensive Car Supplement. This sees cars costing over £40,000 paying an extra £410 a year between years two to six.

Because of their higher prices, electric car drivers are three times more likely to be hit by the ‘luxury’ tax than petrol or diesel drivers.

It’s not just new EVs that are affected, either. Electric cars already on the road and registered between April 2017 and 2025 will also now be subject to the £195 a year rate. It’s the first time in history that such a retrospective charge has been applied.

Prices go up for older EVs between 2001 and 2017 too, but only to £20 a year.

The AA is not happy. While it believes that all vehicles should pay VED, electric vehicle tax should be set at a discounted rate to incentivise their purchase.

"The introduction of VED at the full rate from 1 April could have a negative impact on the future of EV ownership," says its head of roads policy Jack Cousens.

"Drivers tell us that incentives are still required at this early stage of adoption."

It could still be worse, though – there were also changes to the CO2-based first-year VED road tax rates for regular petrol and diesel cars.

The biggest impact will be felt from April 2025 by those buying the highest-emitting cars, with the first-year rate for a Range Rover V8 going up from £2745 to £5490…

Potholes

The government announced a £500m boost to road maintenance in England during the Autumn Budget, taking the total up to £1.6bn. The Department for Transport has now confirmed local authorities will start receiving this boost from mid-April.

However, councils must publish annual progress reports, or they’ll lose a quarter of the extra funding.

Prime Minister Sir Keir Starmer said broken roads were "not only risking lives but also cost working families, drivers and businesses hundreds – if not thousands of pounds – in avoidable vehicle repairs".

The PM put the cost of fixing the average pothole at £600.

As transport is a devolved matter in the UK, only councils in England will receive the additional funding.

The Local Government Association has estimated clearing the country’s backlog of road repairs would cost almost £17bn to fix, but no extra funds were announced in the Spring Statement.

EV public charging prices

If road tax for EVs is going up, another aspect should be cut, reckon lobbyists – the 20% VAT charged on public charging should reduce to 5% in order to match household electricity costs.

As things stand, those without off-street parking are being hit with a ‘pavement tax’ that is costing them nearly £5 a charge.

Lobby group FairCharge has long been calling for VAT on home and public charging to be equalised. Earlier in March, it delivered a letter calling on the Chancellor to take action.

The letter was signed by industry leaders such as JLR, Stellantis, Polestar, energy provider E.ON and even Greenpeace. To date, though, it has not worked.

EV Rapid Charging Fund

The EV Rapid Charging Fund was announced by PM Rishi Sunak in 2020. It was created to fund high-power grid connections at motorway service stations. 

However, the fund has remained in limbo ever since, and not a penny has been released. There is speculation the funds could now be diverted to other charging schemes or initiative to support the EV transition. The Chancellor made no announcement in the Spring Statement, but it could be a policy area for the future.

VAT on new EVs

Since January 2024, the SMMT has been calling for VAT to be halved on new electric cars. It recently renewed this call after Future of Roads Minister Lillian Greenwood confirmed the pledge to ban the sale of conventional new petrol and diesel cars from 2030 was "iron clad."

Halving VAT on new EV purchases for the next three years would give consumers an extra £7.7bn in additional buying power, it said.

Of course, the fact it would therefore cost the Treasury £7.7bn meant that many were not holding out hope that something like this will be announced on Wednesday. They were not surprised to be duly disappointed – but could it be an area of focus for when conclusions from the ZEV mandate review are announced?

Pickups

After a strange 'will they won't they' last year, the Chancellor finally confirmed in the Autumn Budget that the beneficial tax treatment of double-cab pickups with a payload of more than 1000kg will end. 

Instead of a flat rate of Benefit-in-Kind tax, they will switch to the CO2-based system used by other company cars from 1 April 2025. 

Nobody was surprised when the Chancellor chose not to reverse things once again in the Spring Statement.