The cost of electric cars is projected to fall rapidly over the next two to three years as energy prices normalise and electric car production costs continue to fall. DfT forecasts are that by 2026, a typical fully electric car will cost the same to lease and operate as an equivalent petrol car, once lower running costs are considered. From 2027 onwards the forecast is that it will be cheaper to lease and operate a fully electric car than a petrol equivalent.

The aviation sector, including business aviation, is important for the whole of the UK economy and supports connectivity, direct economic activity, trade, investment and jobs.

The Department is taking measures to reduce emissions from aviation. Its Jet Zero Strategy sets out how the sector can achieve net zero aviation by 2050 without requiring additional government interventions to limit aviation growth, by focusing on new fuels and technology.

The Government is driving the demand for sustainable aviation fuel in the UK by mandating its use from 2025, with at least 10 per cent of jet fuel to be from sustainable sources by 2030 and is seeking to develop a SAF industry in the UK. The Government is supporting production plants with funding but recognises that there are barriers to investment.

In April, the Government published an independent evaluation by Phillip New on developing a UK sustainable aviation fuel industry. In response to the report’s recommendations, the Government has committed to work in partnership with industry on options to increase future revenue certainty of UK SAF plants and on actions for stabilising the UK feedstock market. If required, following that work, the Department for Transport will consult on policy options in the summer.

The Government is committed to keeping the transition to electric vehicles (EVs) affordable for all consumers. Government grants have been in place for over a decade to help reduce the up-front purchase price of EVs. These grants remain available for the purchase of zero emission vans, trucks, wheelchair accessible vehicles, taxis and motorbikes.

Once purchased, EV owners benefit from lower operational and maintenance costs including favourable taxation policies.

The Government is also committed to ensuring EV charging remains affordable for all EV drivers. Most EV drivers charge overnight at home where they can access cheap and flexible tariffs. This is a trend that the Government expects will continue. The Government continues to support and encourage innovations to ensure that EV drivers, who do not have their own home chargers, can benefit from cheaper domestic electricity tariffs, such as cable gulleys and peer-to-peer charging schemes allowing owners to rent out their home chargepoints.

The price of HVO is ultimately driven by market conditions and production costs, however, the operation of the RTFO is the Government’s primary mechanism for addressing the cost difference between fossil fuels and renewable fuels such as HVO.

Ministers have not had any conversation with Cabinet colleagues recently regarding price of HVO specifically. But the Government recognises the important contribution that fuels such as HVO can play as it works to decarbonise transport.

The temporary VAT reduced rate came into effect on 15 July 2020 and was initially scheduled to end on 12 January 2021.

In order to continue supporting the cash flow and viability of over 150,000 businesses and to protect 2.4 million jobs, the Government extended the temporary reduced rate of VAT (five per cent) to goods and services supplied by the tourism and hospitality sectors until 31 March 2021.

The Government keeps all taxes under review, and any future tax decisions will be made at Budget.

In recognition of the fact that families should not have to bear all of the VAT costs they incur to meet their needs, households already benefit from a reduced VAT rate of 5 per cent on domestic supplies of gas and electricity.

Decisions on tax policy are made at fiscal events and the Government keeps all taxes under review.

Property transactions fell by as much as 50 per cent during the COVID-19 lockdown, and this downturn in the market meant that the future was uncertain for many people whose jobs relied on custom from the property industry. The temporary increase in the Stamp Duty Land Tax nil rate band was designed to immediately support the market, and jobs which rely on the sector.

The Treasury regularly holds discussions with the FCA on a range of issues. The Treasury does not routinely comment on specific companies.

The cost of a holiday is determined by tour operators and travel agents. VAT will be just one of the EU Exit factors that businesses will take into account when pricing holidays.

In the event of no-deal, the Government has prepared legislation that would mean that sales of holidays to the EU would be free of VAT, as is the case now for holidays to the rest of the world. If Parliament passes the Withdrawal Agreement, there will be no change to the VAT treatment of holidays to the EU during the implementation period.

The Government has vehicle grant funding schemes to assist with the upfront cost of purchasing electric cars, vans, taxis and motorcycles, as well as e-cargo bikes in due course. The development of the used market for electric vehicles will also make them more affordable for more people.

Owners of both new and used electric vehicles are able to take advantage of tax incentives which favour the least emitting vehicles. In addition, they can also benefit from local initiatives, such as free parking in some areas, as well as the Government’s infrastructure grant schemes, such as the Electric Vehicle Homecharge and Work Place Charging Schemes.

Further technology innovation should also bring the price of ultra low emission vehicles down in the long term. The Office for Low Emission Vehicles has awarded over £300m to support a range of industry led R&D projects that have driven forward ultra low emission technologies and strengthened UK industrial and supply chain capability.

The Department has not completed any work on the prices of flights connecting to the UK or on the competitiveness in the international aviation market of the proposed merger of the (non-UK owned) Emirates and Etihad airlines.

The price of bioethanol is set by the global fuels market and a range of factors will influence this, including production and raw material costs and the relative price of fuels and other commodities.

In September the Government published its response to a consultation on proposed amendments to the Renewable Transport Fuel Obligation. It is available at: https://www.gov.uk/government/publications/renewable-transport-fuel-obligations-order-government-response. The analysis of the costs and benefits of the proposals included in Annex A of that document identifies market price developments i.e. how renewable fuel prices change in relation to fossil fuel prices, as an area with some uncertainty. To address this uncertainty, the analysis considers the impact of our proposals under low, central and high projections of the price spreads between renewable fuels and fossil fuels.

The 15 year strategy for renewable transport fuels provided by the Government’s Response is designed to provide a strong and growing market in the UK which should benefit existing domestic investments as well as encouraging further opportunities in this area.

The review of embedded benefits related to Transmission Network Use of System demand charges is a matter for Ofgem, as the independent regulator. Ofgem is consulting on a draft impact assessment which considers various impacts of its proposed reforms.

The Department has received a number of stakeholder representations regarding the review of embedded benefits. These suggest that many embedded generation projects with capacity agreements from the 2014 and 2015 auctions will be largely unaffected; but some may be affected if they have assumed current levels of embedded benefit over a longer term.

The Capacity Market exists to provide back-up supply when needed.

Holders of capacity agreements are of course subject to strict termination fees where they are unable to fulfil their agreements. The Government remains confident that these obligations, alongside the future one-year-ahead auction, can be used effectively to mitigate any risks to capacity that arise between the four-year-ahead auction and the delivery year, so that security of supply is maintained.

Between 2010 and 2016, household energy bills in real terms increased by 9.2 per cent. For gas, the increase was 5.9 per cent, whilst for electricity, it was 13 per cent. This comparison is based on bills based on average consumption levels of 15,000kWh for gas and 3,800kWh for standard electricity.

Between 2010 and 2015 domestic energy consumption on a temperature corrected basis fell by 5.2%. Consumption data for 2016 will be published in Energy Trends on March 30^th.

The average base load wholesale price of electricity in the day-ahead market for the period January to November 2016 was £42 per megawatt-hour*.

*Source: Ofgem electricity prices, https://www.ofgem.gov.uk/chart/electricity-prices-day-ahead-baseload-contracts-monthly-average-gb

The Department has not made an assessment of the potential effect on electricity bills of future decisions on the deployment of onshore wind.

It is important that, as the costs of generating technologies fall, we move steadily to an operating model in which competitive markets deliver the energy on which our country depends. The Department has requested stakeholders’ views on how we can deploy electricity generation through competitive markets without the requirement for ongoing subsidy as part of our Industrial Strategy consultation.

The UK’s future relationship with EU electricity markets following its exit from the EU will be determined by negotiations between the UK and the EU. The future of the EU Internal Electricity Market will be determined by negotiations on the Commission’s proposals for market design. In both these negotiations the Government remains committed to getting the best deal for consumers.