Fleet News

Alternative fuel demand may mean PowerShift cash crisis

ROCKETING demand for alternative fuels could lead to a cash crisis at the Government-backed TransportAction PowerShift scheme as demand for vehicles could overwhelm its grants budget. PowerShift provides grants to cover up to 75% of the extra cost of an alternatively-fuelled vehicle compared to its traditionally-powered counterpart, in a bid to kick-start demand for the fuels.

But the organisation has seen its grant to help fleets frozen at £10 million a year, with an extra £1 million for Scotland, for the next three years, raising the risk it may be unable to fund some fleets. The announcement could lead to a shake-up at the scheme to spread grants more thinly to cover vehicle purchases. The financial benefits from lower fuel costs are now guaranteed for several years, following Chancellor of the Exchequer Gordon Brown's Budget 2001 freeze of gaseous fuel duty until 2004.

About 2,000 further applications have already been sent in and Jonathan Murray, head of PowerShift, has admitted that demand is set to rocket. The day after the Budget statement, Murray was in talks with Government officials about the development of the scheme. He said: 'The announcement was good news for alternative fuels because it allows fleets to invest with confidence for in the knowledge there will be savings ahead for several years. We are going through a process of reviewing the agreed level of support.'

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