How could Andy Burnham's new 2p per mile driveway rule affect Ofgem?
Ofgem may need to adjust oversight due to new EV charging fee structure The introduction of a new 2p per mile driveway rule, coupled with the slashing of VAT on domestic electricity charges from 5% to 0%, fundamentally changes the cost structure for electric vehicle owners. This creates a significant disparity between subsidized home charging and public charging, which remains subject to 20% VAT. As the energy market oversight body, Ofgem's regulatory framework may need to adjust to manage this new market reality and address calls to abolish VAT on public EV charging.
- Effect
- Mixed
- How direct
- 2 steps, 1 inferred by Brind
- When
- Within weeks
- The story
- Gone quiet
How it reaches Ofgem
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Andy Burnham introduced a policy in October following a Prime Minister decision to slash VAT rates on domestic electricity charges from 5% to 0%. This change affects electric car owners charging at home or in off-street parking. For those using a smart tariff, the VAT cut reduces the cost to 7p per kWh, or approximately 2p per mile.
The full event1independent outlet -
Andy Burnham introduced a new 2p per mile driveway rule in October, which coincided with the Prime Minister cutting VAT rates on domestic electricity charges from 5% to 0%. This change reduces fees for EV owners topping up at home using a smart tariff to 7p per kWh or around 2p per mile.
1 report connects these two. Brind only summarizes; follow a link to read the reporting itself.
- aol.co.uk Oct 20
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system or group of people governing an organized community, often a state
Everything about government -
The policy creates a sharp contrast between the low-cost domestic charging (2p per mile) and public charging, which is still charged at 20% VAT, with average retail park fees at 52p per kWh, or around 12.6p per mile. This structural change in pricing and access requires market oversight.
No report states this step directly. Brind drew it from the reporting on each side of it, so treat it as an informed guess.
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United Kingdom government non-ministerial department
Everything about Ofgem
Tap any step to see the evidence behind it.
The facts so far
As reported. Each one links to where it comes from.
- Andy Burnham introduced a new 2p per mile driveway rule in October.aol.co.uk
- VAT rates on domestic electricity charges were cut from 5% to 0%.aol.co.uk
- Home charging using a smart tariff reduces fees to 7p per kWh or around 2p per mile.aol.co.uk
- Public charging fees are still charged at 20% VAT, averaging 52p per kWh or around 12.6p per mile.aol.co.uk
Why it matters
For Ofgem, the regulator of the energy market, this policy shift introduces a complex regulatory challenge. The creation of a significant price disparity between subsidized home charging and high-VAT public charging requires the oversight body to assess whether the current market rules adequately manage the transition to clean transport and ensure fair competition.
This situation is further complicated by industry calls, such as those from Matt Galvin of Polestar UK, urging officials to abolish VAT on public EV charging. This pressure highlights the need for Ofgem to potentially review the regulatory framework governing charging infrastructure and pricing to maintain market balance.
What we don't know yet
- Will Ofgem initiate a formal review of the VAT application across all EV charging methods?
- How will the market respond to the continued disparity between domestic and public charging costs?
What would change this answer
Who else could feel it
Other possible ripples from the same event.
Reporting
- aol.co.ukOct 20
Keep going
Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.