Drivers will be offered discounts of up to £3,750 on new electric cars as the Treasury releases a £650m fund to get the scheme up and running, substantially more generous than Jeremy Hunt’s scheme when the Conservatives were in power.

There will be a cap on the value of the electric cars with the maximum car priced at £37,000 or under.

There was a similar scheme until June 2022 but it was only worth £1,500, when the last Conservative government withdrew the grant, which was available for any electric vehicles, including vans and trucks.

Manufacturers will be able to apply to join the electric car grant (ECG) with eligibility dependent on the highest manufacturing sustainability standards, the government said.