Motorists in the UK will get a grant worth up to £5,000 from the government next year if they buy an electric plug-in car.

The coalition has decided to pay the subsidy, after it had already been mooted by the previous Labour government.

Carmakers had been putting pressure on the new government to announce the electric car subsidy and had warned the UK would not be attractive for new technology auto investment without it.

The government has earmarked £43 million for the scheme, which means anyone who buys an electric plug-in car from next January will get a 25% discount up to a maximum of £5,000.