News of the UK government's decision today (28 July) to approve grants of up to GBP5,000 (US$7,790) for ultra-low carbon vehicles will come as an enormous relief to manufacturers.

There had been considerable doubt up to now that such a generous allocation would be made at all - or at best reduced - but the decision to go ahead with the GBP5,000 subsidy has given a considerable boost to the EV sector.

The new UK coalition conceded it had accelerated the programme or in government speak "looked at more quickly" - as realisation dawned considerable investment from overseas manufacturers - initially from Nissan but also potentially from a raft of others - could be dependent on the incentives.

That the programme has been fast-tracked is good news for low-carbon manufactures including those from the electric, plug-in hybrid and hydrogen fuel cell sectors - but the UK is emphasising the "exceptional" nature of the decision.

The last thing the government wants to encourage at this stage of non-stop budgetary austerity is a stampede of lobbyists arguing their case in the light of today's car subsidy news.

And clearly, the start-up costs for consumers and fleet buyers is not exactly cheap. Nissan's Leaf - initially assembled in Japan but to be produced in the UK's North East city of Sunderland from 2013 - will be a shade under GBP24,000.

For consumers at least - still in the teeth of a recession no matter how many green shoots are talked about - finding GBP29,000 without the incentive for a step into the unknown could well have proved just too much.

And Nissan was keen to stress today that its GBP24,000 price tag includes the - not inconsiderable - VAT hike from its current 17.5% - itself spiked from an economy-boosting rate of 15% recently - to 20% from New Year's Day.

Business Secretary Vince Cable has been telling anyone who will listen recently how the UK government will encourage the auto industry through means often other than direct subsidy - by encouraging new lending possibilities and training for example - but then his government - of which he is very much a senior member - slaps on the steep tax increase.

He'd argue there's no choice of course. A GBP170bn deficit is a massive, gaping hole whichever way you look at it but it certainly doesn't help the auto industry.

And clearly the government is hoping where Nissan leads others will follow and decide to put their expertise in the hands of a British workforce only too willing to embrace electric technology.

The GBP43m EV pot is up for review after around a year. There will be a significant amount of UK automotive workers who hope the government finds a way to make it continue.