Road Pricing Is Coming

Road pricing has proved politically unacceptable to date. But a report from the House of Commons Transport Committee published today (4/2/2022) makes it very clear that it needs to happen and very soon (see link below).

The problem is that VED and fuel duty generate 4% of overall tax receipts. But as people switch to electric vehicles almost all of that will be lost by 2040. In addition traffic congestion might become worse as the cost of journeys will be reduced when nobody is paying for fuel.

The Transport Committee rightly points out that the plethora of local schemes that are now appearing such as the London Congestion Charge/ ULEZ taxes and CAZ schemes in other cities mean too much complexity is the result. There needs to be a single unified national scheme.

How to provide that? Telematics is the answer they suggest when a black box in every vehicle could track usage and enable charging based on distance travelled, roads used, vehicle type used, etc. It could be an ideal solution in essence to meet several policy objectives and yet be user friendly in operation.

The Committee suggests that whatever options are chosen to replace fuel duty should be “revenue neutral” and not cause drivers as a whole to pay more than they do currently. This is quite essential as that was one of the major objections to road pricing in the past. It could enable the Government to raise taxes on motoring when motorists already pay over £50 billion in taxes (only a very small fraction of the money raised is spent on improving our roads – about £7bn).

The Committee also say that the situation is urgent and a recommendation for a road pricing solution needs to be developed by the end of 2022. The only obvious omission from the Report is the lack of consideration of the cost of a national road pricing scheme.

Comment: the Committee’s Report is certainly worth reading. I do not see any viable alternative to their proposals. No doubt there will be opposition from some motoring groups who like to live in the past but they won’t have any other practical solutions to put forward.

As the Report says: “The Government must start an honest conversation with the public on the funding implications for road development and maintenance and for other essential public services of decreased revenue from vehicle excise duty and fuel duty”. I agree but readers should add their own comments to this blog – but please read the Committee’s Report first.

Roger Lawson

Transport Committee Report:

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