The Government has responded negatively to the Parliament Transport Committee on road pricing with these words: “……. as set out in the Chancellor’s previous letter the Government does not currently have plans to consider road pricing. Given this, the Government does not have further views on the Committee’s recommendations for the ways in which road pricing should be considered. More broadly, as noted previously the Government will need to ensure that the tax system encourages the uptake of EVs, and revenue from motoring taxes will need to keep pace with this change, while remaining affordable for consumers. Our tax system has already begun to adapt to this transition. From 2025, electric cars, vans and motorcycles will pay Vehicle Excise Duty in the same way as petrol and diesel vehicles. The Government will continue to keep all tax policy under review.”
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.
Two days ago (on 17/01/2022) I pointed out on this blog that the Mayor’s Budget document spelled out that road pricing in London was definitely anticipated. His budgets for future years depend on it.
It became clearer what he is planning yesterday when both the BBC and London Evening Standard provided more details of the Mayor’s plan – see links below.
His proposals include a small daily charge on everyone who drives in London – perhaps £2. He claims this is required based on a report commissioned by City Hall that found that a 27% reduction in London’s car traffic was required by 2030 to meet net-zero ambitions. He has the powers to introduce this but he is also considering a London entry charge for anyone who drives in from outside. A boundary charge (of perhaps £3.5 per day) would require Government consent when they don’t currently favour it.
Longer term, by the end of the decade, he would like to introduce a pay- per-mile system although the technology to do that is not yet available.
In the meantime it looks very likely that he will extend the ULEZ to the whole of London.
The Mayor has said “I have got to make sure there is a disincentive to drive your car, particularly if it is petrol or diesel, when there are alternatives, like public transport”. Yes he would like to force everyone to use public transport which of course he has a financial incentive to advocate. It’s yet another reason to take TfL out of the control of the Mayor.
The justification for these measures is to tackle air pollution and defeat climate change. It certainly won’t do the latter and there is a very good debunking of the claims of death from air pollution on the web site Not a Lot of People Know That – see link below.
Improving air quality is certainly something the Freedom for Drivers Foundation supports but there needs to be a clear cost/benefit and the measures our national Government has been taking have been by far the most effective to reduce air pollution. London’s measures introduced by Sadiq Khan have been enormously financially damaging with very little benefit. He postures about saving the world while spending your money ineffectively.
Gareth Bacon, Conservative Leader on the Greater London Assembly, has published a most interesting document entitled “Highway Robbery – The Case Against Road Pricing in London”.
He makes the case very well and argues that Londoners should have a wide choice about the modes of transport that they use and that car journeys are quite essential for many trips in outer London. He highlights that Mayor Sadiq Khan may be looking at road pricing simply as another way to fix his TfL budget problems.
But it would undoubtedly lead to much higher costs on vehicle owners – perhaps 70% more than they pay in taxes at present very little of which is spent on the road network. Meanwhile public transport users in London are subsidised by over £1 billion per annum. Mr Bacon suggests the Mayor should rule out road pricing in London while committing to spend more on London’s roads. In particular he supports the Mayor’s claim that some of the VED tax paid by London’s drivers should be given to the Mayor but only on condition that it is hypothecated to spend on road maintenance.
We have opposed Sadiq Khan’s stated wish to grab some part of the VED tax take as it might give him control of it and lead to higher tax rates for no benefit. But if it was strictly controlled by the Government on the suggested basis it may be more arguable. But will central Government and the public accept that less money is thereby available to spend on the national highway network?
Surely it would be better to cut out the excessive bus subsidies and the over-generous concessionary fares (payable to everyone even when they can afford the cost) which would easily pay for improved maintenance of London’s roads?
Record numbers of people are leaving London according to a report by the Office of National Statistics (ONS). In 2018 some 340,000 residents left London while 237,000 moved in meaning a net loss of 103,000. The national press attributed this to high house prices and a fear of crime. No doubt they contributed but perhaps the congestion on the roads and on public transport is also making London a less pleasant place to live while car owning and public transport costs are rapidly rising.
Sadiq Khan seems to be making matters worse rather than fixing them. The report mentioned above shows some of the negative aspects of what he has done and what he is planning to do. That is surely contributing to Londoner’s giving up on the capital for a better life elsewhere.