Between Vehicle Excise Duty (VED) and fuel duty, the Treasury typically pockets around £40bn each year, a not insubstantial amount of money, but as the push for greener vehicles gets into its stride, there will very clearly be a hole in that revenue, and it’s one that will need plugging.
The two important questions are: Where will that shortfall come from? And will there be an overlap between VED and whatever new plan is put in place?
Per mile charging
The Chair of the Transport Committee, Lilian Greenwood, has proposed that a national debate take place to discuss the issue, claiming that a debate would be “An opportunity to discuss the nation’s use of road space, cutting carbon emissions, tackling congestion and how we should prioritise active travel.”
“Tackling the climate emergency is essential, but this is about more than what we must do to meet that challenge, it’s also about our health, and the sort of towns and cities we want to live in.”
A cynic may say that with such focus on health, air pollution and congestion, rather than encouraging or incentivising other forms of transport or motive power, it’s pretty much guaranteed that “this isn’t about pricing drivers off the road” will pretty much exactly equate to that.
Research by the RAC has shown that 75% of motorists are worried that any change in how we pay for the roads will result in them paying more, and with sales of new Battery Electric Vehicles rising by 122% in the first nine months of 2019 (despite there being an overall 2.5% downturn in new car sales), we can clearly see that the government will need to implement a new pricing strategy sooner rather than later.
It’s long been argued that whatever form of taxation (such as the current VED) is added to the price of fuel; motorists who use the roads, will pay for the roads, but it’s quite possible that adding a surcharge to fuel will price hundreds of thousands of families off the road, and that still wouldn’t be a solution to the whole electricity debate.
Further still, it’s not quite as simple as adding tariffs to our domestic energy supply either – what of those motorists that haven’t been able to afford, or want, to make that switch over to ‘green’ motoring? It’s pretty clear that there must be some overlap between the systems.
Back in 2005, an attempt was made to introduce, or at least, discuss, a new way to charge to motorists for using the roads. The idea being that small cars on small or uncongested roads would pay less than large cars using large or congested roads.
The examples used at the time were £0.02 per mile on uncongested roads, and as much as £1.34 where traffic was a problem. Each car would be fitted with satellite technology, which could track and calculate charges as the car was driven.
Unsurprisingly, 1.8 million motorists (around 6% of all drivers at the time) signed a petition against the scheme in 2007, and it was duly dropped. Fears of extra stealth surveillance and taxation were the main concerns.
Worryingly, we’ve become so used to in-car technology, and the interference with our driving, that it will soon be mandatory to allow it to limit our speed, which of course means tracking our movements. As Lilian Greenwood points out – we’re much more aware of issues such as climate change, pollution and congestion now. So could this be part of the next attempt to monitor driving and apply charges?
There has been talk of ‘charge neutral’ and ‘congestion neutral’ pricing, but reading between the lines of the earlier statement by Greenwood, it would seem that congestion and air pollution are two of the hottest topics to be covered, so it’s doubtful that congestion neutral pricing will happen.
Given that any pricing structure would need to cover congestion, air pollution, emissions, road usage & maintenance, fuel duty and electric charging, it would seem doubtful that we’d be looking at the lower end of per mile charging.
The Transport Committee have proposed a national debate take place in 2020, in which these issues can be discussed, and put forward to the public for their input: “This isn’t about pricing drivers off the road, it’s about making sure that as many people as possible have a say in future plans so that we can manage the changes to come. The Transport Committee want to kickstart that conversation.”
Rarely have charges been introduced that favour the motorist, we often hear about stealth taxes and how it’s the motorist that’s being made to make up any shortfalls of revenue, we’d suspect this won’t be much different.
How should the government tackle this problem? What would be a fair pricing scheme? Do you think it could price some families off the road? Let us know in the comments.