Text Size

Current Size: 100%

Budget 2021 Special: End of the road for the fuel duty freeze

Paul Tuohy's picture
fuel pumps

Fuel duty has not increased since 2010, a policy that’s somewhat difficult to justify when we are facing a climate crisis and have both a moral and legal duty to reduce our carbon emissions, a third of which come from transport with cars the main culprit. 

Almost three years ago, the UK Committee on Climate Change recommended that that the fuel duty freeze be ‘reconsidered’ if the country was to stay on track to meet the fourth and fifth carbon budgets, so it’s hard to understand why this policy remains a linchpin of successive Budgets, especially as it’s estimated that the freeze has resulted in an extra five million tonnes of CO2 and an extra 15,000 tonnes of NOx emissions. 

Tomorrow, Rishi Sunak has a chance to address the white elephant in the room, but, if ‘sources at the Treasury’ are to be believed, he will be the fourth Chancellor to continue the freeze, missing yet another chance to help reduce our dependency on the car and set us on the road to zero emissions.

To avert climate disaster, we must urgently reduce emissions from transport through a combination of zero emission vehicles and modal change. It is estimated that the fuel duty freeze has led to five per cent more traffic, 250 million fewer bus journeys and 75 million fewer rail journeys. If you own a car, the incentive to leave that car at home and choose to travel to by public transport has to be because it is more convenient and affordable to do so, but since 2010, bus fares have risen by 76 per cent and rail fares by 30 per cent. Just yesterday, rail fares went up by 2.6 per cent. If fuel duty remains frozen tomorrow making the car the more affordable transport mode, it sends entirely the wrong signal about travel choice. 

Public transport is crucial to a fair, healthy and sustainable future, but to encourage a greater shift to sustainable transport the Government must end the fuel duty freeze, scrap the old fashioned and unfair Vehicle Excise Duty, and review vehicle taxation as a matter of urgency. As revenue from vehicle taxation continues to decline due to fuel efficiency and cleaner vehicles, the Government should move towards a distance-based system of road pricing that varies by time of day, location, vehicle size and emission levels. This would be fairer to both the consumer and to society, reflecting more closely the impacts of individual journeys (including road danger, congestion, air pollution and carbon emissions), while supporting the transition to cleaner vehicles. To further encourage the shift to cleaner vehicles, the Chancellor should also introduce targeted incentives to help businesses and operators switch to cleaner vehicles. 

Only when we have a taxation system in place that better reflects the true cost of motoring, and actively incentivises people to swap their cars for public transport and active travel, will we be on route to a more sustainable transport future. With the UK hosting COP26 later in the year, all eyes will be on the Government to make good on its environmental commitments; traffic clogged roads and incentives that promote car use will not look good.
Read the first two blogs in our Budget 2021 series: Keeping us on route to a sustainable transport future and Getting back on board post Covid.