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The Treasury should act now on road pricing

Norman Baker's picture

Never put off to tomorrow what you can put off until the day after tomorrow. That seems to be the mantra of Treasury ministers who know that road pricing is inevitable but are trapped like rabbits in the headlights by the prospect of having to implement it. 

It is inevitable because fuel duty is slowly disappearing down the plughole as the vehicle fleet rightly moves from petrol and diesel to electric. And the Treasury isn’t going to stand by and see an annual income of £40 billion disappear from its accounts. 
As it is, the fuel duty rate has remained unchanged since 2011, while public transport fares have continued rising, leading to a move of traffic off rail and bus and onto the private car. This is not a sensible policy and goes against the Government’s own green ambitions. 
Road pricing is not a new concept. Different types of schemes are already in place in many countries, including Singapore, Sweden, Norway, France, and Italy. Indeed in a small way it is already in this country, with tolls in place for the use of specific roads like the M6 toll road bypass or the Dartford Crossing charge, or cordon-based set charges like the Congestion Charge and Ultra Low Emission Zone in London. 
In the UK, there have long been calls for the introduction of a more comprehensive road pricing system. As long ago as 2004, the Department for Transport published a report entitled Feasibility Study of Road Pricing in the UK, which said road pricing was ‘becoming feasible’ and identified a number of potential benefits. 
We need a scheme that replaces fuel duty with a system of distance-based road pricing that vary by time of day, type of road, vehicle class and emission levels. Limiting such a scheme to motorways and motorway-equivalent A roads would encourage travellers to use the parallel rail lines that almost always exist, as well as protecting those in rural areas who have fewer alternatives to the car. 
Such an approach would have many benefits: 

  • It would support the transition to cleaner vehicles by charging diesel and petrol vehicles proportionately more 
  • It would promote the use of public transport, as well as car sharing 
  • It would promote driving at less busy times of day and cut overall vehicle miles, thereby reducing congestion, air pollution and carbon emissions 
  • Based on the ‘polluter pays’ principle, it would be fairer to the consumer and to society, reflecting more closely the negative impacts of individual journeys 
  • Less car dominance would reduce road danger and improve public health. 

As well as replacing fuel duty, the opportunity should also be taken to abolish Vehicle Excise Duty (VED). VED is fundamentally flawed in that it is a tax on ownership of a vehicle rather than its use. Nor are the present bands sufficiently differentiated to encourage motorists to move to cleaner vehicles. 
There is also a strong case for a wider roll-out of localised distance- or cordon-based road pricing schemes within our cities, with the money being collected by local authorities and used to promote public transport and active travel. Such local schemes are a good way to combat congestion and pollution. 
So Treasury ministers, it’s time to grasp the nettle. You should now launch a review of existing vehicle taxation and set a plan for moving towards distance-based road pricing as a way of supporting net zero ambitions. This should be through a Green Paper with encouragement for cross-party discussions and involvement of bodies like the Office of Rail and Road. 
I believe it is possible for the concept of road-pricing to be an acceptable and even attractive proposal to the public, particularly if the government stresses that it will be revenue neutral for the average motorist and draws attention to all the advantages of such a scheme. But the longer they leave it, the less fuel duty income there will be and the more difficult any transition. 
The time to act is now.