Speculation has arisen this week that the Chancellor is weighing up options for a national system of road user charging, with motoring groups and a prominent consultant favouring a ‘pay per mile’ approach.

This coincides with Prime Minister Boris Johnson’s announcement today that the Government’s 2035 ban on the sale of new petrol and diesel cars will now come forward to 2030. He also pledged £1.3Bn to accelerate the roll out of electric vehicle charge points in addition to £582m to be spent on grants for those buying low emission vehicles and £500m for electric vehicle battery development.

Commenting on the prospect of a national pay per mile scheme for drivers, Amey senior strategic consultant Gary Raccuja said “the time is right” to take action on the issue of depleting fuel duty revenues. Reports suggest greater take up of electric vehicles could cost the Treasury £40Bn in tax.

“It is important to look at this sooner rather than later because every single year revenues from fuel duty are declining,” said Gary, who won the Wolfson Prize in 2017 for his ‘Miles Better’ proposal for a pay per mile tax system which would see both fuel and vehicle excise duty abolished.

He added that such a system would create greater transparency around the cost to society of making journeys by car. “Those include things like congestion – we as motorists often complain we are ‘sitting in’ congestion rather than thinking we are creating congestion,” he said, as well as the risk of accidents and the release of emissions.

Sue Percy CBE, Chief Executive, CIHT said:

"CIHT believes that polices in support of road pricing would have a multitude of benefits. Road pricing has the dual benefit of being able to be at the forefront of economic recovery by creating the correct sustainable funding regime and support a route to net zero for transport."

"In our recent ‘Improving Local Highways’ review, we also outlined the constructive steps that could be taken to enable a national highway network to support a route to net zero for transport."

"CIHT believe that there is a need to identify clear funding streams to replace the gap in fuel sales, for example through road pricing in some capacity. There has been a recognition of the need to plug the income gap potentially left by a switch to electric vehicles. CIHT has called for the government to further investigate a more comprehensive road pricing system for England in our recent representation to the Comprehensive Spending Review 2020."

Also commenting on road pricing, AA president Edmund King said: “While the push toward electric vehicles is good for the environment, it is not good for the Exchequer. The Government can’t afford to lose £40Bn from fuel duty and car tax when the electric revolution arrives.”

He added: “It is always assumed that road pricing would be the solution but that has been raised every five years since 1964 and is still perceived by most as a ‘poll tax on wheels’.” The motoring group proposes a charging system whereby every driver gets 3000 ‘free’ miles and must pay a small charge beyond this limit.

Meanwhile research by the RAC indicates that around 40% of drivers believe a pay per mile system would be fairer than the current fuel duty arrangements. Motorists also want to see tax revenues from any replacement for fuel duty reinvested entirely in the road network, the group reports.

“While not paying car tax is clearly an incentive to go fully electric at the moment, we will very soon need a system that can levy tax on both conventionally fuelled and battery electric vehicles fairly, said RAC head of roads policy Nicholas Lyes.

“If this isn’t addressed, we risk finding ourselves in a situation where petrol and diesel drivers continue to pay all the tax for using the roads which is unsustainable.”

He added: “Drivers are firm in their views that any new system must not be used as a way to increase the tax burden on them.”

(Photo: Mariordo and licensed for reuse under this Creative Commons Licence)