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Is pay-by-the-mile road pricing back on the agenda?

2-minute read

Catriona Smith

11 February 2022

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Driving on Britain’s roads could get more expensive as the government considers ways to recover funds lost in tax as people switch to electric vehicles.

With the UK government’s commitment to ban the sale of new petrol and diesel vehicles by the end of 2030, there will be a huge financial hole in public finances with a loss of funds from Vehicle Excise Duty (VED) – known as car tax – and fuel duty.

MPs say the UK must introduce road pricing

The government is considering a national road pricing scheme to help recover money currently raised through motoring tax.

This comes as a new report into road pricing, published by the House of Commons’ Transport Select Committee on 4 February 2022, says the 'situation is urgent'.

Fuel and excise duty currently raises £35 billion a year, which goes towards maintaining and developing roads across the UK.

MPs say the government must act now and there's now 'no viable alternative to a road pricing system'. The report adds that the government should begin developing a solution to motoring taxation by the end of 2022.

The government has two months to respond to the report.

Zero emission vehicles and road pricing

This report follows last year's proposals from Greener Transport Solutions, a not-for-profit group, which were published as part of the government’s inquiry into zero emissions vehicles and road pricing.

The proposals say road pricing is "the most effective way to tackle road congestion and pollution, and now there is a fiscal imperative.”

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Higher rates proposed for vans and lorries

The Greener Transport Solutions proposals say that drivers should pay for the roads through a scheme calculated on a vehicle’s weight as well as mileage.

Car drivers would be charged a flat rate of 2p a kilometre, while heavier vehicles would be subject to higher rates. It proposes a rate of 3p for vans and 6p for lorries.

It’s also suggested that these rates should increase to take into account axle weight and wear and tear to the road surface.

Incentivising a switch to electric vehicles

Not paying VED and fuel duty is one of the main incentives for consumers to make the switch to an electric vehicle (EV), although MPs have warned this isn’t enough to meet the ambitious targets for phasing out petrol and diesel cars.

The Telegraph reports that there’s a ‘mountain to climb’ when it comes to the prices of plug-in cars.

Ultimately, the green transport group says more needs to be done to encourage people to buy an EV to avoid a ‘Big Bang’ in 2030. Their proposals include:

  • discounts on the cost of EVs if people opt-in to a road pricing scheme before 2030
  • similar discounts on second-hand EVs
  • money towards an EV if you scrap your current vehicle and it’s more than 10 years old

It’s important to note that this is only a proposal, and the government hasn’t yet indicated how they plan to balance motoring taxation and this commitment to the green agenda.

RAC Foundation director Steve Gooding said: "Drivers choosing to go electric deserve to know what is coming next - particularly if the promise of cheap per-mile running costs is set to be undermined by a future tax change."

Meanwhile Silviya Barrett, head of policy at the Campaign for Better Transport, said: "Road pricing, based on distance travelled and how polluting a vehicle is, can be a fairer system for everyone."

What do you think of the road pricing proposals? Let us know in the comments below.

This article was first published on 20 May 2021 and updated on 11 February 2022 after a new report was released

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