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Councils want to drive motorists out of town but how is the exchequer going to plug its black hole?

Article by Richard Massett,

LTDA Chairman, and Chairman of the London Cab Ranks Committee

With petrol and diesel fuelled vehicles set to be phased out over the next 10 to 20 years and the Government committed to a target of reaching zero emissions by 2050, you have to wonder where the £40 billion cash take the exchequer makes from motoring will come from in the future. The £40bn is largely raised from fuel duty and VAT.

As things stand, this will reduce to nil and with no duty presently being levied on the electricity used by motorists the Government would be left with a massive black hole in its finances. So, obviously things must change and the tax receipts must come from somewhere else.

No doubt much of it will still be raised from motorists. The two ways this can be done would be to either add tax to the electricity costs of motorists, so that the power used would become at least as expensive as the fuel currently used. The other alternative, and the most likely, would be to introduce road pricing whereby motorists will be charged for using roads.

The idea of road pricing has, of course, been around for years and has been avoided by politicians, who feared the anger it could bring upon themselves if they were to be held responsible for its introduction. Now, faced with a looming black hole, it seems highly likely that road pricing will be the way to go. It would probably be applied nationwide, not just confined to the big cities, with drivers having to pay various rates according to where and when they drive.

As well as the loss in fuel duties, it should also be considered that the motor manufacturing industry makes a massive contribution to the nation’s economy, with close on 200,000 people directly employed and hundreds of thousands more across the wider industry. So, with many local councils currently waging war against the motorist, what will happen to the economy if they are successful in removing cars from our streets?

Where would the tax receipts come from which are paid by all the workers in the industry and where are the alternative jobs? Where would all the foreign exchange come from that we currently earn from selling vehicles abroad?

We all want to see improvements in our air quality and to make our towns and cities safer and more pleasant for pedestrians, but we can’t afford to ignore the likely consequences for the economy of some of the policies that are currently being pursued.

I totally buy into schemes that bring about major improvements for pedestrians in London, and other crowded towns, and I do think that cycling should be made as safe as possible, but I have doubts about all the focus and massive expenditure on cycle schemes.

I feel that some of that expenditure could be better spent on perhaps widening the pavements in some areas rather than putting in more infrastructure for cyclists that frequently only benefits comparatively few people. After all, we all walk to a certain extent in our daily journeys, while cycling is undertaken by a relatively small minority.

In fact, when the Mayor of London started investing large sums of public money into cycling facilities, it was a transport mode used by only 2% of London commuters and the target was to increase that figure to 4%. I haven’t heard much recently about the numbers now commuting by cycle, so while the numbers may have gone up, even if they have increased by 100%, they would still only stand at 4%. The vast majority of people in London, maybe 96%, have never cycled and are never likely to, however much is spent on infrastructure.

But are the priorities right? For example, why shouldn’t walking and public transport be placed above cycling in the pecking order? This even more pertinent now that we are seeing electric bikes scattered around.

The use of these would seem to significantly reduce the often-quoted health benefits associated with cycling.

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