Let us keep the £500m raised from London-based vehicle excise duty says Sadiq Khan


Image credit: Greater London Authority

The Mayor of London, Sadiq Khan, has today urged ministers to 'play fair' by London in the future funding of the capital's transport network after the COVID-19 pandemic saw Transport for London's fares income collapse.

He called on the Government to allow the capital to keep the £500million raised annually from vehicle excise duty charged to London-based drivers.

The Mayor argues that despite this money being collected from drivers who live in London, ministers spend the huge sum almost exclusively outside the capital, with TfL left to fund maintenance of major roads in Greater London from its fare-dominated income.

Khan has warned that unless London is allowed to keep the £500million a year Londoners pay in VED, other ways of raising this money will be needed to help overcome TfL’s unprecedented financial challenges and achieve the aims of the Mayor's Transport Strategy.

TfL officials have been asked to investigate the feasibility of a new Greater London Boundary Charge for non-residents which would apply only to vehicles registered outside London which are driven into the capital.

A small charge of this nature could have significant benefits in terms of managing congestion, reducing emissions and encouraging more use of sustainable modes of transport. Income from the charge would also be reinvested in the capital’s transport network.

Every weekday 1.3 million vehicle trips are made from outside London into the capital. Around one million of these trips are into outer London alone and the majority of these journeys are made by vehicles registered to addresses outside of the Greater London boundary, highlighting that drivers from outside London greatly benefit from using the capital’s roads without contributing to their upkeep.

According to the Mayor, initial estimates suggest a scheme like the Greater London Boundary Charge for non-residents - if levied at £3.50 a day and applying only to non-Londoners - could reduce the total number of weekday car trips across the GLA boundary by 10–15 per cent and raise around £500million a year. The worst polluters could be charged more to encourage those who do need to drive to do so in the cleanest vehicles, resulting in further air quality benefits.

The Mayor’s move to begin examining the feasibility of a new charge comes as an independent review of TfL’s long-term future funding and financing options is published.

It found that this type of road-user charging could have benefits for Londoners – for example, reducing weekday traffic and emissions – and raise significant funds. Commissioned by the Mayor and the TfL Board in July, the review was carried out by an independent panel with significant experience of public policy and Government reviews.

The Mayor of London, Sadiq Khan, said: “Ministers have failed to play fair by Londoners when it comes to financing our world-renowned transport system. It is high time they did so.

"Londoners pay £500m worth of Vehicle Excise Duty every year, which is then spent on maintaining roads outside the capital. It is not fair on London that our drivers should subsidise the rest of the country’s roads and get nothing in return. The Government must allow London to retain its share of VED and to support the capital’s transport system properly as in other world cities. It’s not just transport – Ministers continuously hand out pots of money in a whole range of different areas that Londoners cannot access, which is hugely unjust.”

"If Ministers aren’t prepared to play fair, then we will need to consider other options to address this unfairness, such as asking people who live outside London and make journeys into Greater London by car to pay a modest charge, which would be reinvested in London’s transport network. As the independent review shows, we can’t go on expecting public transport fare-payers to subsidise the costs of road maintenance."

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