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MPs want national road pricing discussion: Should pay-per-mile charging replace fuel duty and VED?

14 Oct 2019

The Transport Committee have set their sights on starting a national debate about road pricing – something that has been lacking for more than a decade since the then Labour Government’s road pricing plans were abandoned. 


MPs on the committee would then launch a formal investigation in 2020 about whether pay-per-mile driving is a viable future alternative to fuel duty and vehicle excise duty (VED).

The committee would start discussions on how drivers might be charged to use the road network, not just through a per-mile basis but also via congestion charges, HGV levies, workplace parking levies, and low emission and clean air zones.

 

In 2007 the then-Labour government backed away from road pricing after an online petition against any such scheme attracted 1.8 million signatures.

The £40 billion annual income from Fuel Duty and Vehicle Excise Duty is likely to decline sharply in future, and may end entirely if the Government keeps its pledge to fully decarbonise road transport within two decades. 

 

This income will need to be replaced if the Government is to continue to invest in transport infrastructure and prepare the transport network for a new greener future.

The committee chair, Lilian Greenwood MP, said: “It’s been almost 10 years since the last real discussion of national road pricing. In that time, we have become much more aware of the dangers of air pollution and congestion.

“We cannot ignore the looming fiscal black hole. We need to ask how we will pay for roads in the future and in answering that question we have an opportunity for a much wider debate about our use of road space, cutting carbon emissions, tackling congestion, modal shift and how we prioritise active travel.”

Steve Gooding, director of the RAC Foundation, said: “For the Treasury, the beauty of fuel duty is its ease of collection and difficulty of evasion. Leaving aside the multitude of questions of equity around road pricing – such as where and when it will operate, and how much will charges vary between locations – whatever replaces the existing system is bound to raise new challenges and complexities, will take time and effort to establish, and could potentially be difficult to explain to the public.

“It could also prove to be considerably more expensive to run. Hence it makes sense for the Transport Committee to be kicking off the conversation – the trick will be to ensure that conversation is genuinely well-informed and rooted in the real world.”

In 2017, the RAC Foundation contributed to Gergely Raccuja’s winning entry in the £250,000 Wolfson Economics Prize.

Answering the question, ‘How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?’ the submission argued that a per-mile charge collected by insurers could replace existing taxation.

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