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UK road pricing inquiry planned as electric cars threaten a £40bn tax black hole

MPs start road pricing debate ahead of 2020 inquiry; tolls, congestion charging and workplace parking levies all under consideration

UK motorists could be faced with pay-per-mile road charging and other fresh levies to plug a £40 billion financial black hole caused by the mass advent of electric cars, which are currently exempt from road tax and generate no fuel duty revenue. 

The news comes after the cross-party Transport Select Committee announced it was starting a “national debate” on road pricing, with a formal inquiry beginning in 2020.

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VED road tax: UK car tax explained

The Committee highlights that “road pricing does not only mean tolls”, with congestion and low emission zones being other possibilities, along with extra fees for heavy goods vehicles, and workplace parking levies. 

Citing a desire to encourage a “modal shift” away from cars, and decarbonise the transport sector, the Select Committee wants the national debate to be open to “drivers and non-drivers alike”, while the inquiry will consider the pros and cons of road pricing and its economic, environmental, and social effects.

How might the road charges work?

M6 toll

Pay-per-mile charging

Road tolls, GPS data loggers (mandatory on new cars from 2022), the UK’s vast ANPR camera network (which scans 10 billion number plates a year), or a combination of all three could be used to charge drivers based on the length of their journeys. 

Workplace parking levies

Drivers who park at work could be charged for the privilege of doing so. Nottingham council already runs a WPL scheme, charging employers  (including schools) with more than 10 staff £415 per parking space, per year. Birmingham is also proposing a WPL.

More charging zones

London’s Congestion Charge Zone generated £1.9billion in net revenue up to 2017, while the ultra low-emission Zone charges owners of pre Euro 6 diesel cars or pre-Euro 4 petrols extra to enter the Zone. Other towns or cities that have considered or are considering emission zones include Birmingham, Bath and Glasgow.

HGV levies

Lorries weighing over 12 tonnes are already liable for the HGV levy, which costs up to £1,200 a year, depending on lorry type and emissions class. Foreign trucks are also subject to levies. Ministers could opt to increase the charge of make its conditions more strict.

The UK's long road to road charging 

The fact that the Treasury faces a huge revenue loss due to EVs not using petrol or diesel and currently being exempt from VED has been an elephant in the room for some time. It was only last week that the Institute for Fiscal Studies recommended the introduction of road pricing to recoup lost fuel duty and vehicle excise duty (VED) revenue. Back in 2007, the then Labour government scrapped proposals that would have seen drivers pay up to £1.30 per mile following public opposition. 

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Auto Express, meanwhile, submitted a Freedom of Information request to the Treasury in October 2018 asking what methods the Government was considering to replace VED and fuel duty revenue lost to EVs. Our request was refused as it related to “an area of live policy development.” 

And in 2017 Edmund King, president of the AA, and his wife proposed a ‘Road Miles’ system that would see each driver given an annual mileage allowance that they could trade or swap with other drivers, while also being able to buy extra miles by entering auctions and lotteries.

HGV Levy - header

Announcing the start of the debate, Lilian Greenwood, chair of the Transport Select Committee, said: “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. 

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“Tackling the Climate Emergency is essential but this is about more than what we must do to meet that challenge. It’s also about our health and the sort of towns and cities we want to live in.”

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The UK generates just 1% of global CO2 emissions, with surface transport responsible for 23% of that. Any road-based UK CO2 reduction programme therefore has the potential to affect 0.23% of global CO2 emissions. Particulate pollution from tyre and brake dust particles, plus NOx and particulates from older diesel engines, are known to be harmful to human health, though. 

UK petrol and diesel prices

Greenwood added: “This isn’t about pricing drivers off the road; it’s about making sure that as many people as possible have a say in future plans so that we can manage the changes to come. The Transport Committee wants to kickstart this conversation.”

Commenting on the news, Edmund King, president of the AA, said: “We do need a national debate about how we pay for our road infrastructure to bridge the taxation gap between falling fuel duty revenue and the electric vehicle revolution. However, the British public will never vote for ‘national road pricing’ so we need greater imagination to sell the public something that they actually want – our answer is Road Miles. 

“In Road Miles drivers pay less, more is spent on roads, tunnels, cycling, buses and the Government gets £2bn extra per year.”

What’s your view on the road charging debate? Let us know in the comments section below...

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