Written evidence submitted by Onward (EVP0133)

The case for introducing some form of road pricing and the economic, fiscal, environmental and social impacts of doing so;

The most significant example of falling tax receipts is fuel duty, which are at risk of decline as we decarbonise the transport sector. In 2019–2020, fuel duty was projected to collect £28.4 billion in receipts and Vehicle Excise Duty was projected to collect £6.5 billion. Given the shift to zero emissions vehicles, who do not pay fuel duty, there is set to be a sharp drop in fuel duty in the years to come. HM Treasury has already changed VED and Company Car Tax rates to reflect the trend towards lower CO₂ vehicles. But if anything, the reduction in Company Car Tax rates for zero and low emission vehicles from April 2020 will accelerate the decline in tax receipts.

Which particular road pricing or pay-as-you-drive schemes would be most appropriate for the UK context and the practicalities of implementing such schemes.

Looking further into the future, the government should consider moving from the current system of taxing fossil fuels and carbon emissions to a system of road user charging. This could be in the form of toll charges, charges per mile or an expansion of congestion charge zones in urban areas, phased in over time to gradually deliver tax receipts without undermining the incentives for switching to low emission transport.

Another option is to introduce a small per-mile charge on driverless vehicles, using the hyper-accurate GPS monitoring on which they rely to measure mileage accurately. If the Treasury did this before the widespread adoption of driverless cars, this would encounter considerably less political opposition which has historically blocked other forms of road user charging.

A further option is the proposal of pay-as-you go proposal put forward by the Institute for Civil Engineers.

The level of public support for road pricing and how the views of the public need to be considered in the development of any road pricing scheme;

Polling conducted for the ICE report by YouGov found that 47% of GB adults would support the introduction of pay as you go if it replaced both Vehicle Excise Duty (VED) and fuel duty. Only 23% would oppose with 30% reporting they would neither support nor oppose or don’t know.

References:

February 2021