Road charging should replace road tax, says Transport Committee

The government should introduce a road user charging system to avoid a £35bn ‘fiscal black hole’, says House of Commons Transport Select Committee. 

The treasury currently receives £35bn a year from fuel duty and vehicle excise duty, a figure that will decline as motorists shift to electric vehicles. 

However, according to the committee, road user charging, which sees motorists pay for their use of the roads, could replace this lost revenue. 

When replacing the existing motoring taxes, the committee calls for the Government to ensure that the new charging mechanism:

• entirely replaces fuel duty and vehicle excise duty rather than being added;
• is revenue neutral with most motorists paying the same or less than they do currently;
• considers the impact on vulnerable groups and those in the most rural areas;
• does not undermine progress towards targets on increased active travel and
• public transport modal shift; and
• ensures that any data capture is subject to rigorous governance and oversight and protects privacy.

Dr. Gavin Bailey, Sustainable Transport Lead at sustainability consultancy Eunomia Research & Consulting has commented on this report, he said:  ‘The new report is a timely reminder of the need to reform how we charge for road use ahead of the government’s plans to ban new sales of petrol and diesel cars in 2030.

‘As petrol and diesel cars are phased out, road user charging is a necessity in plugging the revenue shortfalls from loss of fuel duty, revenues which could be used to support other environmental objectives in pursuit of the government’s 2050 Net Zero target, as well as reducing congestion.

‘As the report says, the government should explore implementing a road user charging scheme as soon as is feasibly possible. There are many forms that such a scheme could take, from simply charging road users by overall distance travelled to ‘dynamic’ road pricing, taking account of the location and time of day.

‘However, from an environmental perspective, we would also suggest differentiating the charge by vehicle weight, as this acts as a proxy for energy use. While they generate zero tailpipe emissions, electric vehicles are on average a fair bit heavier than standard petrol or diesel cars due to the additional weight of the battery used to power them. This increased weight also leads to elevated levels of particulate emissions from tyre wear, a source of microplastics which
can negatively affect air quality, as well as enter soil and watercourses.

‘However, in the focus on revenue, the Committee appears to have missed a fundamental point about road user charging. The Committee suggested that road user charging should be “revenue neutral” and cost the same or less than fuel duty currently does to car users. It is hard to see how setting the charge at lower than fuel duty, which has been frozen for more than a decade, will incentive people to use alternative modes of transport. For road user charging to be a truly progressive environmental policy, the price incentivise must be there to get people out of cars and into public transport and active modes of travel. Without it, it would likely turn into a missed opportunity.’