- Gareth Davies
Road Pricing. February 2021
Updated: Aug 30, 2021
It is amazing what a pandemic can do. With the country emerging from a state of suspension and government expenditure running high, the last thing the Chancellor would want is a huge chunk of taxation revenue dwindling over the next decade. Balancing the nation’s books is not an easy job at the best of time, but with a Prime Minister who seems to be able to conjure up money and throw it around, the job is made doubly worse. It is no wonder there is talk of a certain amount of friction between No 10 and No 11 Downing Street, let alone within parliament!
The statement by the Prime Minister that the sale of petrol and diesel cars will be banned from 2030 has caused a few twitches at the Treasury. Positive as this statement is in the move towards zero carbon emissions from transport, the down side is that the move to electric cars has been estimated to cost the Treasury nigh on £40b in lost revenue annually.
Conscious of the fact that the Treasury has already lost billions through the political expediency of not raising fuel duty over the past decade, it is the Chancellor, not the Department for Transport, that has acted first. The Chancellor is reputedly considering introducing road pricing to address the anticipated tax shortfall. a Treasury paper on a new national road pricing scheme has supposedly been presented to Chancellor Sunak, who is said to be ‘very interested’ in the idea.
Road pricing is nothing new, it has been around for quite a while. The move to a more equitable form of transport taxation based on distance travelled rather than the one-off yearly vehicle excise duty has been raised periodically since the 1960s. It is political expediency that has generally silenced it. But today, the subjects of climate change, air quality, lung disease and the link with exhaust emissions is putting road pricing under a new spotlight. What form road pricing will take has yet to be determined but Professor David Begg is spot on with his statement:
Road pricing is right for our public finances, right for reducing congestion, right for improving air quality and right for tackling climate change. Its time has come.
(Professor David Begg was Emeritus Professor of Economics at the Imperial College Business School. He is now Chief Executive of Transport Times)