Campaign for Better Transport proposes new road pricing to offset lost fuel duty revenue from the rise of zero-emission vehicles

Chancellor Rachel Reeves is facing pressure to introduce a “pay-per-mile” scheme for electric vehicles (EVs) as part of her upcoming budget. The proposal, put forward by the Campaign for Better Transport (CBT), aims to address the anticipated shortfall in fuel duty revenue resulting from the increasing adoption of zero-emission vehicles.

Under the CBT’s proposal, drivers of EVs would be charged based on the distance they travel. The plan includes an exemption for those who already own a zero-emission vehicle before the scheme’s implementation date, providing an incentive for early adoption. This measure is designed to make up for the loss of approximately £25 billion annually in fuel duty revenue, which is expected to decline as more drivers switch from petrol and diesel cars to EVs.

Silviya Barrett, CBT’s Director of Policy and Campaigns, highlighted the urgency of the situation: “The new Chancellor faces a looming black hole in fuel duty revenue. Implementing a pay-per-mile scheme could address this shortfall in a fair and publicly supported manner. However, it is crucial to start now, as the issue will only become more pressing.”

Barrett argued that while such a change may face political challenges and opposition, it is a necessary step to ensure that zero-emission vehicle drivers contribute equitably to vehicle taxation. The proposed scheme would involve a straightforward charge based on regular odometer readings.

The suggestion follows recent discussions around road pricing and the broader impact of transitioning to electric vehicles on government revenue. Despite the potential backlash, Barrett believes that the general public supports the idea of fair contribution from all vehicle drivers.

Labour has committed to reversing the previous government’s delay in banning the sale of new petrol and diesel cars, which was pushed from 2030 to 2035. Chancellor Reeves is expected to address these issues in her first budget on October 30.

Analysis:

Political: The proposal to introduce a pay-per-mile scheme represents a politically sensitive issue. While aimed at addressing the loss in fuel duty revenue, it could face significant opposition from both the public and political adversaries. The move could also impact Labour’s position on environmental policies and its relationship with voters who might view the scheme as an additional financial burden.

Social: The pay-per-mile scheme could have mixed reactions from the public. On one hand, it addresses the need for equitable contribution towards road maintenance and infrastructure. On the other hand, it may be perceived as an unfair additional cost for EV owners, who have already made the switch to cleaner vehicles. Public acceptance will largely depend on how the scheme is structured and communicated.

Racial: The scheme is unlikely to have direct racial implications. However, considerations around economic equity and access to EVs could intersect with broader social justice issues. Ensuring that the scheme does not disproportionately impact lower-income or minority communities will be crucial.

Gender: Similar to racial considerations, gender impacts are not directly related to the pay-per-mile scheme. However, issues of affordability and access to EVs can affect diverse groups differently, including women who may be more likely to drive lower-cost vehicles or rely on public transport.

Economic: The introduction of a pay-per-mile scheme could provide a new revenue stream for the government, mitigating the financial impact of reduced fuel duty from declining petrol and diesel car sales. However, it could also affect consumer spending and the automotive market, particularly if perceived as an added cost for EV owners.