Road pricing rears its head once again

A new paper from the former prime minister’s consultancy sets out views on priority reforms for 2025 and says the introduction of pay-per-mile pricing would be a ‘crucial step in reforming the UK’s system of motoring taxation for the electric-vehicle era’.

The TBI says the chancellor should introduce a simple pay-per-mile road-pricing system of 1p per mile for cars and vans and 2.5p to 4p for heavygoods vehicles. With average UK car mileage at around 7,400 miles a year, the charge for car drivers would be just over £70 a year.This would work out revenue neutral compared with a fuel-duty hike and the average motorist would be no worse off, according to the think-tank.

At the same time, it would be a crucial first step on the road to reforming the UK’s system of motoring taxation for the net zero era while also tackling rising congestion levels.As electric vehicles become more prevalent on the UK’s roads, the Government stands to lose about 1% of GDP in fuel-duty revenue.

Under the TBI proposal, the Government would hold fuel duty at its current level and instead add a rising pay-per-mile charge on almost all road users – both electric and conventionally powered vehicles.

It’s recommending a flat per-mile charge in the first instance – verified and paid during mileage checks at MOTs – to establish a system that is easy to understand and can be implemented quickly.

The TBI then says road pricing charges would need to rise to replace lost fuel-duty revenue, account for inflation and offset some of the social costs of congestion – including air pollution, health and other costs associated with accidents, road maintenance and infrastructure costs plus congestion.

And it’s recommended that the Government should look to deploy technology to make road pricing more targeted in the longer term. This could include using telematics to lower the per-mile cost during off-peak driving times.

Other think-tanks including the Policy Exchange, the Centre for Policy Studies and the Resolution Foundation have also previously forward proposals for road user pricing.The Government, however, has so far denied reports that it’s imminently announcing a pay-per-mile scheme.

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