Road pricing: new tax could be part of UK’s green future

  • Taxation shortfall as Britain goes green
  • 2030 ban on new petrol and diesel sales
  • Better quality roads may not be part of the plan

Aside from Coronavirus (COVID-19) and Brexit, the biggest recent noise from government has been the confirmation that sales of petrol and diesel cars will end in the UK from 2030. The knock-on effect of this, according to a report in The Times, is that road pricing could be introduced to balance the books.

What is road pricing?

Essentially, it’s a tax on driving itself – the more you use the roads, the more you will pay. However, it’s important to stress at this stage that exactly what method of charging might be introduced is far from being decided.

Are we going to be taxed for using roads in future?

Certainly, the Chancellor of the Exchequer, Rishi Sunak is in no rush to follow Prime Minister Boris Johnson’s early announcement for a taxation shake-up that could still be the best part of a decade away.

On a very small scale, road pricing already exists in the UK, with fees for driving in Central London’s Ultra-Low Emissions Zone (ULEZ, but commonly known as the Congestion Charge), the M6 Toll motorway and various crossings such as the Dart Charge at Dartford.

Why is road pricing being considered?

While banning the sale of petrol- and diesel-engined cars might please environmentalists, the reality is the drop-off in sales of those kind of vehicles will hit the Treasury’s revenues hard.

Estimates, according to The Times’ report, are that fuel duty and VAT on petrol and diesel, combined with a slowing of income from VED car tax – presently only paid on zero-emission cars if they cost more than £40,000 new – could be as high as £40 billion.

The chancellor's red briefcase

Given the economic peril the UK already faces, this is a financial headache that the chancellor can’t simply pop a couple of paracetamol for.

Consequently, road pricing is being toted in government circles as a way to effectively replace those existing, lucrative income streams that motorists have to pay.

How could we be charged for using the roads?

While there are still months, if not years, of debates ahead about precisely how we will be charged for using the UK’s roads, it’s extremely unlikely that all cars will be fitted with black boxes to monitor their precise movements. Such a move would contravene privacy legislations, so regard any such conspiracies as fake news.

What is more likely is that drivers will be charged for using different kinds of roads, with urban zones set at one tier, motorways at another and other road types being cheaper still, if not free to use.

Systems such as automatic number plate recognition (ANPR) and electronic tags stuck to the inside of windscreens already exist, so using similar technology would prove cost-effective.

More cars will have charging ports in the future

Either way money would have to be invested on installing the necessary infrastructure for whatever system is chosen.

What this means for you

Precisely who will pay any road pricing charges will not be confirmed until nearer the time plans are finalised, with various options up for consideration.

It could be that only drivers of zero-emission cars – those running on electricity or hydrogen – will pay the new tax, with petrol and diesel vehicle drivers continuing to pay duty on the fuel itself. Alternatively, that levy could be scrapped so that road pricing applies to all drivers.

Of all road users, it seems people living in rural communities could be hardest hit by the proposed changes.

If the price to use minor roads is significantly cheaper than dual carriageways and motorways, it could encourage thriftier motorists to take the countryside option, making them far more congested than they are presently.

This is compounded by the fact that many smaller towns and villages have poor public transport links to larger cities, giving many little option but to drive instead of taking a bus or train.

We will also be keeping a close eye on what revenue from road pricing is spent upon. Given that existing fuel duty and VED car tax money is not spent on road repairs, it seems unlikely that a percentage of road pricing income will be ringfenced for spending directly on highways.

Further reading:

>> Read the latest on the 2030 ban on new petrol and diesel car sales
>> Get the lowdown on electric cars currently on sale
>> Drive a van and want to go electric? We show you how

Britain's future may be greener, but there'll be a price to pay