Our Position on Road Pricing

By: Tom van Vuren, Director of Policy
Last updated: February 2022

A pay per mile road-user pricing system could be a fairer and more sustainable source of revenue accounting for the many social and environmental costs of motoring and encouraging more efficient use of vehicles

Road pricing and motor taxation is a topic which Transport Planning Society (TPS) have explored in detail before concluding that the current system needs reviewing.^{1 2}

The current fiscal incentive system for UK transport heavily favours car use which results in lost revenue, but also means we miss out on an opportunity to use price signals to foster modal shift from private motor vehicles to public transport, active travel or other sustainable forms of transport.

The cost of public transport has increased at a significantly faster rate than motoring. Between January 2012 and December 2021, according to the ONS, the cost of motoring had increased 26%, rail fares 30% and bus and coach fares 65%.

Estimates suggest the discontinuation of the fuel duty escalator in 2011 has caused a 5% increase in traffic and an extra five million tonnes of CO2. This is as well as £50 billion lost in potential revenue.³

Motoring has a range of environmental and social externalities that need to be considered to inform any future motoring taxation.

The House of Commons Transport Select Committee report on road pricing

In February 2022 the Commons Transport Select Committee (TSC) released a report on road pricing which concluded that the government should reform road pricing to avoid a £35 billion loss in revenue. This loss is mainly due to fuel duty and vehicle excise duty currently not being levied on electric vehicles.

Political issue

The problem which often arises when discussing road pricing policy, as well as demand management schemes in general, is that they are viewed as being politically unpopular. Historically, the public meet these policies with opposition.^{4 5 6}

More recent data shows a changing picture. A 2021 poll from The Social Market Foundation has found that almost four in 10 people back road pricing to replace fuel duty and other similar taxes.⁷

Solutions

Two things are essential to ensure the success of road pricing policies:

• They must be accompanied by carefully constructed public relations campaigns which engage with the public early and frequently. Campaigns should address any key concerns the public have, explain why road pricing is necessary and stress the many environmental, social and economic benefits of the policy. Stockholm provides an inspiring example, where initial opposition turned into support when the benefits of congestion charging schemes were carefully monitored and presented.⁸
• Reforms to road pricing should be accompanied by improvements to the transport network elsewhere. This would include, for example, safer segregated cycle lanes, simpler, cheaper rail fares or a more frequent bus network. The actual improvements will vary depending on the area, but the important point is that people must see where their money is going, including in the provision of realistic alternatives to their previous car journeys.

We welcome the TSC report and fully support the premise that reforming motor taxation is necessary - and not just for revenue reasons, but particularly for the associated environmental and societal benefits. What these reforms look like in practice needs further discussion and debate. We recommend looking to Singapore⁹, Stockholm¹⁰ and Nottingham¹¹ for inspiration.

Find out more about Transport Policy in the UK: read our State of the Nations 2020 report