Road pricing

What do councils want to replace motoring taxes with as part of the move to electric vehicles?

As the UK transitions to electric vehicles, the £35 billion income that government receives from motoring taxes is set to decline dramatically. The Government has said it will ensure that this revenue continues to keep pace, however – so, what could replace the current system? 

Road pricing has the potential to reduce congestion and car usage, and encourage more use of public and active travel. The Transport Select Committee recently recommended that the Government set up an arm’s-length body to make proposals for a national road user charging system by the end of 2022.

In this context, the LGA asked Mott MacDonald to explore the views of councils, specifically seeking feedback on the committee’s recommendations through interviews with a range of local authorities, including combined authorities and regional bodies.

We found that local authorities are just beginning to consider the implications of road pricing, but areas of clear agreement and disagreement emerged. The interviewees agreed that a new way is needed for electric vehicles to pay to use roads and that this should be a national road user charging system. It is imperative that this system is seen to be fair across social groups and regions, and between urban and rural areas. 

Clarity on the resulting funding model was strongly desired and there was agreement that a portion of the funds generated from a national road-pricing system should be allocated to local authorities for transport investment. 

One difference of views was around revenue neutrality. Some councils felt that imposing such a requirement was a missed opportunity to introduce charges that would better align with local transport objectives, particularly around reducing car travel. Others felt that revenue neutrality was absolutely necessary to sell a national road-pricing system to the public.

Several authorities welcomed the opportunity for local top-ups, where local authorities could generate additional funds from local charging systems on top of a national system. Others felt this could introduce unwelcome competition between regions. 

Complexity was a key trade-off. Some interviewees argued that simple systems were essential for ease of implementation and public acceptance, while others felt that simple systems could miss the opportunity to be fairer or better align with local transport objectives. Finally, there was some disagreement about the urgency of a national road-pricing system. Is a simple scheme needed urgently, or is a phased rollout better for this potentially controversial policy?

To stimulate discussion, we have proposed an outline of a system with three components: a ‘revenue neutral’ national road user charging system; a clear and long-term funding model with no authority worse off than now; and an optional ‘top-up’, with local authorities receiving the additional revenue they generate.

Together, these would meet government fiscal goals, but also allow local authorities autonomy over whether local charges are generated and how funds would be used. No authority should be worse off than now, and a national scheme with local top-ups would reduce the risk of a patchwork of overlapping local and national charging systems. 

The Transport Committee has asked the Government to respond to its recommendations by the end of the year. There is still time for local authorities to collect and put forward their views on a national road user charging system. We hope this work provides some direction for these conversations.

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The full report from Mott MacDonald will be available shortly at www.local.gov.uk

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