Ministers will unveil a new blueprint for “decarbonising” Britain’s transport system on Wednesday amid Whitehall wrangling over how to replace petrol tax after traditional cars and lorries are banned from the country’s roads.
Grant Shapps, the Transport Secretary, will pledge to ban diesel and petrol lorries from 2035 and the sale of new petrol cars from 2030 – while promising billions to encourage cycling.
It had been thought that the plans would also pave the way for a new system of road pricing to replace the £30 billion raised through petrol and diesel duties.
However, following debate in recent days between Whitehall departments, the blueprint is now expected to not include any specific plans for road pricing.
There is growing criticism over the lack of detail in what would be one of the biggest shifts in generations for the country’s transport network.
Experts also believe there is scant information about how the Government will introduce the new extra charging points needed for electric cars.
On Tuesday night, Treasury sources said they were “not keen” on road pricing, but a government spokesperson admitted that “as we transition to decarbonised motoring, we will need to ensure that revenue from motoring taxes keeps pace with this change”.
Senior industry figures said that meeting the government’s net zero ambitions would have to be paid for, with road pricing an obvious proposal.
The UK's largest high power motorway electric vehicle charging site at Moto's Rugby Services
Sir John Armitt, the chairman of the UK’s National Infrastructure Commission, said: “There is going to have to be a shift of revenue streams for the Government – which is going to lose a significant tax. So they will need to have new mechanisms put in place by the Government to offset that.
“It’s clearly an option, road pricing, in some form or other. We have been talking about it for probably 30 years now.”
Edmund King, the president of the AA, added: “At some stage we know that the Treasury will lose a lot of its £30 billion from drivers when they stop paying fuel duty and vehicle excise duty with electric vehicles. The Treasury is going to have to do something, because [it] is not going to give up billions of pounds of tax revenues from drivers.”
Tax revenues from fuel duty reached £28.4 billion in 2020, accounting for two per cent of GDP, and vehicle excise duty, which is zero for electric vehicles, was estimated at a further £6.5 billion.
However, the Government has committed to net zero targets, and transport is the biggest single source of greenhouse gas emissions in the UK, accounting for 28 per cent, the vast majority from road vehicles.
It first emerged last November that Rishi Sunak, the Chancellor, was considering plans to charge drivers for using Britain’s roads to make up the tax shortfall from the loss of fuel levies and vehicle excise duty as fossil fuel cars are phased out.
On Tuesday night a Treasury source insisted they were “not keen on road pricing”.
However, another Whitehall source warned that the Government’s decarbonisation targets presented a “strategic problem for chancellors for years to come”, adding: “You going to have to cover that [revenue loss] over time … All this will have to be resolved.”
A government spokesman said: “At present we have no intention to introduce road pricing. As we transition to decarbonised motoring, we will need to ensure that revenue from motoring taxes keeps pace with this change, so that we can continue to fund the first-class public services and infrastructure that people and families across the UK expect. Any changes to the tax system are a matter for the Chancellor.”
Proportion of car sales that are electric
Mr Shapps insisted that the “greenprint” was “not about stopping people doing things”.
“It’s about doing the same things differently. We will still fly on holiday, but in more efficient aircraft, using sustainable fuel. We will still drive, but increasingly in zero-emission cars.
“The Transport Decarbonisation Plan is just the start – we will need continued efforts and collaboration to deliver its ambitious commitments, which will ultimately create sustainable economic growth through healthier communities as we build back greener.”
The AA backs a road mile allowance scheme, under which drivers would be allowed 3,000 untaxed miles annually, or 4,000 in rural areas, with prices rising after that.
Congestion pricing already exists in London, where drivers must pay £15 a day, plus additional charges for more polluting vehicles in the extended emissions zone.
Similar schemes operate in Durham and Bath and are planned by other city authorities including Birmingham and Manchester.
The Dart Charge on the Dartford Crossing and the M6 toll road are currently the main two examples of road pricing in effect.
Three in five people support some kind of pay-as-you-drive scheme, according to a poll last year by Ipsos Mori.