As electric car sales rise in the UK, a problem looms for the government. The treasury takes in a substantial amount of money from fuel duty – the tax on petrol and diesel that drivers pay at the pump. Even with recent crowd-pleasing cuts and freezes to fuel duty, it still hauls in £28 billion a year in tax.
However, since they don’t burn petrol or diesel in their cars, electric vehicle drivers don’t contribute anything to this total. The more electric cars there are, the more that source of funding erodes. £28 billion is a significant prop to public spending, and it needs to be replaced by something else.
There’s also a matter of fairness. Until recently EV owners didn’t pay Vehicle Excise Duty either. That has all helped to incentivise their take-up, but as they become a mainstream option, EV owners ought to be contributing towards the cost of the road infrastructure they use.
Another problem, outlined by the Campaign for Better Transport recently, is that the tax exemptions could make EVs too cheap. No bad thing you might think, but if EVs are cheaper than public transport, then there’s little reason for people to choose the latter. That means – as has always been the risk with the electric cars – that in the long term we lower emissions but do nothing for traffic, car dependency, health, road safety or car-clogged neighbourhoods.
One way to address these problems is pay-as-you-go road pricing. This is fairly straightforward as a concept, and would consist of a per-mile charge for driving. The more miles you drive, the more you pay, and the rate could be linked to the car so that more polluting vehicles are more expensive. This could easily be reported as part of the MOT process, when mileage is read and recorded already.
It is possible to make a smarter system than that, now that cars have on-board telematics that would allow for location tracking. You could develop a road pricing system that accounts for location and time of use. That would avoid discriminating against people living in rural areas, where public transport isn’t a viable option. You could also incentivise people to travel outside of peak times by having higher rates at rush hours, or create automated congestion charging zones. This could be a harder sell because of the privacy element, though you could potentially opt out and choose to pay a flat fee based on MOT mileage.
One of the most useful aspects of pay-as-you-drive is that people only pay for what they use. If you take your car everywhere, you’ll pay more for it. If you walk or cycle but use the car occasionally, you’ll pay proportionately. That creates incentives to use the car less and save money, and that supports active transport and the lower carbon emissions that result.
The Campaign for Better Transport found that 49% of people support the idea, and a significant number of people who opposed it changed their minds when it was explained. That suggests we need some awareness raising around what is currently a fairly unfamiliar idea, but one that could well be on its way.
- Read the full report here.
- There’s also pay as you go insurance