Asked by
To ask His Majesty's Government what consideration they have
given to replacing excise duty on fuel with road pricing.
The Parliamentary Secretary, HM Treasury () (Con)
My Lords, the Government have no plans to consider road pricing.
As set out in the letter to the Transport Select Committee in
January 2023, the Government are focusing on delivering their
core priorities.
(Con)
My Lords, road pricing clearly touches a raw nerve in the body
politic. The OBR has recently said of the Government's policy on
electric vehicles that it is
“rapidly eroding the £39 billion”
a year
“revenues from petrol and diesel”
taxes. That will leave a large hole in the Budget. The Transport
Select Committee in the other place, with a government majority,
said that work on road pricing should start straightaway. When I
was Transport Secretary 30 years ago, I floated the idea, which
is now much more feasible because of technological progress. If
taxes made through the fuel duty are not replaced with something
else, public transport will become much more expensive,
undermining a sustainable transport policy. Should the Treasury
be quite so hostile?
(Con)
The Treasury sees that there are many options going forward for
the fuel duty and many broader motoring taxes—and indeed for all
taxes. As we transition to net zero, the Government will need to
ensure that the tax system encourages more EV uptake and that
revenue from motoring taxes keeps pace while remaining
affordable.
(CB)
Does the Minister agree that the introduction of road pricing
with modern technology would mean that vehicles could be priced
on the basis of their consumption of fuels and that
differentiation could be made between goods vehicles and
passenger vehicles, so that it would be a much fairer system?
Does she also agree that road pricing would enable the police
very much more easily to detect vehicle crime, particularly on
motorways, which has raised car insurance premiums so much
recently?
(Con)
I recognise what the noble Lord says. Many think tanks and other
groups have done a lot of work on road pricing. Jurisdictions
around the world are looking at it; however, as yet, very few
have managed to introduce it successfully. From the Treasury's
perspective, we welcome work from external stakeholders on road
pricing and all other taxes.
(LD)
My Lords, the Minister has done good job of telling us what the
Government are against but a less good job of telling us what
they are in favour of. In light of the reduction in fuel duty
revenues that will arise from the UK's ambitions to shift to
electric vehicles, can she tell us what concrete plans the
Treasury has to replace those losses in a way that is positive
for the environment and fair to rural communities?
(Con)
At the moment, fuel duty raises around £25 billion annually. That
is forecast to increase in nominal terms to £30.5 billion over
the scorecard period to 2029. The change in fuel duty is a
medium-term to long-term problem which will allow everybody who
has an interest in this to have their say—including taking into
account the shift to electric vehicles—and an appropriate
solution will be found.
(Con)
My Lords, many of our motorists feel badly done by, with the
extra cost of motoring all the time and the extra cost of
insurance for motorists. If the Government have any idea of road
pricing, would it not be fairer to look at all those who use our
roads apart from those who merely pay the vehicle excise
duty?
(Con)
My noble friend raises an important point about the cost of
motoring. That really is top of mind for the Government. It is
why we have frozen fuel duty since 2011 and had a 5p cut on fuel
duty since March 2022. We recognise that for many
people—particularly those in rural communities—using their car is
essential, and it can be quite costly.
of Pickering (Con)
My Lords, will the Minister assure the House that, were the
Government ever minded to introduce road pricing, rural
communities and those who drive on rural roads—particularly in
North Yorkshire, where we have the longest transit routes for
people on their way to work or pleasure—would be protected?
(Con)
As I said at the outset, the Government have no plans to consider
road pricing. Therefore, I cannot give my noble friend that
assurance, because it would be purely hypothetical.
(Lab)
My Lords, the state of Britain's roads has been described as
being at breaking point. A recent survey suggests that local
roads are in their worst condition for more than 30 years, and
the backlog for repairs has risen to a record high. The AA
estimates that pothole damage is costing Britain's drivers nearly
£500 million every year. Is the Minister aware of figures
compiled by the LGA that show that Labour councils invest 83%
more per head on road maintenance than Conservative councils?
(Con)
What I can say is that this Government have invested
significantly in local highway networks. For example, since 2015,
we have invested £11 billion and, as part of Network North, £8.3
billion has been earmarked for local road maintenance over the
next 11 years.
(Con)
My Lords, I refer noble Lords to my interests as set out in the
register. Many economists like road pricing because it relies on
the principle of “polluter pays”. As we shift from polluting
vehicles to EVs, hydrogen, et cetera—more environmentally
friendly vehicles—we might move from “polluter pays” to the
principle that those who contribute to the wear and tear of our
national infrastructure have to pay as drivers. I know that the
Government have ruled it out at this stage, but in the longer
term, have they done any planning on how we pay for upkeep of the
roads? Perhaps those who contribute to wear and tear could make a
contribution.
(Con)
I am not aware of any work in that area, but, of course, my noble
friend raises a very important point. There is the issue of wear
and tear on the roads, which all vehicles contribute to, but what
is sometimes overlooked is the impact of particulates that come
from tyres. That might be from an internal combustion engine
vehicle or from an electric vehicle—it is another source of
pollution.
(Lab)
My Lords, over the years, Ministers frequently say that they have
no plans to do anything, and then, within a short period, they
change their minds. This may well be one of those instances. Does
the Minister agree that road pricing would have another benefit,
in that it could be used to ease congestion on motorways? There
would be different charges for peak times and for off-peak times.
Would that not be helpful?
(Con)
As I said in my opening remarks, the Government have no plans to
consider road pricing. I really cannot say more than that.
(Con)
My Lords, I find it difficult to fault the analysis of my noble
friend , because he points to
an inescapable gap in revenue receipts for the Treasury from fuel
duty receipts. I have a difficulty in understanding the
Treasury's opaqueness in responding to this analysis, for which I
do not blame my noble friend the Minister. Is that opaqueness
attributable to fiscal timidity or dogmatic blindness?
(Con)
My Lords, it is not opacity. What is going on here is simply that
a number of options can be taken forward as taxes shift and
change over time. All taxes shift and change over time with
regard to the amount of money they bring into the Exchequer. The
Government have forecasts as to what will happen to fuel duty and
are considering all sorts of ideas as to how that would be
plugged. For example, noble Lords will have seen that electric
vehicles will start to pay VED from April 2025. It will not be at
the same level as for an ICE vehicle, but it is right that EVs
start to pay their way.
of North Oxford
(Con)
My Lords, putting aside road pricing for a second, average car
insurance costs in the UK have neared £1,000 after prices rose by
58% this year. Does the Treasury intend to look into whether
these increases are justifiable?
(Con)
It is concerning to see such large rises in insurance. Officials
are monitoring it. The Treasury is unlikely to intervene in what
is a private market. However, I will write to my noble friend,
because there are various helplines and advisers who can
sometimes help people to find cheaper car insurance.
(Lab)
My Lords, the Minister is impressive in her attempts to explain
away the huge fiscal holes that this Government are digging for
themselves and for future Governments. Can she comment on the
rather strange leaflet that many residents of London have
received, apparently from the Conservative mayoral candidate,
purporting to be a penalty notice for a road pricing scheme that
does not exist and is not planned by the current Mayor of London?
Given that the Government are so opposed to this, does the
Conservative mayoral candidate in London not know what
Conservative policy is, or is it that she has enormous faith in
the ability of the London government to deliver something that
the Minister has said is incredibly complicated?
(Con)
I am seeking out the question in all that, but I think that all
noble Lords will be aware that transport in London is devolved.
Whether the current mayor will introduce road pricing within the
Greater London area has been a matter of speculation for some
time. If there was a Conservative mayor, the current candidate
would certainly rule it out and ensure that the extension to ULEZ
was rolled back, because that is causing significant hardship
towards the outer boroughs of London.
