‘Ask ORR to devise long-term road pricing model for EVs’

MOTORING

Fuel costs: 13 per cent lower because of a seven-year freeze on duty

Fuel costs: 13 per cent lower because of a seven-year freeze on duty

Ministers should ask the Office of Rail and Road to devise a new pricing model for electric vehicle use, encompassing the cost of electricity, road infrastructure, and congestion, according to a new report by bus industry lobby group Greener Journeys. 

Transport economist Professor David Begg and Greener Journeys chief executive Claire Haigh make the recommendation in a report looking at the pricing of road transport. Begg was the first chair of the now defunct Commission for Integrated Transport under the last Labour Government. 

The report says the seven-year freeze of fuel duty means that the price of fuel at the pump is now 13 per cent lower than it would otherwise have been.

“While the freeze has been welcomed by many road users and has undoubtedly been of benefit to people struggling on low incomes dependent on car travel, there have been some unintended consequences,” say Begg and Haigh.

The freeze means traffic levels are 4 per cent higher than they otherwise would be, pollution and carbon dioxide emissions are higher, the Treasury has lost £7bn of tax revenue, and public transport use has fallen by between 1.3 per cent and 3.9 per cent.  

“The Government has stated that from the financial year 2019/20 fuel duty will be uprated each year in line with the growth in the RPI,” say Begg and Haigh. “They are right to make this commitment. It is vitally important that Government delivers on this commitment as a minimum if it is to begin to send the right price signals to road users.” 

The Government should  introduce a new model of paying for road use, they say.  

Ministers should ask the Office of Rail and Road to devise a way to encourage electric vehicle uptake while ensuring that EVs “eventually pay for electric charging, road infrastructure and congestion costs”.

“The first two would be distance-based and the latter time-based,” say Begg and Haigh. “We need to pass a tipping point where electric vehicles are price competitive and take-up would not be discouraged by charging for infrastructure and congestion.”  

The Freight Transport Association criticised the report. Chris Snelling, its head of UK policy, said: “To suggest that a fuel duty level dictates how many vehicles are on our roads is, quite frankly, ludicrous. It is the level of economic activity that drives traffic levels, not the level of tax paid on the fuel in their vehicle’s tank. This is because, for freight, as for most road users, travelling is not a choice you make dependent on how much it costs, but based on what you need to do.”