Compelling case for UK road charging, IFS study says

Road Private money could be used for road maintenance in future if the prime minister has his way

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There is a "compelling" case for road charging in the UK rather than the current system funded by taxes on fuel, a study has suggested.

The report by the Institute for Fiscal Studies (IFS), funded by the the RAC Foundation, suggested a "radical overhaul" of road taxes was needed.

Fuel and Vehicle Excise duties raise about £38bn a year but are set to fall.

The Treasury said possible new ways of funding roads would not involve tolls or pricing on existing routes.

It added that revenue from duties was currently rising.

Forecasts from the Office for Budget Responsibility predict tax revenues from duties will fall by £13bn a year, at current prices, by 2029, as cars become electrified and more fuel-efficient.

Plugging the gap would require a 50% rise in fuel duty, according to the IFS.

It recommends moving towards a nationwide system of road charging, including road tolls, to account for this loss of revenue.

The IFS says a solution would be to charge drivers by the mile, with higher pricing in congested areas at peak times. Drivers in the countryside would be likely to pay less.

"Such a move would generate substantial economic efficiency gains from reduced congestion, reduce the tax levied on the majority of miles driven, leave many (particularly rural) motorists better off, and provide a stable long-term footing for motoring taxes without necessarily raising net additional revenue from drivers," the IFS said.

Private roads?

The IFS said that the current system of taxation on fuel "cannot vary according to time and location", and so is "fundamentally unable to account for" differences such as levels of congestion and demand.

"Taxes on road use, however, would be able to do so," it said.

The Treasury and Department for Transport are carrying out a feasibility study looking at "new ownership and financing models" for the roads, with the results due in the autumn.

Prime Minister David Cameron, meanwhile, has suggested that private money be used to improve England's road network.

The government is consulting on charging tolls to motorists, following on from the existing M6 toll road.

It is also considering "shadow tolls" - a fee to the road maintenance company per driver using a road, but paid by the government rather than drivers.

Under the plans, companies would lease motorways and trunk roads from the government, maintaining and perhaps improving them by adding lanes, for which - as long as they meet targets - they would be entitled to a share of road taxes.

The construction of new roads could also be taken on by the private sector.

An online petition against a national road pricing plan by the last Labour government secured two million signatures.


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  • rate this

    Comment number 34.

    Yes - there are far too many ordinary people clogging up the roads - remove them so that Dave and his cronies can drive in peace.Then they can raise the speed limits (or get the wife to take speeding points).

  • rate this

    Comment number 33.

    Yet another cunning strategy devised by the Conservative Party as an attempt to offload their financial liabilities to the public. I'm wondering how far would the Conservative "sell off" Great Britain at the end of this administration?

  • rate this

    Comment number 32.

    The government should offer free bicycles meaning less cars and more health benefits.

  • rate this

    Comment number 31.

    Everything's just getting more and more expensive! They'll be charging for the air we breath next... We're all doomed!

  • rate this

    Comment number 30.

    There should be a system to tax foreign goods vehicles that currently fill up on cheap diesel in Eurpoe and then use our roads undercutting UK haulers. However any system mustn't penalise rural communities who are often faced with long journeys to reach shops and services.

  • rate this

    Comment number 29.

    So, after years of suffering the "fuel tax escalator" and the highest fuel prices in Europe the policy actually does what it intended and forces us into more fuel efficient cars.


    Actually no. The fact that the Government now want to tax actual road use. You will have to pay no matter how efficient your car is, demonstrating the "escalator" was just a money grab after all.

  • rate this

    Comment number 28.

    Drivers in the countryside to pay less-I should hope so given the state of public transport and our roads. Imagine farmers and rural businesses trying to do their job using the bus. If tolls are introduced I would like to see rural buses serving villages instead of taking "fast " routes on main roads. And more stopping trains. Road tolls should only apply to cities motorways and dual carriageways.

  • rate this

    Comment number 27.

    Road tolls do not reward economical driving

    Car Road Tax does not reward economical driving

    Fuel taxes reward economical driving, economical cars, and above all, minimising use of cars.

    Whilst I hate fuel tax, I think it's the best method of road taxing we have, especially as it's the only way to tax foreign vehicles on our roads.

    We should increase fuel tax and remove road tax.

  • rate this

    Comment number 26.

    Again the people who will be worst affected are the poorest.

    The simple answer is to get rid of fuel duty totally (which is one of the most counter productive taxes) and replace with a properly funded road tax system where ALL road users are taxed more fairly and vigorously against fuel efficiency, vehicle value and average mileage.

  • rate this

    Comment number 25.

    "leave many (particularly rural) motorists better off"

    Pull the other one. If motorways become toll roads then the majority of users will seek other, non-toll routes which will inevitably see many of the old Roman roads bearing a much higher load than at present. What rural motorists may save in duty they will more than pay for in increased congestion.

  • rate this

    Comment number 24.

    All 5 comments so far have a justifiable cynicism on any government revenue change as a means of squeezing more out of us.

    In this article is there is no mention the critical relationship between total revenue raised from road users and total annual spend on roads - nor does it clearly distinguish between using charging as a means of raising revenue versus as a mean of influencing behaviour.

  • rate this

    Comment number 23.

    What on earth? Roads are funded through general taxation and have nothing to do with either VED or fuel excise. The entire article is based on an error.

  • rate this

    Comment number 22.

    I welcome this.

    I cycle to work but own a car and a motorbike. My main cost is owning the vehicles (insurance (2.5k!), taxing, moting and repairs). Any financial model that rewards users with low miles gets my vote!

  • rate this

    Comment number 21.

    If there was a proper system of fines for the highway code offences committed by ALL road users we would make more money than the oil rich arab countries.

  • rate this

    Comment number 20.

    No matter what, the government will find a way to squeeze cash out of us for travel.

  • rate this

    Comment number 19.

    Why complicate things just do away with income tax and its feudal ideas and replace with a graduated tax on all purchases....the more luxury the goods the higher the tax etc. This way you remove tax avoidance off shore schemes, reduce dramitically Inland Revenue staffing and overheads and you can move tax levels on different goods as need arises. Easy to collect too like VAT. No Brainer.

  • rate this

    Comment number 18.

    Scrap all tax except VAT, hike it up to 30% and make everyone pay on everything, including companys. Job done, if everyone pays the same we end up all equal, the rich find ways around VAT at the moment by using a company to claim the vat back, stop this practice a level palying feild for all.

  • rate this

    Comment number 17.

    I don't see the problem. Tax is not always a means of discouraging something, it's just a means of charging for use and paying for maintenance. Charging per mile would be fair.

    If the government wanted to discourage use of the roads they need to offer a viable alternative. Rail is overcrowded, air is too polluting, cycling too dangerous.

  • rate this

    Comment number 16.

    When are governments going to get it, people do not want road tolls. Millions signed the anti road pricing petition. Politicians need to understand that they are our servants, and not impose things on people which is clearly against the will of the people.

  • rate this

    Comment number 15.

    No doubt in a similar way to how our tax system operates, the administrators of such a scheme would make the charging strategy so complex as to ensure there are plenty of loopholes, which will be ruthlessly exploited by those with the greatest ability to pay.

    Either that, or they introduce a series of toll booths which should ensure that our traffic system comes to a complete standstill regularly


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