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 54.

    This isn't about road funding. It's about population control.

  • rate this

    Comment number 53.

    A major disadvantage of congestion charging has always been that it creates a 'moral hazard' as Governments/Councils collect more money by not improving road systems, ie. by not doing what we want them to do. This sort of thing has already caused chaos in financial systems! Better a scheme which incentives Government/Council to improve transport efficiency - perhaps by paying us for congestion!!

  • rate this

    Comment number 52.

    All motorways should be toll roads. We could then have a reduction in our taxes !!!!

  • rate this

    Comment number 51.

    I can see it now: This Road is Owned & Maintained by Ryanair Infrastructure Ltd. [Booking fee: £12. Travel fee: £2 per mile x No. of passengers in car. Exit fee: £12. Credit card charge: £8 x No. of passengers in car. Please Note there will additional parking and toilet charges if stopping at our Service Stations en route. Please Note: Overloaded cars will be subject to a penalty charge.

  • rate this

    Comment number 50.

    Why don't they just come out and announce their end game now? They are driving towards total poverty for the poorer 40% of the population so that they will eventually work for bread and water. Toll charges will simply effect everyone who's income is only barely covering their outgoings, causing rising prices across the bored. And still they will get a second term to rule after the next election

  • rate this

    Comment number 49.

    so they want us to pay a tax on the road - don't we already pay road tax? This is ridiculous. Surely all this tax money they are going to gain from stopping companies and rich people avoiding paying tax would make up the shortfall? Perhaps they should do what everyone else has to do - decrease your outgoings when your incomings decrease.

  • rate this

    Comment number 48.

    At the end of the day it wont make a tiny bit of difference. The gas guzzler drivers will still be better off, the roads will still be congested and covered in pot holes. It will be a tory ploy to sell another public liability onto the private sector, there really is nothing they wont consider selling off.

  • rate this

    Comment number 47.

    Here we go again, how can we rake in more coin? It doesn't matter that peoples' movement will be restricted just so long as we can make a quick quid!

  • rate this

    Comment number 46.

    Comment 27 ...EXACTLY!
    Then those who never pay their road tax will HAVE to pay and make their contribution!

  • rate this

    Comment number 45.

    Private companies owning private roads. Seems a great idea!
    Lets remember that they need to make a profit for their shareholders, so the prices will be high. Then when the private company gets into financial difficulty, i'm sure we will need to pump more and more money in to keep our road network up & running.

  • rate this

    Comment number 44.

    A load of electric cars on the road is a long way off. The government should stick to increasing fuel duty to help cut out all those unnecessary journeys. It also helps keep income tax lower. Of course the petrolheads hate it, but they are self-serving with no idea of the wider picture.

  • rate this

    Comment number 43.

    And as yet nobody has mentioned the issue of the government being able to follow your movements everywhere you go. The box in your car recording and transmitting where you've been, when you went there, how fast you drove, whether you stopped on a double yellow for 30 seconds in the middle of the night.

  • rate this

    Comment number 42.

    Pay as you go - can't get fairer than that.
    Evens out peak road usage - saves money on road improvements.
    Reduces costs for rural areas - a long running issue.

    And sets the stage for the taxation of electric cars as and when they become the majority. With an electric car and solar panels one can currently pay almost nothing for using the roads.

  • rate this

    Comment number 41.

    Are there any opposing points of view? How much of a minority view is this? Where is the analysis and balance in this article?
    This just yet another BBC article representing extremist neo-liberal ideas as normal.

  • rate this

    Comment number 40.

    At the moment fuel duty, VAT and road fund tax all go to central treasury and a fraction of that goes on roads, if we went to toll roads with private funding all the tolls would go to the private company the treasury would lose out big time. Can't see them going for that somehow.

  • rate this

    Comment number 39.

    This statement is completely bogus. Road Tolls are a tax which would more than pay for the road costs. Looks at the Dartford tunnel. That Toll is now just a cash cow for the foreign owners. Again we lose our cash overseas in a privatisation. I sometimes think the Tories just want to support FORIEGN business.

  • rate this

    Comment number 38.

    Why is the price of Diesel so expensive when it takes much less refining, so in theory it should cost less as the comment before, how long before a levy on electric cars is introduced?

  • rate this

    Comment number 37.

    So instead of collecting revenue from 5 or 6 oil companies this quango is suggesting that it's collected from 25 million drivers -

    well doesn't that sounds a great way of reducing bureaucracy...

    P.S Car tax should be scrapped & placed on fuel instead.

  • rate this

    Comment number 36.

    Every time we open our eyes in the morning the government has found another way to take more out of our pockets.

    Many people have not had a wage increase in years.

    They are just managing to pay their household bills, taxes, transport, work clothing, and food - enough to keep them functioning as employees.

    And the government wants more?

  • rate this

    Comment number 35.

    @Jon: 25

    Yes, in fact, the roads which will not be tolled will be in a worse state due to the heavy volume of traffic on them.


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