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 714.

    No. 649 JonDM - I am from Wigan, I said "Oyster card" because it is nationally known.
    There are those (perhaps a few million at best) who absolutely need a car, the rest would serve themselves better by buying a rucksack (and walking shoes) and an Oyster card (or similar). But NO, they love their cars. And if you love your cars but do not absolutely need them, then you deserve no sympathy.

  • rate this

    Comment number 713.

    @ 697, 708
    Do cyclists use roads? Of course - and they should contribute to their upkeep and construction in the same way as motorists do. It's not a dig at cyclists, it just makes sense that use of a road should result in a contribution.
    Don't make silly arguments to avoid the key point - pedestrians do not "use" the roads in the same sense and we don't directly pay to construct more air.

  • rate this

    Comment number 712.

    It's a good idea. Additional revenue could be generated by more consistent implementation of greater penalties for road crimes. The toll technology would make it possible to catch and fine speeders and dangerous drivers with 100% consistency.

  • rate this

    Comment number 711.

    Simple tax would be nice. Flat % rate of income tax across the board, transparent and not dodged; we contribute to the general costs of this country regardless of our personal use.

    We pay for the NHS whether we use it or not. We pay for defense whether we believe in it or not. Those without kids pay for schools. All for the benefit of the country. Funding the road network is the same.

  • rate this

    Comment number 710.

    Surely if the arguement is that a road toll charge or pay per use charge is fairer as it depends on the amount a car is used, is this not the same as the tax on fuel. The more fuel you use the more you pay.

  • rate this

    Comment number 709.

    This seems like another half considered idea, when they can't enforce the existing rules for insurance (APNR would solve this but there's not a profit to be made) or VED (just ignore the demands and don't pay - APNR would solve this too), so how is spending billions on new tech going to help anyone but their business pals-oh yeah that's the plan..silly me

  • rate this

    Comment number 708.

    690. givemestrength
    This will no doubt be a VERY unpopular comment, but how about licensing cyclists. Got to be millions of them on the roads. Why should they get to use them for free!

    Yes, great idea. How about an air tax as well? Surely we can tax the air? Or maybe people can just pay rent on their lungs? All good ideas.

  • rate this

    Comment number 707.


    ...I hope you realise that this could put you in an awkward position in the future...
    You don't aspire to owning a house therefore you're potentially at the mercy of a landlord who can increase the rent or kick you out any time.
    You choose to do a low paid local job - what happens if local work dries up and you have no savings ?
    Most people want more security than that

  • rate this

    Comment number 706.

    I already pay for road use; it's called Road Tax. There is a compelling arguent, which is to REDUCE tax on road usage and fuel so that businesses can reduce prices and be financially viable.

  • rate this

    Comment number 705.

    Wait a minute, I thought road tax & fuel duty went up in the name of "global warming" - which we were told is the biggest ever threat to humanity. Now that people are buying more efficient, less polluting cars & therefore generating less income, it turns out global warming isn't the biggest threat to humanity, congestion is, so we'll have to pay more for that now. How stupid do they think we are?

  • rate this

    Comment number 704.

    Road charging should remain strongly proportional to the amount of fossil fuels a driver uses. If someone uses an electric car, hybrid or merely a fuel efficient car they should recieve monetary benefits from this.

  • rate this

    Comment number 703.

    re 665 Graeme

    try going to and type "road tax"
    You will see the second entry refers to CAR TAX

  • rate this

    Comment number 702.

    Any method they charge that is variable (i.e. depending on engine emmissions, time of day, type of road etc) is going to result in drivers minimising their costs by avoiding whatever incurs the most charge so the Government will always need to raise charges to maintain the same income from them.

  • rate this

    Comment number 701.

    670. Norin Radd

    "The road network is paid for out of general taxation and local roads are paid for by Council Tax."

    Most local authority income is from general taxation: council tax is often less than a fifth of their income, therefore, almost ALL roads expenditure comes from general taxation.

  • rate this

    Comment number 700.

    I don't believe for a second it will be less for rural users who've also had public transport cut. So much traffic outside London is lorries, 86% frieght is transported round the country this way. If the roads are going to be privatised it'll be businesses like Tescos that will control them and charge taxpayers. Let's trial charging the businesses first before squeezing householders yet again.

  • rate this

    Comment number 699.

    Improving roads requires spending lots of money, taking on the green lobby, taking on the NIMBYs (that's you btw) and the archaic planning laws. Today's politicians can't risk their careers on this stuff.

    But charging motorists more to use the roads is a great way of raising revenue. You can charge as much as you like and there's nothing anyone can do about it.

  • rate this

    Comment number 698.

    People are buying more fuel efficient cars because fuel is so expensive Gov needs to realise that it can't just keep taxing & taxing as something has to give. What is happening is people are becoming less mobile which hugely impacts economy & jobs market. I can't afford to spend money in the shops if I can't get to them. Motoring will go back to being a rich boys only past time - suits the Tories.

  • rate this

    Comment number 697.

    690. givemestrength "How about licensing cyclists. Got to be millions of them on the roads. Why should they get to use them for free!"

    Silly comment. Why not license pedestrians as well then? After all, why should they get to cross the road for free!

  • rate this

    Comment number 696.

    An excellent idea as then every car in the country can be tracked wherever it is whenever it is on the road.

  • rate this

    Comment number 695.

    No. 680 Andrew Lindop - Ok, at least you seem less attached to your car than others. My contention is that most people (even in the age of supermarkets away from town centres) can manage without a car.
    The problem we have today is that three and four (and five) car households are the norm - that is beyond crazy, people are mindless.


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