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 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 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 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 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 343.

    Privatising the roads will only further push up the cost of living as haulage firms will have to pay the tolls too. They in turn, will simply pass the added cost onto the consumer. A better way might be to sort out our archaic, disjointed and crumbling public transport system and reduce fares to encourage people to use that rather than yet another stealth tax many can ill afford.


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