How to tax Britain's changing cars while fighting shy of irate drivers

Transition from fossil fuels to renewables has been piecemeal and the car market shows how not to do it

The Ulez scheme in London is an example of why we can’t have a situation in which the poorest are paying more to get around. AFP
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Where I live in South-west London, you know to avoid certain roads at particular times of the day. Don’t do that and you will sit in traffic jams.

Likewise, venturing into the centre of the capital by car, Londoners know when, and when not, to go.

It’s the same with driving farther afield.

Heading north, avoid the M1, M6 beyond Birmingham, and to the South-west, the M5 south of Bristol in ‘rush’ hour (an oxymoron if ever there was one, there is absolutely no chance of rushing).

Indeed, all over the country it is the same: high levels of traffic and gridlocked roads.

So bad is our car problem that a report from the Resolution Foundation and funded by the Nuffield Foundation, Where the rubber hits the road, reckons that Britons spend 1 billion hours a year sitting in traffic, at a cost of £60 billion ($76 billion). For those who commute, they’re spending 115 hours on average, costing about £7 billion.

Average British road speeds are behind those in rival nations. They’re only going to become slower, as road use increases – up by more than 20 per cent by 2060, the Department of Transport predicts.

Part of the reason for the rise, as well as an ever-growing population, will be EVs, which are cheaper to run, in fuel costs but also in taxes.

As a nation, we’re all over the place where cars are concerned. Drivers of fossil-fuelled cars must pay fuel duty every time they visit the pumps. Likewise, they have to stump up for vehicle excise duty to keep their car on the road. Together, these taxes raise £32 billion a year.

Electric vehicles or EVs are largely exempt. Therein lies a problem, as EVs are growing in popularity, accounting for one in six car sales last year.

By 2030, if the government sticks to its net-zero plan, all new UK car sales will be non-petrol and diesel. At that point, receipts from the twin car levies will be down by £10 billion, a large amount lost to the Exchequer. That figure will only increase as EVs take over and traditional cars disappear completely.

Yet, for the 13th year in a row, the government has failed to increase fuel duty by inflation – because it would rather have the vote of gas-guzzling motorists than make more money out of them before pushing them away totally.

Go figure. Equally, parts of London are subject to a congestion charge, aimed at reducing exhaust pollution and improving journey times. But the roads are just as crowded as they ever were. Why? Because people are using EVs, which are not subject to the charge, so in that second aim the policy has failed.

The Labour mayor of London has also installed the Ultra Low Emission Zone (Ulez) to reduce pollution, so that those driving older petrol and diesel cars must pay a fee. Until this week, only specified districts fell within the Ulez restrictions. Now, it applies to the whole of London.

Mighty unpopular it is proving – held responsible for the Tories winning the recent Uxbridge and South Ruislip by-election and subject to popular protest, including repeated acts of sabotage as cameras meant to police the zones are disabled.

To add to the driver’s burden there are also low-traffic neighbourhoods or LTNs to contend with. An LTN is a street that is closed off, either by ANPR (automatic number-plate recognition) cameras, bollards or large wooden planter boxes. The aim was to remove traffic in some residential streets, in turn reducing air and noise pollution and road accidents. It was also intended to extend local journey times so drivers were more inclined to walk or cycle.

The LTN targeted cut-throughs but they’ve proved hugely controversial and Prime Minister Rishi Sunak has ordered a review. However, in the face of a backlash over the return of rat runs, there is no sign of progress.

Confused? You’ve every right to be. Britain wants to be anti-fossil fuel car but dare not upset those drivers. It wishes to be against congestion, while adding to congestion with increasing numbers of EVs. These are EVs that cause road wear and tear, the same as petrol and diesel vehicles do, and deaths and injuries, same as them.

Since EVs are new, they tend to be bought by people in higher-income brackets; it’s the less well-off who can’t afford to make the switch from petrol and diesel, who don’t have charging points in their homes. They’re suffering more in this alphabet soup of road charges and restrictions, and that is not fair.

None of it adds up. And all the while, a large dent is being created in the already stretched public finances.


These are EVs that cause road wear and tear, the same as petrol and diesel vehicles do

Reform and simplification are urgently required. EV-users can no longer expect to reap every benefit. They pay less in running costs than traditional drivers, but they should be obliged to cough up, so they may think twice before taking the car and making the roads even more crowded, and that yawning gap in the government finances must be filled. They should be subjected to a flat-rate, per-mile duty that could be monitored and collected by their sophisticated on-board software, including GPS.

That same telemetrics could be adapted to increase the per-mile charges when they hit congestion areas.

While the thinking behind Ulez and LTNs is good, their application is flawed. Both should be independently reviewed and as quickly as possible. If needs be they ought to be scrapped – we can’t have a situation in which the poorest are paying more to get around. This, too, often arises in areas where public transport has been allowed to decline.

A faster-moving Britain will be reflected in productivity growth, long the bane of repeated governments.

To date, our response to climate change, to the transition from fossil fuels to renewables has been piecemeal – hit and miss is another way of putting it. This simply won’t do any longer. A complete refit is needed.

Published: August 22, 2023, 10:14 AM