Policy statement

Road Pricing

This policy statement considers the need for a new system of road pricing that balances the competing demands of the citizen’s right to mobility and economic and environmental costs of travel.

Traffic has increased by 81% in the UK over the last 25 years, driven by increased car ownership and the fact that it is often cheaper to travel by car than by bus or train. This has resulted in increased congestion which has serious impacts on the economy, our quality of life and overall emissions from transport.

Currently UK motorists pay Vehicle Excise Duty (VED) and fuel duty, which goes directly to central government. The majority of motorists currently pay the same amount to use roads at all times of the day, whether they are congested or not. This is at odds with public transport users, who generally pay more at peak times. While VED rates encourage lower-emission vehicles, they do not affect when we use our cars.

The cost of providing and maintaining our roads is met from general revenue, but the amount spent is far less than the amount collected from the motorist. We now need a pricing mechanism that effectively internalises the real environmental and economic cost of road use. The core principle of any road pricing scheme should be that it directly reflects the environmental and financial costs associated with road use and, where appropriate, accounts for congestion.

The technology is now available to implement this change and significantly improve the way in which revenues are collected, the long-term cost savings of which would justify the initial capital investment.

Public perception of expenditure on public transport and roads is generally poor. A restructuring of the road and fuel taxation system would provide the ideal opportunity to incentivise social change in the way we use our cars, while ensuring that sufficient funds are ring-fenced to fund alternatives (such as public transport). Properly marketed, such a change would restore public confidence that their taxes were being appropriately spent.

 

Key recommendations

We recommend a new system of road pricing that:

  1. Reflects the true cost of travel. The core principle of road pricing should be that any charge made should directly reflect the environmental and financial costs associated with road use.
  2. Replaces existing forms of taxation. A new system of road pricing should be holistic; it should not be in addition to existing forms of taxation (VED and fuel duty) but replace them.
  3. Disincentivises road use during peak hours. Any future national charging scheme should include a congestion element where appropriate.
  4. Ring-fences the funds raised. The government should pledge the funds accrued through a new road pricing system and pump this back into public transport right across the modes.

Share:

All reports and policies

Browse all our reports, policy statements, consultation responses and presidential addresses

View all

Have a question?

Contact our press team.