Pay-per-mile scheme 'only way' to fill £24bn 'black hole' left by lost fuel duty receipts

The proposal comes after growing concerns about the sustainability of current car taxes and the need for a more radical approach to funding transport infrastructure.

Various stakeholders, including think tanks, industry associations, and MPs, have weighed in on the potential impact of road pricing.

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Gideon Salutin, Transport Lead at the Social Market Foundation, explainedthat introducing road pricing is a reasonable request. He noted that as drivers switch to electric vehicles, the loss in fuel duty revenue would need to be funded from elsewhere.

He told GB News: "With public services squeezed by increasing demand and tightening budgets, it's reasonable to ask EV drivers to pitch in for the services they use, like road maintenance, safety, and construction.”

Salutin added that polling showed more people support road pricing than oppose it. However, opposition to fuel duty has made the new Labour Government cautious about new taxes.

He predicted that a steeper drop in fuel duty receipts might be necessary before road pricing is seriously discussed in the Chancellor's Budget.

Meanwhile, the National Franchised Dealers Association has submitted its Budget proposal to Chancellor Rachel Reeves. It addresses various issues affecting the automotive industry, including the need for a clearer plan for future road taxation policy.

Sue Robinson, Chief Executive of NFDA, said the association opposes increases in fuel duty rates, arguing it would impose higher costs on British motorists during a time of global instability.

The Campaign for Better Transport has urged a new pay-per-mile tax to be brought in for electric vehicles in lieu of fuel duty.

In 2022, when the idea of road pricing was discussed by the Transport Committee, Huw Merriman MP, emphasised the urgent need to discuss road pricing.

He advocated for a national scheme using innovative technology to price journeys based on road usage and vehicle type. "Just like our current motoring taxes but, by using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives," Merriman stated.

He stressed that road pricing should not increase overall costs for motorists or hinder progress on active travel. Merriman warned against a patchwork of local schemes, arguing for a unified national approach.

The former MP for Bexhill and Battle highlighted the pressing nature of the issue, noting that new taxes relying on new technology require years to implement.

Merriman urged: “Work should begin without delay. The situation is urgent. New taxes, which rely on new technology, take years to introduce.

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“A national scheme would avoid a confusing and potentially unfair and contradictory patchwork of local schemes but would be impossible to deliver if this patchwork becomes too vast. The countdown to net zero has begun. Net zero emissions should not mean zero tax revenue.”

Speaking previously to GB News, an HM Treasury spokesperson, said: “We have no plans to introduce road pricing. We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”