My Lords, the Government have no plans to consider road pricing. As set out in the letter to the Transport Select Committee in January 2023, the Government are focusing on delivering their core priorities.
My Lords, road pricing clearly touches a raw nerve in the body politic. The OBR has recently said of the Government’s policy on electric vehicles that it is
“rapidly eroding the £39 billion”
a year
“revenues from petrol and diesel”
taxes. That will leave a large hole in the Budget. The Transport Select Committee in the other place, with a government majority, said that work on road pricing should start straightaway. When I was Transport Secretary 30 years ago, I floated the idea, which is now much more feasible because of technological progress. If taxes made through the fuel duty are not replaced with something else, public transport will become much more expensive, undermining a sustainable transport policy. Should the Treasury be quite so hostile?
The Treasury sees that there are many options going forward for the fuel duty and many broader motoring taxes—and indeed for all taxes. As we transition to net zero, the Government will need to ensure that the tax system encourages more EV uptake and that revenue from motoring taxes keeps pace while remaining affordable.
Does the Minister agree that the introduction of road pricing with modern technology would mean that vehicles could be priced on the basis of their consumption of fuels and that differentiation could be made between goods vehicles and passenger vehicles, so that it would be a much fairer system? Does she also agree that road pricing would enable the police very much more easily to detect vehicle crime, particularly on motorways, which has raised car insurance premiums so much recently?
I recognise what the noble Lord says. Many think tanks and other groups have done a lot of work on road pricing. Jurisdictions around the world are looking at it; however, as yet, very few have managed to introduce it successfully. From the Treasury’s perspective, we welcome work from external stakeholders on road pricing and all other taxes.
My Lords, the Minister has done good job of telling us what the Government are against but a less good job of telling us what they are in favour of. In light of the reduction in fuel duty revenues that will arise from the UK’s ambitions to shift to electric vehicles, can she tell us what concrete plans the Treasury has to replace those losses in a way that is positive for the environment and fair to rural communities?
At the moment, fuel duty raises around £25 billion annually. That is forecast to increase in nominal terms to £30.5 billion over the scorecard period to 2029. The change in fuel duty is a medium-term to long-term problem which will allow everybody who has an interest in this to have their say—including taking into account the shift to electric vehicles—and an appropriate solution will be found.
My Lords, many of our motorists feel badly done by, with the extra cost of motoring all the time and the extra cost of insurance for motorists. If the Government have any idea of road pricing, would it not be fairer to look at all those who use our roads apart from those who merely pay the vehicle excise duty?
My noble friend raises an important point about the cost of motoring. That really is top of mind for the Government. It is why we have frozen fuel duty since 2011 and had a 5p cut on fuel duty since March 2022. We recognise that for many people—particularly those in rural communities—using their car is essential, and it can be quite costly.
My Lords, will the Minister assure the House that, were the Government ever minded to introduce road pricing, rural communities and those who drive on rural roads—particularly in North Yorkshire, where we have the longest transit routes for people on their way to work or pleasure—would be protected?
As I said at the outset, the Government have no plans to consider road pricing. Therefore, I cannot give my noble friend that assurance, because it would be purely hypothetical.
My Lords, the state of Britain’s roads has been described as being at breaking point. A recent survey suggests that local roads are in their worst condition for more than 30 years, and the backlog for repairs has risen to a record high. The AA estimates that pothole damage is costing Britain’s drivers nearly £500 million every year. Is the Minister aware of figures compiled by the LGA that show that Labour councils invest 83% more per head on road maintenance than Conservative councils?
What I can say is that this Government have invested significantly in local highway networks. For example, since 2015, we have invested £11 billion and, as part of Network North, £8.3 billion has been earmarked for local road maintenance over the next 11 years.
My Lords, I refer noble Lords to my interests as set out in the register. Many economists like road pricing because it relies on the principle of “polluter pays”. As we shift from polluting vehicles to EVs, hydrogen, et cetera—more environmentally friendly vehicles—we might move from “polluter pays” to the principle that those who contribute to the wear and tear of our national infrastructure have to pay as drivers. I know that the Government have ruled it out at this stage, but in the longer term, have they done any planning on how we pay for upkeep of the roads? Perhaps those who contribute to wear and tear could make a contribution.
I am not aware of any work in that area, but, of course, my noble friend raises a very important point. There is the issue of wear and tear on the roads, which all vehicles contribute to, but what is sometimes overlooked is the impact of particulates that come from tyres. That might be from an internal combustion engine vehicle or from an electric vehicle—it is another source of pollution.