Is road pricing inevitable?

The recent RAC Foundation report  arguing for the introduction of road pricing was not surprisingly met with a mixed response and a statement from the Department for Transport to the effect that there were no plans to introduce such charges. However, individual Conservative MPs continue to promote the idea.

Those opposed to road pricing made the usual arguments that fuel duty is a cheap (as a way of collecting revenue) and effective proxy. The more you drive the more you pay so why do we need to implement a highly expensive and potentially bureaucratic system of logging where and when everyone is travelling. On the face of it this seems a very appealing argument, however, it ignores two important issues.

First, the days of filling our cars with petrol and diesel are slowly ebbing away. According to some estimates within ten years, 10% of the cars on the road will be electric and by 2030 the figure will be 20%. To maintain the same level of tax revenues there will need to be a large increase in fuel duty or another source of revenue will need to be identified. Hence, The Treasury’s continued interest in road pricing.

Second, fuel duty does not address the issue of congestion. The cost of petrol does not vary where and when we drive. There is not going to be an increase in road capacity in our urban areas, so, to address congestion, the only solution is pricing. The London congestion charge has shown it is possible to significantly reduce the volume of traffic if charging is introduced and hence reduce congestion.

So while road pricing will not be coming in any time soon, within ten years we can expect the first steps towards a national road pricing scheme being introduced.


One thought on “Is road pricing inevitable?

  1. 1) When will the tipping point be (relative to electric cars etc) when fuel duty income will fall sufficiently to require a change in policy to road pricing?
    2) Fuel duty works with congestion in a coarse way – queues lower your mpg, so you pay more.
    3) Sceptics point to London charging scheme not being as effective in reducing traffic as is often claimed. How cost-effective is collection? And could a national scheme guarantee anything like London’s ‘efficiency’?

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