The autumn financial statement provided little encouragement for the decarbonisation of transport, with confirmation that electric vehicles (EVs) will soon be liable for vehicle excise duty (commonly known as road tax).
Behind the headline, from April 2025, EVs will benefit from a low £10 tax rate in the first year of registration of a new vehicle (compared to first year tax of between £10 – £2,365 for petrol and diesel vehicles) rising to match the standard rate of £165 from the second year of registration.
Prior to the financial statement, it was rumoured that an announcement might be made regarding some new form of road pricing.
Road pricing, if implemented effectively, is a way to encourage more efficient car travel by moving the balance of car costs from standing costs to usage costs.
Currently, despite increases in fuel costs, the marginal costs of an additional trip by car are small once you have purchased, insured and maintained a vehicle. Comparably the marginal costs of public transport are high, but there are no costs associated with purchase, insurance and maintenance.
Moving a greater proportion of car costs from ownership to usage can help reduce car trips which could be more efficiently made by other modes. Effectively this can have the impact of a short urban trip by car costing the same or more than an equivalent public transport trip, encouraging modal shift to more efficient and sustainable modes including walking, cycling and public transport. This modal shift will need to be supported by services which can complement public transport, reducing the need to own a car, such as taxis, car clubs and shared micromobility schemes.
Changing from a pre-existing system can be hard, and despite careful planning, there can be perceived ‘winners’ and ‘losers’ from a change in costs.
To prepare for the inevitable changes required, starting a national conversation about the balance between tax-raising powers and the future transport system we need is vital. In order to start this conversation, work is required to:
- Understand how tax revenues will decline as petrol and diesel sales decrease;
- Develop a shared vision of how we want transport to support life in the UK in the 2030s and beyond; and
- Discuss the options to develop a new form of paying for how we travel to help meet this shared vision of a decarbonised future.
We know from recent experience that local transport schemes can be divisive. We can plan for a positive and sustainable future, but we must work together on the potential solutions, starting now.
