Chancellor Rachel Reeves is considering implementing a pay-per-mile scheme for UK drivers to address a potential revenue shortfall caused by declining fuel duty income. The Campaign for Better Transport (CBT) is advocating for this scheme, proposing that drivers of zero-emission vehicles (ZEVs), such as electric cars, should be charged based on their mileage. This move aims to encourage the adoption of environmentally-friendly vehicles while ensuring fair contributions from drivers for road usage.
Currently, duties on petrol, diesel, and other fuels generate approximately £25 billion annually for the Treasury. However, with an increasing number of drivers switching to ZEVs, this revenue stream is expected to decrease. Despite previous governments hesitating to introduce per-mile charges, CBT believes that the public would support such a measure to address the impending financial challenge.
CBT’s director of policy and campaigns, Silviya Barrett, emphasised the importance of the Chancellor taking action promptly to avoid the looming financial gap. The proposal suggests exempting existing ZEV owners from the new charge to encourage the transition to electric vehicles. Additionally, CBT emphasises the need for a fair and straightforward system that garners broad public approval.
The organisation’s letter to Chancellor Reeves highlights the necessity for ZEV drivers to contribute to vehicle taxation through a transparent pay-as-you-drive model based on odometer readings. While acknowledging potential opposition to the proposal, CBT’s research indicates that the general public is in favour of the concept.
Support for this initiative extends to a forum comprising 37 transport-related organisations, all advocating for a comprehensive reform of vehicle taxation. Members, including the RAC and the Confederation of Passenger Transport, stress the importance of a balanced approach that considers both conventional and electric vehicle drivers’ interests. The potential benefits of pay-per-mile taxation, such as reducing congestion and promoting public transport use, are also highlighted by industry representatives.
In the realm of political commitments, Labour has pledged to reverse the previous government’s decision to delay the ban on conventionally fuelled new cars, originally set for 2030. Chancellor Reeves is expected to unveil further fiscal plans in her upcoming budget presentation on October 30, which will mark her first budget announcement.
The conversation around pay-per-mile schemes and the evolving landscape of vehicle taxation will continue to shape discussions on transportation policy and environmental sustainability in the UK.