As electric cars become mainstream, could drivers soon be taxed per mile to use the roads?

What would a new taxation system for driving look like?

Forward thinking: MPs say £35bn of tax could be lost if there is no replacement for duty on vehicles and fuel (Getty Images)

Fuel tax and vehicle excise duty could be replaced by tracking technology billing motorists for every mile they travel.

The proposal comes from MPs on the Transport Select Committee – whose chair is the senior Conservative, Huw Merriman.

They say the nationwide switch from petrol and diesel to electric vehicles means the £35bn currently paid by drivers could shrink to zero.

But how would a new system work? These are the key questions and answers.

What’s the problem?

The long-established convention is that motorists should pay according to the amount they drive, to reflect the demands they place on the road network and the environmental damage they cause.

Currently motorists contribute £35bn per year in tax. That is £500 for every man, woman and child in the UK.

The smaller part of this is the £7bn revenue from vehicle excise duty (VED, the former “tax disc”). This is allocated to the National Roads Fund to fund local and strategic road upgrades.

But four times as much – £28bn from fuel duty – goes into general taxation.

Drivers of electric vehicles are exempt from both taxes. The government says: “We will end the sale of new petrol and diesel cars and vans by 2030, with all new cars and vans being fully zero emission from 2035.”

The Transport Select Committee, which has investigated the problem, says: “Fuel duty and vehicle excise duty are increasingly unfit for purpose. The consequences for both the public finances and congestion management are too severe for inaction.

“Policies to deliver net zero emissions by 2050 are likely to result in zero revenue for the government from motoring taxation by 2040.”

If the environment benefits, what’s the problem?

“Zero emissions” from car exhaust pipes does not mean there is zero impact; the electricity needs to come from somewhere, and renewable sources of energy may not be able to meet all the demand.

Removing taxation also incentivises greater road use, causing congestion and increasing the risk of accidents.

“If the government fail radically to reform motoring taxation, the UK faces an under-resourced and congested future,” the MPs’ report says.

“In addition to generating taxation to fund essential public services, motoring taxation plays a key role in managing congestion by regulating demand to use public roads.”

Claire Haigh, chief executive of Greener Transport Solutions, warned: “If we do not move fast, people will just bank the fact that if you buy your electric vehicle you do not have to pay much in running costs.

“If that becomes part of the psychology of owning an electric vehicle ... we have no hope of filling that hole and changing how we pay.”

But don’t we already have lots of local schemes?

Yes. They range from tolls on bridges and tunnels to the London congestion charge (£15 for driving into the centre of the capital) and low emission zones. The danger, say the MPs, is that piecemeal arrangements could make a national scheme unpopular or impossible.

“The patchwork of devolved schemes may make it impossible to deliver a national road pricing scheme. The simultaneous operation of local and national road pricing schemes would subject drivers to confusion and unfair double taxation,” the report says.

Anything but an all-UK policy is unwise, MPs say: “The devolution of road pricing could lead to the introduction of clunky, unconnected schemes that charge users the same price for driving one mile into the zone as those who drive across it for hours in a day.”

How would it work?

The most likely approach will work on the same basis as “black box” or telematics insurance. This involves a device fitted to cars that gathers information on distance travelled as well as data on speed, braking and cornering.

Currently its main purpose is to allow younger drivers to get cheaper policies if they can demonstrate cautious motoring and avoid driving at night.

How much would I pay?

In a typical (non-Covid) year UK motorists drive around 350 billion miles. To recoup £35bn, all other things being equal, the charge would be 10p per mile. But initially there are likely to be variable fees depending on the vehicle type.

In addition, government might wish to increase the rate to, say, 11p to try to reduce the amount of driving and incentivise public transport use without reducing revenue.

Many experts prefer a flexible system where drivers pay less if they switch to quieter roads or travel outside rush-hours to reduce congestion.

The committee says the scheme should be “revenue neutral,  with most motorists paying the same or less than they do currently”.

Wasn’t there a proposal for “road miles”?

Yes. The economist Deirdre King and the AA president Edmund King submitted a proposal for the Wolfson Economic Prize.

They propose: “Drivers would be allocated at least 3,000 free Road Miles giving free access to roads. Fuel duty will be reduced and VED revised to further encourage greener vehicles.

“After 3,000 miles, car drivers would be charged modest mileage rates of less than 1p per mile in the first year.”

How many people currently drive in the UK?

About 70 per cent of the British population has access to a car – but the figures on commuting differ dramatically. The proportion of workers who commute by car is:

• Wales: 83%
• Scotland: 68%
• England: 67%

But only 27 per cent of workers who live in London report using a car for their commute – meaning that 76 per cent of English employees outside the capital commute by car.

Do other countries use road pricing?

Singapore introduced the concept in 1998, and now has a sophisticated Electronic Road Pricing scheme.

“Various road pricing schemes have been introduced in Sweden, Germany and the United States,” says the Transport Select Committee report.

What do the MPs say should be done?

The Transport Select Committee wants the Treasury and the Department for Transport to set up an “arm’s length” body to find a new road-charging mechanism by the end of the year.

“The body should consult experts on road planning, taxation and telematic technology, and it should consider international experience,” the MPs say.

What does the government say?

“The government has committed to ensuring that motoring tax revenues keep pace with the changes brought about by the switch to electric vehicles, whilst keeping the transition affordable for consumers.

“We will respond to the committee’s recommendations in full in due course.”

But the report notes the views of Professor Stephen Glaister, a member of the advisory panel to the 2004 Road Pricing Feasibility Study.

In October 2014, he said it has become a standing joke that even if any UK politician is unable to deny the logic of the case for some form of road pricing, they are never willing to implement it within the next 10 years – by which time they will be long gone.