Tuesday, 23 February 2021

Submission to UK Inquiry on road pricing

On 18 December 2020, the Transport Committee of the UK House of Commons called for written evidence on an inquiry on zero emission vehicles and road pricing.

Leaving aside zero emissions vehicles (of which I am not so much of an expert), the road pricing elements were of interest.  The terms of reference had the following questions:

  • The case for introducing some form of road pricing and the economic, fiscal, environmental and social impacts of doing so;
  • Which particular road pricing or pay-as-you-drive schemes would be most appropriate for the UK context and the practicalities of implementing such schemes;
  • The level of public support for road pricing and how the views of the public need to be considered in the development of any road pricing scheme;
  • The lessons to be learned from other countries who are seeking to decarbonise road transport and/or utilise forms of road pricing.

I was part of a consortium of experts, comprised of Ian Catling, Andy Graham of White Willow Consulting and Andrzej Kowalski, with Steve Morello from Milestone Solutions (as am I).  The next few blog posts will be about that submission and elaborate further.

I lived in the UK from 2005 until 2019, so have extensive experience with transport and highways policy in the country, and still have a personal interest in the UK.  The UK notably embarked upon and then abandoned a radical programme called "National Road Pricing" between 2005 and 2009, failing due to enormous public and political backlash.  The lessons learned from that attempt need to be heeded again, although technology has changed much in that time, not just for road pricing, but in vehicle motive power technology.  

Background

The UK Government is looking at road pricing for one reason, revenue from fuel duty is in decline because of the switch towards electric and hybrid vehicles, and the ongoing improvements in fuel efficiency of petrol and diesel vehicles.  It’s worth noting that this revenue is treated as general tax revenue in the UK, unlike fuel duty in many other jurisdictions (notably the United States at Federal and State level).  It is important to note that the policy motive comes from a desire to protect general tax revenue, not tax revenue to pay for road maintenance and capital spending more specifically, but the tool being looked at is one generally used to do the latter, although some jurisdictions that hypothecate fuel taxes for transport do so for modes other than roads.

I’ll write more about this in the coming weeks, but for now I want to summarise the six key messages:

Get your objectives clear from the start

Given the primary objective of this exercise is to consider the value of road pricing to raise revenue, it’s important to consider what transport policy outcomes politicians want from introducing road pricing.  If it is simply about revenue sustainability from user pays, then scheme design can be simpler than if it is intended to address congestion.  However, as a tool the introduction of road pricing can be undertaken to be simple at first, but with flexibility built into it to meet other objectives.  Don’t try to do too much at once.

Public acceptability is critical

The UK’s National Road Pricing programme faltered after one of the first online petitions to Number 10 saw over a million signatures in opposition to a policy to introduce time/distance/place based charging.  The reason being that the British public did not accept the need or desirability of the concept, not least because many feared they were to be taxed again with little benefit for them (reflecting the many years that fuel duty increased with the infamous “fuel tax escalator” which increased fuel duty by beyond inflation – all of which was simply general revenue for the Exchequer.

For public acceptability to even begin to exist in the UK, talk of road pricing has to be about replacing fuel duty and largely vehicle tax and the HGV levy.  The public will not accept road pricing on top of existing taxes.  Secondly, road pricing must deliver value to road users, as seen in how at least some of the money is used, such as by addressing comprehensively the backlog of deferred road maintenance and providing a steady schedule of high value road projects to be delivered. Thirdly road pricing must include user choice, whether it be in the technical solution to measure and report distance data, but also the entity a motorist uses to have and to pay a road pricing account.  If roads are going to be much more like other utilities, then paying for the roads ought to learn the lessons from those experiences – competition, choice and consumer interests are important.  One way to develop public acceptability would be a demonstration programme not of technology, but to test the public’s experience of what it would be like to pay by mile instead of paying through fuel.  There is extensive experience in the United States of this that the UK would do well to heed.

Keep it simple and don't try to do a "Big Bang" introduction

Keep it simple by avoiding gold plating requirements (don’t seek to try to implement too many policies at once – it should be about charging by mile, by vehicle type, on public roads) and do not try a Big Bang approach. The National Road Pricing programme sought to do too much in one step, by applying to all vehicles and charging them by road type and time of day.  It would be lower risk to introduce pricing to one type of vehicle first,  such as Heavy Vehicles (replacing the HGV Levy and fuel duty for them) or electric vehicles.  Experience in New Zealand, Oregon and in some European countries indicates that starting with heavy vehicles may make it easier to move to light vehicles subsequently, as heavy vehicles are more complex and need a more complex rate structure (taking into account changes in configuration).  Heavy vehicles and electric vehicles may make sense as the first groups to transition, followed by hybrids and then newly registered conventional vehicles, with a transition that may take some years.

Use proven technologies and systems, but don't treat it as just another IT service.

There is no need to reinvent the wheel.  The time for treating road pricing as bleeding edge technology is long over, as multiple jurisdictions have proven.  However, it isn’t just another IT service, so don’t just treat it as buying an IT and billing system.  Road user charging involves reliably and consistently identifying a chargeable vehicle, metering its use of a geographically defined (and vast network) and billing it accordingly (and enforcing it).  Experience in many jurisdictions should be brought to bear in designing the system, by specialists who know how it works from years of actually operating systems.  Note that no jurisdiction to date has introducing road user charging for all vehicles on all roads, but a few have applied it to some vehicles on all roads.

Let competition drive innovation and user choice

Let the market provide innovative competitive customer service options this could range from a plain, simple account to an account that provides a platform to pay for parking, pay-as-you-drive insurance, roadside assistance and other related services.  There shouldn’t be a government mandated single box and account, but rather allow road user charging to be just another service that is offered.  This reflects experience in countries like Belgium, Hungary and New Zealand. 

Use this as an opportunity to reform the UK highways sector more generally

Highways England was a good start, but this should take things much further as it applies to all public roads and should move roads away from the current panoply of central government funds supported by council tax, to a more dedicated and accountable system of funding all roads from a user charge.  It should mean that users get a better level of service, that maintenance is prioritised and maintenance happens at times that minimise disruption to road users.  It should mean delivering objectives around reducing congestion and improving safety, and a dedicated funding stream available to ensure the road network enhances accessibility.  It should mean an end to ad-hoc politicised funding of roads driven by central and local politicians wanting to make names for themselves, rather than meeting the needs of those who are paying.



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