UK announces further details of its electric vehicle road user charging proposal (eVED)

I wrote in December 2025 about the proposals from the UK Government for what it is called eVED or Electric Vehicle Excise Duty.  Elsewhere, this would be known as a distance-based road user (or road usage) charge, and is intended to apply to EVs, PHEVs and hydrogen fuel-cell vehicles that are light passenger vehicles.

The UK is following Iceland and New Zealand, which are the first two countries to mandate distance-based road user charging for EVs and PHEVs. It is also following in the US, Oregon, Utah, Virginia, Hawaii and Vermont all of which have or are introducing opt-in distance based charges (with the option of an annual fixed fee) for similar vehicles. 

The significance of the UK is it will, when implemented, be the largest light vehicle road user charging system in the world (based on numbers of vehicles it applies to). 

There are around 2.8 million vehicles today in the UK that it will apply to, which is larger than the number light vehicles that are subject to RUC in New Zealand (currently the largest - which is around 1.2 million light vehicles). That number will be exceeded when New Zealand shifts all remaining petrol powered light vehicles to RUC (which will mean around 4.3m light vehicles on RUC).  

What is VED?

In order to avoid confusion in terminology, what is meant by Vehicle Excise Duty in the UK is broadly equivalent to annual vehicle registration or licensing fees in most other jurisdictions. This are broadly fixed fees for a duration (one year or smaller increments), based on a vehicle classification which may be by size, type of vehicle, gross maximum weight, engine size, fuel type or emissions class, or some combination of those.

The eVED proposal is for a fee based on distance travelled to apply to BEVs and PHEVs.

What's happened now?

The UK Government has now published its response (PDF) to consultation on the proposal.

The details of the proposal have been updated on the UK Government website here.

In short:

• On 1 April 2028, light BEVs, PHEVs and hydrogen-fuel cell cars will be subject to eVED. It only applies to "light passenger vehicles" so not light commercial vehicles.
• The charge will be £0.03/mile (US$0.025/km) for BEVs and hydrogen-fuel cell vehicles and £0.015/mile (US$0.0126) for PHEVs. 
• Charges will be increased in 2029 and 2030 in line with the Consumer Price Index.
• Drivers will be required to provide an odometer reading when they re-register their car for VED from that date, and to estimate mileage for the YEAR ahead.
• Drivers can choose to pay for the entire estimate upfront in advance, or in instalments spread through the year.  Reconciliation of the correct amount will happen at annual VED time.
• It is expected to generate £1.1b (US$1.48b) in revenue in the first full year, increasing to $1.435b the subsequent year and £1.865b in the year after that.
• The effect on EV sales is expected to be a 2% reduction over a five year period.

So the fee will not apply to any other BEVs or PHEVs (i.e. light commercial or heavy vehicles)

Several other important elements include:

• Net revenues will be treated as general tax revenue. It will not be hypothecated for road spending or transport spending.  This reflects fuel duty, but does not reflect practice in any other jurisdiction, which generally sees it hypothecated for road spending or to support further vehicle electrification.
• No provision has been made to require that there be a location-specific option for measuring distance available for vehicle owners who want it. This means that such vehicles located in Northern Ireland which cross the Irish border, will be subject to the fee for any distance driven in the Republic of Ireland. Likewise, driving such a vehicle outside the UK will see the fee charged at the same rate. Officials may say it is the same case with fuel duty, except that fuel duty isn't paid infinitely on travel outside the UK. At some point the vehicle will need refueled, and would be subject to fuel duty in the country of purchase.  If the Republic of Ireland or say France introduced a similar fee, imposed on visiting vehicles, then it would mean UK registered vehicles are double taxed.
• The fee only applies to UK registered vehicles, so visiting BEVs. PHEVs and hydrogen fuel cell cars will pay nothing.
• Verification of odometer readings only occurs when safety inspections are undertaken ("MoTs") , which only needs to happen after a vehicle is three years old. This raises the real risk of vehicle owners facing a very high initial EVED bill if their estimate of miles for the previous three years has been low. This is particularly the case if it has changed ownership, as the incentive will be for the owner for the first two and a half or so years to estimate a very low mileage and pay (and lie about mileage when renewing VED), and to sell the car, with the subsequent owner receiving the first MoT and the verified odometer reading being much higher.  This might be resolved if change of ownership includes records of reported mileage to be compared to actual mileage on sale.

The proposal continues to upset the EV retail lobby which sees it as risking EV sales overall, but it is a fairly simple plan, and it does only partially recover revenue that would otherwise have been collected from fuel duty if the cars were petrol or diesel powered.

Nevertheless, assuming it proceeds it means the UK will be introducing a road user charge from July 2028 which is distance based, largely as a partial revenue replacement for fuel duty.  This will follow Vermont in January 2027 and New South Wales in July 2027.

We will await to see if the new British Prime Minister, and Chancellor of the Exchequer will see these plans change, once again. However, given the experience of multiple other jurisdictions, it appears the UK has gone for an excessively simplistic approach, when it should have been more bold. 

What could the UK do instead?

1. Allow odometer self-reporting via app, to spread out payments:  The average car in the UK is driven around 7,200 miles per annum.  That means £216 a year if charged 3p a mile. It should be possible for those who want to spread that out up to four times a year to do so, if they submit odometer readings (either through an app or to an independent third party).  Iceland bills motorists (in fact all vehicle owners for all vehicles) monthly, with an estimate which can be corrected through submission of an actual reading.  This added flexibility will better suit some users, and avoid the pressure of a higher annual fee.
2. Allow the market to enable third parties to provide distance measurement and account management services, including the option to exclude distance off public roads including outside the UK: Complaints about driving to Ireland or France are valid, so the option to avoid paying for distance in other countries should be available, although not government led. Likewise, some people in rural areas may want to avoid paying for distance travelled on private properties. Some Treasury officials will insist this is fair because fuel duty is consumed for such trips, but if the UK is not interested in moving more towards user pays in road charging then it is missing out on an opportunity for more efficient and fairer pricing
3. Hypothecate the revenue and subject increases to regulatory review: Treating it like just another tax prevents there being more flexible charges and pricing in future, and also undermines its potential acceptability. If net revenues were used to help pay for road maintenance, then the rates they are set at can be based on the cost of providing that infrastructure allocated proportionately to those vehicles. This becomes the embryo of a national road user charging system for all vehicles that recovers infrastructure costs much more fairly and efficiently than the status quo. Not doing this leave it as just another tax, and provides no link between what is paid and what service is delivered.

It is easy to see why this proposal might be scrapped, except that the government will urgently want over £1b in revenue per annum, and will also want to start sending the message that driving is not "free" if you have an EV.  Surely it would not be difficult to enable the private sector to provide solutions to make it easier both for fleet operators, and for vehicle keepers whose vehicles leave the UK regularly to not have to be subject to paying for distance travelled outside its jurisdiction? (even if such solutions are not necessarily available to all vehicles on day one).

UK to implement road user charging for EVs and Plug-in Hybrids - called eVED

As was widely forecast, the UK's Chancellor of the Exchequer, the Right Honourable Rachel Reeves, announced in the 2025 Budget that the UK will be consulting on introducing a distance-based road user charge (RUC) called, confusingly (and of course deliberately) the electric Vehicle Excise Duty (eVED).

This is distinct from Vehicle Excise Duty (VED) which is essentially equivalent to annual vehicle registration fees seen in most countries worldwide.  Both electric vehicles (EVs) and plug in hybrid electric vehicles (PHEVs) have been subject to VED in the UK since April 2025 after many years of exemptions, although the rates for the initial registration of such vehicles are lower than for petrol and diesel vehicles (£10 (US$13.23) in the first year for EV/PHEVs, £110 to £5490 (US$146 - US$7262) depending on the CO2 emissions rating).  In the second and subsequent years, most cars are on the same rate for VED.  The concessionary rate for VED for EV/PHEVs is currently due to expire in 2030. 

VED raises £8.4b (US$11.11b) per annum, and used to be hypothecated to the National Roads Fund, which funds National Highways - the Crown company responsible for England's strategic road network (national highways!). This hypothecation was abolished in 2025.

However, eVED is not like the annual registration fee, in that it is not a fixed tax. The only parallel is that it will be collected at the same time as the registration fee (which is an echo of Hawaii's HiRUC programme which collects HiRUC at the same time as the annual vehicle registration). 

eVED is a distance-based RUC, presumably called so because in the UK, the term RUC was used to legally describe any congestion charging type scheme.  

(The one commonality around road pricing/RUC is that it appears to be absolutely impossible for many jurisdictions to use the same terminology to name the same concept)

eVED is proposed to apply from April 2028 and the consultation document on the proposal is here.

In one sense this is a huge leap forward. The UK has spent over 20 years with on and off debates about some form of national distance based road charging, and has mostly been focused on highly sophisticated distance, time and location based pricing (at once time known as TDP (time distance place) pricing). However, as much as academics, bureaucrats and technocrats have advanced how and why this should be done, they have proven completely incapable of developing a policy package and communicating such a package to the public, to make it acceptable.

eVED, by only charging EVs and PHEVs, and only being based on distance is a much simpler proposition, and might just happen.

Why?

Fuel tax revenue loss, pure and simple. Also, as EVs pay nothing to use the roads, they are likely to generate more demand for distance travelled than other vehicles, contributing more to congestion. 

Fuel tax raised £24.4b (US$32.3b) per annum for the UK Treasury in 2024. Noting none of it is hypothecated, unlike in the US. The average petrol or diesel car owner pays around £0.06 per mile (US$0.079 per mile or US$0.127 per km) per vehicle.  This equals about £480 (US$635) per year to use the roads in the UK.  Of course this is just an average, but is an indication of a point to compare to EVs and PHEVs.

Fuel duty revenue is forecast to halve by the mid 2030s.  Curiously the discussion paper depicts this as a loss of funding for 265 million General Practice doctor appointments (as the UK charges nothing for such appointments, for all residents, regardless of income, under its National Health Service), because fuel duty is not linked to any spending.  This is seen as perhaps more politically significant than funding for road maintenance (which is far exceeded by the income from fuel duty).

In short, eVED is to try to make up for this revenue loss for cars.

EV vehicle sales

Treasury reports that around a quarter of new car sales in October 2024 were EVs. The UK Government's policy is to ban sales of conventional ICE cars in 2030 with a further ban on sales of hybrid and PHEVs by 2035 for light vehicles altogether. 

How much will it be?

For pure EVs, £0.03 per mile (US$0.04 per mile or US$0.064 per km). Around half the average paid in fuel duty by petrol or diesel cars. Of course at that rate it only recovers half of what fuel duty currently does, which is in part a way to continue encouraging use of EVs relative to petrol and diesel cars.  It will be increased according to inflation annually. 

PHEVs will be charged at half that rate, at £0.015 per mile (US$0.02 per mile or US$0.032 per km). This is based on nothing more than a political call on what the rate should be, not any reflection of relative payment of fuel duty compared to pure electric use. 

How will it work?

eVED will be an addition to VED, and be paid annually.  Vehicle owners will be asked to estimate their annual mileage and pay either that whole amount upfront or in instalments throughout the year.  The actual mileage will be checked with the annual safety inspection (which only occurs when a car becomes three years old).  For the first two years of a car's life, the odometer will apparently need to be checked for the annual registration. This will be another inspection, which it is hoped can simply be combined with vehicle annual servicing (which most owners of new vehicles undertake regardless). 

Systems will need to be put in place so authorised MOT (safety inspection) garages can collect and pass on mileage data to the Driver and Vehicles Licensing Authority (DVLA). 

At the mileage inspection, if the estimate of the year's mileage is too high, then there will be a credit for the mileage for the following year. If it was too low, then there will be more to pay either in a lump sum or in higher instalments for the year ahead. 

When sold, any prepaid mileage will stay with the vehicle, and be visible to any new owners (so it can be factored into the price).

What about foreign vehicles in the UK?

They won't be subject to eVED, until they become subject to VED (which is when they remain in the UK for at least six months).  This will be quite an issue in Northern Ireland with its open border to the Irish Republic.

What about mileage driven outside the UK?

Tough. All mileage counts. The view is that there is no refund for fuel duty used in vehicles driven overseas, so the same applies here. Of course nobody pays fuel duty for an entire year, and few even pay as infrequently as monthly, so it isn't quite the same.

Is it just about odometers?

Yes, for now, but the consultation seeks advice on how OEM (Original Equipment Manufacturer) telematics might be used voluntarily to automatically report mileage.  The consultation is silent on whether it might be used to exempt mileage driven overseas.  

The consultation notes that 2.3% of vehicles have had their odometers tampered with to lower their readings. It is unclear whether this figure is applicable to EVs and PHEVs as much as other vehicles.

What's the money to be used for?

The consultation doesn't say, although there are references to contributing towards the "wear and tear on the roads" caused by cars (which is negligible). It seems likely to be treated as general Crown revenue, and not be hypothecated. This won't help public acceptability or indicate any actual link to what vehicles should pay based on a fair allocation of infrastructure costs to those vehicles (but that has never been the case for fuel duty either). 

What's next?

The scheme is not meant to start until April 2028, so the consultation responses will be the first check on the public mood for the proposal. There has already been some backlash, but that may be as much about the unpopularity of some general Budget measures around income tax as this measure. 

There are plenty of questions beyond those in the consultation document. The scalability of this proposal beyond EVs and PHEVs being one of them, especially to heavy vehicles.  I'll have to more to write about it in due course.

UK likely to introduce road user charging for EVs and hybrids, and it doesn't resemble National Road Pricing

The Daily Telegraph, Financial Times and multiple other UK newspapers are reporting that the UK's Chancellor of the Exchequer, Rachel Reeves, will announce on 26 November 2025 that she is implementing a distance based road user charge (RUC) to apply to light electric vehicles (EVs), plug in hybrid vehicles (PHEVs) and battery electric hybrid vehicles (BEHVs) from 2028.

EVs will be charged £0.03 per mile (US$0.024 per kilometre), with "lower rates" for PHEVs and BEHVs, reflecting their use of taxed fuel.  It is noted that current estimates are that the average petrol car pays around £0.06 per mile (US$0.048 per kilometre) based on fuel consumption. So the proposed EV rate aims to charge half the price of petrol cars, to help reflect the lower environmental impact and retain an advantage for such vehicles.

Fuel duty (officially called hydrocarbon oil duty) is at £0.5295 per litre (US$0.69 per litre). This is well in excess of fuel taxation in North America and Australasia, but not out of step with some countries in Europe.

Why?

25.4% of new light vehicle sales in the UK in October 2025 were EVs, 13.3% are BEHVs and 12.1% are PHEVs.  So there is clearly an issue emerging of declining fuel duty revenue. 

Estimated revenue from the new charge will be £1.8b (US$2.35b) per annum by 2031. This compares to around £24.8 billion in 2024 from hydrocarbon oil duty.  In 2025/2026 alone it is estimated that around £300m (US$392m) is lost in hydrocarbon oil duty revenue from the growth in use of EV and hybrid vehicles. One estimate is that by 2029 that annual loss of revenue will be at £3.5b (US$4.6b) per annum, although later estimates are predicated on bans on sales of petrol and diesel light vehicles.

Note that hydrocarbon oil duty is not hypothecated for road or any form of spending. It is simply general tax revenue for Treasury. 

Secondary to revenue is fairness. Without some form of road user charge, those who cannot afford EVs or hybrid vehicles are paying more to use the roads and contribute to government spending than those who do not. 

How?

Articles so far indicate that the Driver and Vehicle Licensing Agency (DVLA), a branch of the Department for Transport (DfT) will be tasked with collecting the revenue, as it already collects the UK's annual vehicle registration fee (known as Vehicle Excise Duty - VED).  DVLA checks compliance through Automatic Number Plate Recognition (ANPR) cameras matching vehicles to its database as to who has paid VED. The same could be done with RUC. 

However, the details around implementation leave many unanswered questions. It is suggested vehicle owners will estimate future mileage driven and prepay for that distance, with credit given if overpaid. This suggests some form of independent recording of odometers, likely at annual vehicle safety ("MOT") checks, although these are not required for vehicles in the first three years of registration.  Options include sending photos of odometer readings or the use of telematics technology to report distance, but none of this is clear as of yet.

Reaction?

The Conservative opposition is opposing it, even though it is likely that it would have to do something similar, but given the Labour Government has been doing badly in opinion polls for many months, it is clear this policy is likely to generate plenty of heat from political parties keen to weaken the Government. However, the next UK election is not due until August 2029 at the latest, so theoretically this should not be such a major consideration for now. 

Hasn't the UK been here before?

Arguably yes. From the ill-fated Lorry Road User Charging project (which aimed to charge trucks by distance and vehicle class) replaced by the National Road Pricing project in 2005 which was shut down in 2007 due to public opposition. The differences between that project and this proposed charge are fairly stark though.

National Road Pricing aimed to reduce congestion by requiring all vehicles in the UK, regardless of fuel type, to be equipped with GNSS enabled on-board units, to measure distance varying by time of day and location, so that full network road pricing could be implemented. Although there were indications that some existing motoring taxes would be reduced, such as VED and hydrocarbon oil duty, there was vigorous public opposition. That opposition focused on how much people might pay, disbelief that existing taxes would be reduced by a reasonable amount, lack of belief that it would improve conditions for drivers and belief that money collected would be "wasted".  Around 2 million signatures were added to an online petition to 10 Downing Street to stop the project (and it was subsequently shelved).

A more simple distance and vehicle class based RUC would resemble that which already exists in Iceland, New Zealand and four US states.  Politically the question is how it might be sold to the public, as it is unlikely to matter too much that it is about raising revenue, but it may be to present it as ensuring drivers of EVs, PHEVs and BHEVs pay their "fair share" of the costs of maintaining the road network. 

Issues?

There are plenty. From how distance measurement will be verified and reported, especially in the first three years of a vehicle's life, to whether payments will be annual or can be spread throughout the year.  

Some other obvious questions:

• How will distance travelled outside the UK be treated (Northern Ireland may present particular challenges)?
• How will distance travelled by vehicles visiting the UK be treated?
• Will this only apply to light EVs and hybrids, and if so, what about heavy vehicles?
• Will motorists be able to pay in increments rather than annually?
• Will there be options for fleet operators to report distance more efficiently than is needed for private individuals?

Another question will be whether the revenue will be hypothecated to contribute to spending on road maintenance and renewal, which would give a long-term funding stream to support long-term commitments to the renewal of roads throughout the UK.  The UK Treasury is likely to oppose this, as it is philosophically opposed to any measures that reduce the flexibility of use of tax revenue, but the Department for Transport may take a different view, seeing the RUC as a user charge closer to a utility fee, so that it reflects a payment for the use of infrastructure (whereas hydrocarbon oil duty is simply a tax on fuel). 

What's next?

Details are to come. Key to this will be how these and other design and policy questions are answered, and how it is sold to the public. Is it just a new charge to cover off those types of vehicles, or is there an expectation that it may be expanded to other vehicles over time? (the latter would seem to be very risky politically, given the ineptness of politicians and the civil service in getting public acceptance for anything like this in the past). 

Maybe the big question is whether it is a first stage towards national road pricing? (it could be) Or is that going to be ruled out for now? Noting that this is going to apply across the UK, so what happens to the revenue in Wales, Scotland and Northern Ireland will be of interest to EV and hybrid vehicle owners in those countries. 

London makes two steps forward with congestion charging and tolls

In the past couple of weeks two significant changes have been announced regarding road pricing in London:

• Removal of the Cleaner Vehicle Discount (more widely known as the EV exemption) from the London Congestion Charge from 25 December 2025;
• Proposed time-of-use based tolls for the Blackwall Tunnels and the new Silvertown Tunnel.

Congestion Charge Cleaner Vehicle Discount abolished

Since 2003, the London Congestion Charge has provided a concession, in the form of a 100% discount, for lower emitting vehicles.  Initially the discount applied to Alternatively Fuelled Vehicles, which initially meant vehicles powered by natural gas or hybrid or electric vehicles.  Over time that discount has been tightened, with the most recent change in 2021 restricting the discount to pure EVs (not hybrids) and hydrogen-fuel cell vehicles. 

It is a 100% discount for such vehicles which register for the discount and are identified through the UK’s motor vehicle register. Owners have been required to pay a £10 annual fee for this registration. Over 112,000 cars and light commercial vehicles are registered for the discount, with another 16,000 private hire vehicles (i.e., Uber and app/phone booked minicabs) also registered. Transport for London (TfL) has provided no data on the estimated impacts, either in terms of traffic or in financial terms as it has not prepared annual impact assessments for 19 years. Given reports from several years ago, it seems likely that abolition of the Cleaner Vehicle Discount should increase the number of vehicles that the Congestion Charge applies to by between 10-20% per day, and so should have an impact on reducing congestion within and approaching the Congestion Charge zone.

Note the latest TfL annual report (PDF year ended September 2023) indicates the operating costs of the London Congestion Charge consume around 37% of gross revenues.

Note also that the entire area of the London Congestion Charge has been an ultra-low emission zone since 2019, applying a £12.50 per day charge (on top of the Congestion Charge) for vehicles that do not meet specific standards. At present that standard is a minimum of Euro 4 for petrol vehicles (generally any vehicles manufactured from 2005) and Euro 6 for light diesel vehicles (generally any vehicles manufactured from 2015).

Blackwall Tunnel and Silvertown Tunnel toll/time-of-use pricing announced

The Blackwall Tunnel is a pair of two-lane, one-way tunnels (one built in 1897 and another in 1967) under the Thames that comprise part of a major arterial highway from north-east to south-east London. The route (A102 and A12) is the eastern portion of the never completed Ringway 1 – an inner London orbital motorway proposed in 1966, but mostly cancelled in 1973.  More details on the route here.

Location of Blackwall Tunnel

The Blackwall Tunnel is the eastern-most fixed road crossing of the Thames within the boundaries of Greater London (the next crossing is the Dartford Crossing 26km to the east, which comprises part of the M25 orbital motorway). The northbound tunnel handles around 49,000 vehicles per day and the southbound around 53,000. It is one of the most heavily congested corridors in Greater London with severe delays all day during weekdays and for many hours in the weekends. The tunnels have never been tolled.

To help relieve congestion and improve network resilience, the Silvertown Tunnel is being built to the east connecting the approaches from the south of the Blackwall Tunnel to the suburb of Silvertown and main arterials towards the east and the centre of London. It is currently under construction and is planned to open in 2025. It will have two-lanes in each direction, albeit one lane in each direction is dedicated to trucks and buses only. It will be the first new road crossing of the Thames since the QE2 Bridge at Dartford Crossing in 1991. 

Location of Silvertown Tunnel

The road has been controversial in some circles, concerned that any road building contributes to congestion and emissions, but given half of the new capacity is for freight and buses, and tolls are to be applied, in part, to manage demand, it seems highly unlikely that the new tunnel will make congestion worse. It is far more likely that the combination of pricing and new capacity will improve conditions for both traffic, but also the environment. More detail on the tunnel here.

The Mayor of London had always proposed that the Silvertown Tunnel be tolled to pay for most of the capital costs of the tunnel, but also that the Blackwall Tunnel be tolled, to ensure that demand between the tunnels was not distorted by having tolls on one crossing. Furthermore, it was expected that applying time-of-use pricing to the Blackwall Tunnel would help relieve the chronic congestion on that route.

The Mayor of London has now proposed a time-of-use toll to apply to all tunnels as follows:

• Peak charges between 0600-1000 northbound weekdays and 1600-1900 southbound weekdays only

• Off-peak charges between 1000-2200 northbound weekdays and 0600-1600 and 1900-2200 southbound weekdays, and 0600-2200 weekends

• No charges between 2200-0600 all days.

The price schedule is below. Autopay applies if vehicle owners register their vehicle number plate with TfL to be automatically detected and have their bank account or credit/debit card deducted for crossing each day.  

Proposed Silvertown and Blackwall Tunnel tolls

Taxis, blue badge vehicle holders (disabled), buses, coaches, minibuses, emergency vehicles, military vehicles, vehicles in disabled tax class and NHS vehicles exempt from vehicle tax and zero-emission/wheelchair accessible private hire vehicles are all exempt.

Low income drivers in east London (in any of 13 boroughs) may register for a 50% discount. This is determined based on being in receipt of one of a range of means-tested benefits such as Jobseekers Allowance.

A £1 discount at off-peak times only applies for registered small businesses and charities located in the Royal Borough of Greenwich, and the Boroughs of Newham and Tower Hamlets.

Furthermore, three new cross-river bus services and the new cycle bus will be free for local residents for the first 12 months, as well as further enhanced public transport services and Docklands Light Railway trips between two station pairs.

The cumulative effect of the new tunnel and the time-of-use tolls is expected to be up to a 20-minute reduction in peak period travel times. Part of this relief is from a 50% increase in capacity, but also expected is some demand management as drivers shift travel to off-peak periods and some demand shifts to the new bus services.

Estimated gross revenue from tolling the tunnels will be £123m per annum, which should fully recover the construction cost of the Silvertown Tunnel in just over 10 years (indicating that there is more than adequate demand for the additional capacity and new connection).  

Conclusion

Removal of the Cleaner Vehicle Discount is a useful step forward for the London Congestion Charge, as there is already an Ultra Low Emission Zone applying across of London which is the tool for emissions. The Cleaner Vehicle Discount undermines the effectiveness of the congestion charge in managing congestion, so removing it should help wind back some of the congestion growth in recent years.

It is rational to apply tolls to both the Silvertown and Blackwall Tunnels, as the Silvertown Tunnel will directly relieve the Blackwall Tunnels, so it is fair for users of the latter to pay for the former. The benefits of reduced congestion will be significant.  Furthermore, it is a welcome leap forward for London to effectively trial time-of-use pricing at peak periods by direction. London needs more congestion charging on existing roads to manage demand at peak periods, and this should be seen as a pilot for implementation on other routes.  Hopefully shoulder periods will be introduced too, to encourage peak spreading. 

Does London's ULEZ expansion help or hinder better road pricing in the UK?

Greater London Ultra Low Emission Zone (ULEZ) coverage area

To say that the Mayor of London's expansion of the Ultra Low Emission Zone (ULEZ) to all of the territory of greater London under his authority has been controversial is an understatement.  For some it is a necessary response to climate change and the effects of local air pollution on public health, for others it is an impost on those who cannot afford a newer vehicles with benefits that are questionable, given that most vehicles comply with it already (hence it cannot have much of an impact).  Even Leader of the Opposition, Labour Leader Sir Keir Starmer has refused to back it.

The ULEZ started by being parallel to the London Congestion Charge in inner London, was expanded to the A406/A205 North and South Circular Roads. Its coverage of all of London includes rural areas and rural roads, as well as outer suburbs.

For a start it is important to be clear that the ULEZ is not road pricing. It is fundamentally a regulatory instrument that requires permits for vehicles that do not comply with the zone, in order to enter or drive within it. There is no relationship between the ULEZ and either the costs of providing road infrastructure or demand for it.  The fee is set at a level to dissuade use and generate revenue, and it is blunt. It doesn't matter if you drive a EURO 0 diesel van in crawling traffic beside a school or a EURO 3 petrol car at 3am on the motorway like A12 East Cross Route, you pay the same, even though objectively the local air quality impact is vastly different.  Although a vehicle scrappage scheme has been set up in parallel, owners of vehicles outside London are not eligible even though many cross into the zone.  Some categories of vehicles have exemptions, such as historic vehicles (e.g., vehicles built before 1973) vehicles registered to carry disabled people (until 24 October 2027), wheelchair accessible vehicles, drivers on specific disability benefits.  Those travelling to hospital appointments deemed unfit to use public transport can also apply for a refund. 

Vehicle scrappage scheme

All London residents can apply for up to £2,000 for scrapping a car or up to £1,000 for scrapping a motorcycle. For wheelchair accessible vehicles there is a payment of £10,000 to scrap or £6,000 to retrofit to the ULEZ standards. The scrappage scheme has been claimed by over 37,200 individuals or entities, which has cost £120m. The total budget for the scheme is £160m.  The biggest criticism of it, is that £2,000 will not come remotely close to buying a new vehicle, although it might come close to buying one that barely crosses the ULEZ standard.  However, it is unclear if the ULEZ standard advances (so EURO 4 petrol cars are no longer compliant), if people who took the £2,000 for scrapping a non-compliant vehicle, can claim it again if their latest vehicle is also non-compliant.  

ULEZ  impacts

There are a range of claims about the impacts of the ULEZ. 

Compliance rates for the ULEZ are reportedly 95% meaning the proportion of vehicles that meet the ULEZ standard. Of note, Heathrow Airport claims 7% of its employees drive non-compliant vehicles (and Heathrow is located just within the boundary of the ULEZ

The BBC claims this indicates revenue of around £23.6m per month. This is not inconsiderable, and certainly backs some claims that ULEZ is about revenue more than it is about environmental outcomes.  Van compliance is much lower than the average, with around 86.2% compliance.  However, City Hall claims it will generate no net revenue by 2026-2027, presumably as the costs of operating it are not exceeded by the fine and fee revenue generated (as it is expected few non-compliant vehicles will enter the zone). 

One claim is that ULEZ will reduce the number of cars on London roads by 44,000. Fewer cars means some people won't own a car anymore, which reduces their mobility. For some, London's ample public transport network and expansion of cycleways provide alternatives that may be reasonable for most trips, with carshare schemes plugging the gap. If people choose to give up owning a car because the cost isn't worth the benefit, and alternatives meet their needs, that's all very well, but if they are choosing to give it up because of the cost of ULEZ makes it unaffordable, it is clearly a policy measure that is pricing poorer households out of car ownership (because wealthier ones can afford a car that meets the standard).  

The Mayor of London has published a report on the first month after the introduction of the wider ULEZ. Its findings include:

• 77,000 fewer non-ULEZ compliant vehicles per month identified than before its expansion (a 45% reduction), with a reduction of 48,000 unique vehicles identified overall (which may indicate non-compliant vehicles not being used, but compliant vehicles may be used more in some cases).
• 96% of vehicles driving in Outer London meet the ULEZ standard (86% of vans).
• On an average day only 2.9% of vehicles driving in the ULEZ pay the charge, 1.7% are registered for a discount or exemption and 0.2% are issued a Penalty Charge Notice.

What isn't clear is the impacts on air quality.

What about road pricing?

Beyond extending the operating hours of the central London congestion charge, there has been no changes to policy on road pricing in London since 2011 when the Western Extension was scrapped. Mayor Sadiq Khan has claimed there are plans to introduce distance-based road pricing in London, according to the Evening Standard.  Expanding road pricing in London has been discussed for some time, but it hasn't been advanced largely because:

• Nobody (since Ken Livingstone) has been willing to spend political capital on making a cogent and consistent argument for wider road pricing across London;
• The objectives of such a scheme have not been well defined. Mayor Khan's primary transport policy objective has been around local air quality, not congestion;
• The options for road pricing across London have a significant upfront cost (in roadside infrastructure and potentially in-vehicle technology);
• Central government has been keen to leave it as primarily a local matter, and for the Mayor of London and Greater London Authority to take the risk in advancing road pricing, rather than lead from Westminster.

London's geography lends itself to two broad options for more road pricing:

• Zonal based boundaries, pricing for driving across parts of London (but not within zones). This would have the advantage of being relatively simple to understand, but would significantly disadvantage people and businesses needing to drive across multiple boundaries. In particular, businesses located adjacent to a boundary may feel aggrieved if part of their customers face a charge, which their rivals on the other side of the boundary do not.
• Distance, time, location based pricing.  This is considered by some to be the best option because it offers unparalleled flexibility, and can address issues such as "rat-running" and can be set up to encourage more use of arterial routes over local roads.

Zonal boundaries can be implemented with Automatic Number Plate Recognition (ANPR) cameras, as has  been done for the ULEZ, but depending on the number of zones (there aren't obvious boundaries in some parts of London, and borough boundaries often make little sense from a road network perspective), it would involve a lot of images and a lot of processing, to distinguish between vehicles crossing different boundaries at different times and directions.

Distance/time and location based charging (once called TDP (Time Distance Place) pricing) would require some form of telematics.  Traditionally the thought has been that devices would need to be installed in vehicles to enable this, but the options of Original Equipment Manufacturer (OEM) telematics are beginning to emerge, along with self-installed GNSS dongles that plug into EOBD (OBDII in Europe) ports in newer vehicles or even mobile phones with apps. The latter options would still require location of some ANPR cameras to ensure vehicles drove with such systems operating.

However, the key question still to be answered is why do it?

Congestion, revenue and the environment

There is little doubt that road pricing on a wide scale in London could be transformative for the city's transport networks, productivity and environmental impact.  It could significantly reduce traffic congestion by spreading demand by time of day, route and mode, and in doing so would increase the capacity of existing bus services, and increase fare revenue across public transport.  However, to improve congestion would require taking a different approach than what happened with the central London scheme. In central London much road space was reallocated to other modes, which improved access by those modes, but rendered delays for much traffic to be little better than before, after the reallocation of road space.  It is understandable in the context of reducing car traffic, but for freight traffic (which mostly has little chance for modal substitution), it means they are paying to use road space with little improvement in the level of service provided.

Wide scale road pricing should change that. If there is plenty of excess capacity that might be well used for cycleways or footpaths, then reallocation of road space could be considered (bus lanes are less important if road pricing is introduced, unless there is desire to implement bus rapid transit). 

Most of all, to improve congestion there should be targets set for improved travel times, and for a change in approach and policy regarding congestion.  For decades congestion has been seen both as a problem, but also a tool to constrain traffic growth. However, congestion is a reflection of inefficiency and a very poor use of precious space.  Having consistently flowing traffic mean there is more usable capacity, and so those that pay get a better level of service as a result.  This has rarely been part of the narrative discussed around road pricing in London.

Revenue is important, and almost always the key focus, and plenty will be generated, but it will be key to consider carefully what to do with it. It seems unlikely that Londoners will back road pricing as "just another revenue source", without it making a difference for those who pay it.  Whether it be fixing the continuing backlog of road maintenance, or fixing intersections or corridors that have historic bottlenecks or poor design affecting congestion and safety, road pricing needs a commitment that at least some of the money will be used to ensure London's roads are fit for purpose. It could support undergrounding the Hammersmith Flyover addressing resilience and revitalising public space and land for other purposes, for example.

The environment would win out of road pricing regardless, as less congestion and less motor traffic, with more use of public transport and active modes all improving local air quality and reducing CO2 emissions. So there will be overall benefits environmentally, and the social benefits should come from improving mobility of bus services and accessibility more generally, as long as pricing matches demand and capacity, and is not punitive.  

What hope is there for such pricing?

Given the backlash on ULEZ, regardless of merit, it seems likely that the political appetite to introduce wide scale road pricing in London is likely to be low, certainly before the 2024 general election. After that, the next Government may have more appetite to advance it, knowing that unless it is advanced in London, it seems unlikely to get public support to be advanced in cities or regions which have inferior public transport options.

There remains a revenue issue from electric and hybrid vehicles which isn't going away, which might be solved in the short term by imposing higher Vehicle Excise Duty on such vehicles, but it is clear the appropriate medium term answer is some form of road user charging (RUC).  

However, whether it be revenue replacement with RUC or reducing congestion with congestion pricing (and generating revenue), the fundamental problem with road pricing in the UK remains the toxicity of the politics around an issue that for too many looks like a way to extract money from road users, with little to no talk about improving either the infrastructure  (which outside the national network is in woeful condition) or improving travel times from less congestion.

Until a political leader can communicate clearly about this, and ignore Treasury resistance to hypothecation of road pricing revenues and ignore political calls to treat pricing as a tool to make driving simply more expensive and less convenient, then it will continue to languish.

Cambridge cancels congestion charging and it isn't a surprise

I wrote in March 2023 about Cambridge's ambitious proposal for what it was calling a "Sustainable Travel Zone", but which was actually a congestion charge, and how it was not going well.

Well the BBC has reported that it has been cancelled, less than two weeks after revised plans were suggested that ought to have been the original plans in the first place.

I criticised the original proposal because its scale and scope were too ambitious, and because it offered little for those who would pay, as it was primarily designed as a revenue raising scheme, which had its scope defined by the amount of money local politicians wanted to raise to uplift the quality of its bus service.  £50 million was to be spent enhancing services.

As a revenue raising scheme that was also described as being intended to "reduce traffic" it is hardly surprising that those who faced paying didn't see what they would benefit from, especially as few could envisage how the proposed improvements to bus services were "better" than their own cars, and there was next to no effort made to sell the proposal on the basis that it might improve travel times for those who still drive.

From that objective came a scheme design that was blunt and ill-focused.  Why?

1. It was designed as an area charge, like central London's congestion charge, so there could only be a single charge per day regardless of how much driving was undertaken.  Those who undertook a single trip would pay the same as those driving commercially throughout the day.  
2. The area charge encompassed ALL of Cambridge. It effectively made the entire city into a congestion charge zone, regardless of how busy any streets were at any time, it priced the city for access, so those who drove towards the central city (who likely had other transport options for their trip) paid the same as those crossing from one side to the other (which would typically involve a less direct public transport trip).
3. The charge would apply all day, from 0700-1900.  So there was no effort to focus on peak charging at all, or focus on congestion.  Although it would initially only apply in the AM peak in 2025 to commercial vehicles it would expand to all day operation from 2027 for all vehicles that would not be exempt.
4. HGVs would pay exponentially more than cars, at £50 per day (perhaps £25 if zero emission) compared to £5 for cars.  It's unclear how Cambridge expected to function effectively by treating HGVs as if they take up 10x the road space of cars (and have no modal substitute) when they actually take up 2.5-3x the road space of cars.

There was a proposal for a low-income discount for some drivers, along with exemptions for those attending medical appointments and a range of other categories. However, much of this did not seem to help much with the public perception.

The public response to the proposals was highly negative, with protests, a petition and debates, plus the local election in 2023 seeing the Conservatives (who oppose the proposal, as it has been advanced by the Labour led Council) win a seat on the Council.

I suggested the proposal be scaled down, to peak only charges (with a half-price shoulder period), cordons rather than area charges (and two cordons, one around the city centre and one around the city edge) and a lower multiplier for heavy vehicles.  

Revised plans

At least one of those ideas was taken on board, with plans announced in August 2023 for peak-only charges (0700-1000, 1500-1800) and 50 "free days" for residents to be able to drive without charges, every year. A 50% discount would also apply to locally owned businesses using HGVs and vans, and a 50% discount for people on low incomes.

The revenue to be collected would only be £26 million per annum, but would be enough to implement significant bus improvements. Perhaps had the scheme been scoped like that from the first place, it might have had a chance of being implemented. 

However, it has since been abandoned altogether, not least because the Liberal Democrats have withdrawn support. The Liberal Democrats govern the neighbouring South Cambridgeshire District Council (which surrounds the city of Cambridge) and lead the Cambridgeshire County Council. As the proposed congestion charge has to be agreed by the Greater Cambridge Partnership Assembly (which includes representatives from multiple local authorities), it would be difficult to see it proceed without their united support.  The Liberal Democrats asked for a "pause" to investigate other sources of funding to upgrade the bus system. 

It appears this reflects increased national antagonism at measures which appear designed to penalise driving, and concern about the political fallout of supporting such measures at this time.

 Collapse and what now?

The final collapse of the concept came when the Labour group on Cambridge City Council withdrew support, out of concern for impacts on low income families. This is clearly not assuaged by the proposed 50% discount for low income households or the proposed 50 "free" trips permitted per annum for residents. What this all appears to be is a political reaction to a response to proposals that did not convince the public.

The Councils all still wish to upgrade bus services, and are not opposed to the fundamental objectives, but it is not clear how they proceed, short of recasting the whole scheme to include something  for those who drive.

I'm not surprised it has all faltered, in part because notwithstanding much of the public's stated interest in addressing environmental issues including climate change, there is much less enthusiasm in paying more in what are seen as taxes to pay for services that they do not see as benefiting them.

Assuming Cambridge still wants to proceed it needs to re-evaluating its policy around road charging to think more about one question - What will road charging do for those who pay?

There are two clear answers to this which it should consider:

1. What travel time savings and improvements in trip reliability will the system be designed to achieve?
2. Can some of the revenue be used to improve the road network, whether by addressing deferred maintenance or improving some bottlenecks or safety issues in the network?

Could Cambridge get a road pricing scheme it could accept?

This requires a very different mindset from that which treats pricing existing road users as a useful tax to pay for alternatives only. It doesn't mean that revenue cannot be used to support improving public transport and cycling, but it does mean that first and foremost pricing be used to improve the level of service of those who pay.

Cambridge

If the scheme were redrawn to be cordon based, or even zonal based, at peak periods only (and only in respective directions of travel) there would be a chance it could be focused on congestion and improving travel time reliability.  Cambridge has an awful road network for motorists seeking to avoid driving towards the centre to travel from one side to the other, (for example consider driving from the northwest to the southeast without following the city centre ring route) no doubt because local politicians didn't think that was important. It might help to think about the extent to which pricing should be focused on congested routes, particularly those with viable (or soon to be viable) competing public transport options.

A city centre cordon would be a reasonably elegant start, followed by a peripheral one that enabled vehicles exiting the M11 or A14 highways to avoid Cambridge altogether, or a few strategic charging points on bridges over the River Cam.  Pricing ought to reflect road space occupancy, so none of the 10x multiplier for HGVs, just make it 3x, with 2x for smaller trucks.  If pricing only operates at peak times there is less need for discounts and exemptions as well.

The use of revenue is important as well. Whilst Cambridge won't want to be seen to be replacing spending on maintenance with revenue from a congestion charge, it could consider whether deferred maintenance could be addressed or better yet, some small scale highly efficient road improvements that may make intersections work more effectively or address other localised bottlenecks or safety issues.  Using road pricing revenue for economically efficient road improvements is a net positive for the community, and with pricing there should be no concern about inducing demand, but rather improving the efficiency of the travel of those needing to use the roads. This means buses too, as well as light commercial vehicles, freight delivery and the like.

However, I fear that the ambition and the failure to recognise the need for road pricing to give something to those who pay has "poisoned the well" politically around the very philosophy of congestion pricing.  This is hardly surprising, as far too many of the advocates for pricing do so from an antipathy to private motoring, rather than seeing it as a tool to make roads operate more efficiently, and so be an opportunity to improve all travel.  It should not be a surprise to find that people who drive don't like paying more for what appears to be no benefit to them at all.  I would have thought the lessons of the failure to proceed with congestion charging in Edinburgh and Manchester 20 and 15 years ago respectively (and indeed the failure to even expand London's congestion charging scheme) should have been learned.

Consultation on Cambridge's Sustainable Travel Zone reveals widespread opposition

I wrote a couple of months ago about how poorly plans for a blunt congestion charge for Cambridge (UK) were going, in terms of public response, and this seems to be continuing following publication of the results of formal public consultation into what is being called a "Sustainable Travel Zone".

The Sustainable Travel Zone would be a single area charge (£5 for cars but much more for trucks) across virtually all of metropolitan Cambridge, which would operate 12 hours a day weekdays only. It would legally be a congestion charge, and would effectively emulate London, except for its scale of operation. Whilst the London congestion charge only affects a tiny proportion of greater London (separate from the Ultra Low Emission Zone), the Cambridge Sustainable Travel Zone would affect all of Cambridge. Why? It would appear to be to ensure that it would raise enough money to pay for the significant increase in bus services.

Rarely have congestion pricing schemes ever been publicly accepted if sold on the basis that it is about raising money (effectively a sophisticated form of tax) rather than reducing congestion. The record in the UK is that several cities have attempted to progress congestion charging on the basis that it would raise a lot of money for public transport (see Manchester and Edinburgh), and been rejected by the public.

By contrast, congestion pricing has been successfully advanced in Stockholm because it was about reducing congestion, whereas it saw considerable opposition in Gothenburg because that is about raising revenue. It is difficult, although not impossible to get support for such a scheme as a revenue raising instrument, but it would appear to be that people in Cambridge are not warm to the idea.

Cambridge News reports that although 70% of the population supported the transport improvements, 58% opposed the Sustainable Travel Zone/congestion charge. Only 34% supported the Sustainable Travel Zone as proposed. 

Another report breaks down the results in more detail:

61% of those aged 16-24 who responded to the consultation were in favour of the charge

64% of those aged 55-64 opposed the charge.

Of those living within the proposed zone boundary, 49% were opposed and 46% in favour.

Those living outside the boundary were 60% opposed, 32% in favour.

Key concerns expressed were those wanting more exemptions, thinking the £5 charge was too high and thinking residents should have an exemption.  Many wanted Addenbrooke Hospital excluded from the zone. 

So what now?

29 June is the date when the Greater Cambridge Partnership meets to consider what to do next. It could just plough on, but it may be better to think about some of the ideas I wrote about before on how to phase in charging.

1. Just introduce it in the AM peak only at first, in part to demonstrate the effects, but also to encourage some time-of-day shift in travel (which many would rather do compared to shifting mode). It would also give some idea of the elasticity of demand in the AM peak for driving to better inform forecasts for revenue. Sure it won't be enough revenue longer term, but then the improved public transport package can be focused on the peaks instead. Expand it to the PM peak later, as that would capture more traffic likely to mode-shift, rather than inter-peak traffic. 
2. Replace the blunt area charge with two cordons.  One in the city centre (whether it is a tight city centre or one bounded by the effective ring roads of the A1303, A1334, A603), one at the proposed outer boundary.  This means people won't be charged for simply moving their cars short distances, and will focus attention on entering Cambridge and then central Cambridge. 
3. Have a shoulder charge (at half price) for the first and last half hour to encourage time of day shift and provide more options for motorists.
4. Dedicate some of the net revenues to some improve road infrastructure this means fixing substandard intersections, and although there will be resistance to using the money for maintenance (as it would reduce funding from other sources), some of what motorists pay should benefit them.

It is plausible that the full Cambridge scheme could be introduced over time, but any combination of the above ideas can provide a pathway of phasing it in. Say an inner cordon could operate 0700-1900 (with a half hour shoulder fee), but the outer cordon only 0700-1000 and 1600-1900.  

 

Cambridge (UK) announced plans for a congestion charge - and it is not going well

The Greater Cambridge Partnership has announced plans to introduce a congestion charge for the city of Cambridge. This has been mulled for some years, and of course the record of UK cities introducing congestion pricing, beyond London and Durham has been a failure - primarily because the public has been opposed, so it will be interesting to see how and whether this actually gets implemented.

The Greater Cambridge Partnership is a public sector body set up between five local authorities and the UK Government to implement a City Deal - which is a partnership for funding infrastructure and development for the city using a mix of local and central government tax income.

It would be fair to say that the proposal has been highly controversial, and with good reason. 

The congestion charge zone has been labelled the Sustainable Travel Zone. I'd question whether rebranding something achieves much, as the public's scepticism can only be enhanced when a euphemism is used to describe what it actually is - it's an area which will have road pricing. 

What's the objective?

The objective expressed first in the consultation document is to raise money to spend on subsidising a significant improvement in bus services. The second objective is to lower the level of traffic.  The implication is that there would be reductions in congestion, but it would be wrong to infer this is about improving travel times for those who drive.

Where's the money going?

The proposed improvement in bus services includes simpler fares, more routes and more services, with 10 minute headways, more evening services and more services to rural areas. It certainly looks like a huge uplift in service, but of course someone has to pay, and the Greater Cambridge Partnership wants motorists to. £50 million a year is proposed to be spent, and the congestion charge is not to be introduced until most of the bus service improvement have been implemented. 

A big uplift in cycling infrastructure and improvements to encourage more walking, including secure cycle parking.

What are the details?

Proposed Cambridge congestion charging zone

UK House of Commons Transport Committee Road Pricing report released - so here's my review of it

Nothing new in the UK investigating road pricing

The UK's journey towards national road pricing has been long and arduous.  It once started with the Lorry Road User Charging programme in 2002, essentially a more ambitious version of the highway heavy vehicle RUC systems in continental Europe, but that was abandoned because the business case didn't stand up at the time, given the costs.  It was replaced in 2004 with National Road Pricing, which was to pioneer TDP (Time Distance Place) based road pricing, to better manage congestion.  However, that collapsed due to public opposition, primarily out of concern about how much motorists would have to pay, and a lack of trust that fuel duty and vehicle excise duty would be cut at the same time.

That was 2007.

One of my big questions is whether UK politicians and policy makers have learned from that failure, and maybe learned from the successes of jurisdictions elsewhere that have partially implemented forms of RUC, such as in continental Europe, the United States and New Zealand. 

House of Commons Transport Committee report

Last year, the Transport Committee of the House of Commons (UK) held an inquiry into road pricing (and also electrification of the road vehicle fleet in the UK).  It released the findings of its work on 2 February 2022 with a full copy of the report available here (PDF).

The Committee notes in its report that it "launched an inquiry in December 2020 called Zero emission vehicles and road pricing. We chose to split the inquiry into two parts. We reported our findings on Zero emission vehicles in July 2021. That Report addressed the opportunities and challenges presented by the advancement of the ban on the sale of new petrol and diesel vehicles to 2030. This Report on Road pricing covers the second part of our inquiry. It examines the consequences of the shift to electric vehicles, including tackling the decline in fuel duty and vehicle excise duty."

Before I review the report's key findings, it is important for those unfamiliar with the UK to recognise that the report is influential but not binding on the UK Government. It is a matter for Cabinet and ultimately Parliament to make decisions on implementing any form of road pricing or road user charging (RUC) for the UK.  

What is behind the inquiry?

• Revenue
• Demand impacts of no charges on electric vehicles

It's fairly simple, because it follows on from the primary reason RUC is being implemented in US and now Australian states. Revenue from fuel taxes is threatened by the shift away from fossil fuel use by road vehicles. £28 billion is the annual revenue from both fuel duty and with the UK looking to prohibit sales of petrol and diesel vehicles from 2030, it will drastically erode revenues from motor vehicles. Add the £7 billion raised from vehicle excise duty (an annual registration fee for motor vehicles) that is hypothecated to the National Roads Fund (which fully funds National Highways and contributes towards spending on local roads) and the total revenue is equivalent to 4% of all tax revenue, and this is more than just a problem for spending on roads, let alone transport.  That revenue is five times what is spent on roads, so it is a general source of revenue.

In other words, unlike the US or Australia where motoring taxation barely or doesn't at all cover the cost of paying for roads, in the UK it does so and so much more.  Setting aside externalities (and given no other sector pays for externalities either), the roads make a significant fiscal surplus.

However, it's not all just about money, it is also about the demand impacts. Electric vehicles pay nothing to use the roads, which means that driving is substantially cheaper for those vehicle owners than others. This is a matter of both equity, but also overall impacts on the network. If a third of vehicles are paying nothing in say ten years' time, the effects on congestion are likely to be considerable. I recall a study around twenty years ago that estimated the demand impacts of fuel duty on driving in the UK was around 10%, in other words, 10% fewer miles were driven in the UK because of the effect of fuel duty. As fuel duty has not increased in 11 years, that impact is likely to have weakened somewhat, but it still exists. So for the UK, RUC is also about sending a price signal to drivers to think about whether to drive or choose another option.

Key conclusions

• It is difficult to predict the timescale of the impact on revenues. In 2021, 11.6% of new cars were battery electric and it is estimated by 2026, only 4% of all registered cars will be electric. (comment: Indeed, but hybrids and more fuel efficient vehicles are eroding revenues easily as much as electric. It would be wrong to focus solely on pure electric vehicles) 
• However, it gets much harder to introduce RUC when there are many electric vehicles compared to when there are few, so the message needs to be sent that electric vehicles will have to pay to use the roads. (comment: agree)
• A shift to electric vehicles could increase "traffic levels" by 51% by 2050 according to the Department for Transport (DfT), with the average driver spending an additional nine hours a year in traffic by 2040. (comment: "on average" hides some disparities, but the aggregate impact is likely to be true. Cheaper driving will mean more driving).
• "Any alternative road pricing mechanism must be revenue neutral to the Government rather than causing drivers, as a whole, to pay more than they do currently. Such a mechanism should be phased in before fuel duty and vehicle excise duty decline to zero. The situation is urgent; work must begin without delay" (comment: YES absolutely)
• Technology already built into vehicles (in-vehicle telematics) has potential to collect and deliver the data necessary for a road pricing system (comment: Yes, and this happens already today on a small scale in Utah).
• "The Government must assess the potential effect of a road pricing mechanism based on telematic technology on high-mileage drivers, such as road hauliers and those in rural communities, and on those least able to adapt to increased motoring costs." (comment: Yes there should be modelling and even piloting of road pricing to assess those impacts. Noting that road hauliers should see the HGV Levy replaced by RUC, but rate setting needs some serious policy analysis. A cost allocation study should be carried out).
• "The successful implementation of a national, technology-based road pricing scheme is contingent on the Government explaining how data capture will work in practice, ensuring that data management is subject to rigorous governance and oversight and reassuring the public that their privacy will be protected" (comment: Data privacy is critical, but there needs to be acknowledgement of some obvious ways to ensure this, such as not having a government owned RUC system collecting trip data, specifying the level of location disaggregation needed, consider having a non-location aware option (at least for a transition period))
• The DfT and Treasury should set up an arms-length body to investigate and evaluate options to replace fuel duty and vehicle excise duty (comment: This seems reasonable, but there isn't an actual need to replace vehicle excise duty. Vehicle excise duty is only an issue because electric vehicles are exempt, but that exemption need not be maintained. However, there are merits in shifting from ownership based to usage based charging of motor vehicles).

Conclusions that are questionable

• (para. 25) A claim that the UK can be a "world leader" in road pricing, is bold but also maybe fanciful, especially given how little progress has been made in the UK compared with other jurisdictions. The report doesn't note that there are three and soon to be four jurisdictions charging light vehicles (in all cases but one, electric vehicles) by distance instead of fuel duty. There are two jurisdictions that charge heavy vehicles by distance, weight and configuration instead of fuel duty. There are twelve jurisdictions that charge heavy vehicle by distance and weight as well as fuel duty, using GNSS technologies. However there is very little citing of relevant international experience. Is that because most of those who gave evidence have no such experience> There are multiple companies in Europe, the US and New Zealand that run RUC account management operations, including supplying technology for vehicles (heavy and light). If the UK WAS able to implement a national road pricing scheme that included congestion pricing based on distance it might be world leading (although I suspect Singapore might beat it), but it has so far proven that it cannot even roll out a basic cordon or area based congestion charge beyond London and Durham after 21 years. 

• (para. 28) The claim is that "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. The more regional schemes that are created, the harder it will eventually be for the Government to implement a functional national system". This is simply nonsense, not only because it is based on the idea that there is only ONE type of congestion pricing scheme (cordon or area charges) and only one way to implement it (assuming there is a flat all day charge). Why can local schemes not work with a national system? The US looks like it may have multiple state RUC systems and ultimately federal system, which may all be interoperable and function seamlessly. Several European countries have toll schemes plus heavy vehicle RUC systems operating in parallel (see Belgium which has a national heavy vehicle RUC scheme, with Brussels developing a local congestion based scheme for light vehicles). New Zealand has a national RUC system and is investigating a local congestion pricing scheme for Auckland. There MIGHT be a problem if systems require multiple accounts, or multiple pieces of on-board equipment, but this is unnecessary and avoidable. It is likely to be lower risk for congestion pricing to be locally defined and implemented, even if nationally regulated.  It seems to be an excessively engineering rather than policy and business based perspective.

• (para. 32) The report cites John Siraut from Jacobs who says:

"He stated that a system where charges vary dynamically based on the road being used and the time of travel are “certainly perfectly feasible to do”, even though they do not exist at the moment"

This is simply wrong. There IS a system that varies by location, time of day and charges by distance, in the Czech heavy vehicle RUC system. For heavy vehicles, the charges vary based on the type of road (motorway vs. 1st class highways) and the time of day.  Arguably, Singapore also has a system that varies by road being used and time of travel since.. 1997 (albeit not charging by distance), but certainly the can rates vary across 78 charging points by small increments of time of day. Strange in particular when he is previously cited as saying "Singapore comes closest" to the model discussed, which suggests he may have been misquoted at least once. . (Disclaimer: I used to work for a wholly owned subsidiary of Jacobs, in the UK from 2012-2015).

• (para. 34) The report says "The Government must assess the potential effect of telematic technology on changing drivers’ behaviour and delivering its wider policies on air quality, congestion, public transport and public health.".  No, the effects of telematics technology on drivers' behaviour should be minimal. It is about the policy that is implemented, not the technology (although technology is the enabler).  Furthermore, if you think introducing road pricing should also address a whole host of externalities, then you'll spend another five to ten years investigating it.  This seems like an unwelcome and unnecessary distraction. The effect on environmental and transport policy outcomes will depend on the policy selected. 

Where to from here?

There is one thing missing from the report, which is a thoughtful and considered view on why road pricing failed last time it was tried in the UK. Perhaps it is because most of the politicians were not in Parliament at the time, perhaps it is because the public servants don't want to look into what were largely mistakes by public servants and politicians.  However, it is important to remember how sensitive the issue is.

The number one reason road pricing failed before was that the policy was not designed to benefit those who would pay, and there was no leading of the narrative to address the two biggest concerns:

• Road pricing means paying a lot more to drive
• Road pricing means tracking everywhere that you drive

It cannot be repeated too much that road pricing needs to be introduced in a way that generates the same net revenue as fuel duty and vehicle excise duty. It has to be done in stages and steps that are achievable, but it is almost impossible to introduce any form of congestion pricing until all vehicles are on a road pricing system that measures location and time of day.

So congestion management should be very much a secondary concern, it should be about replacing the current system. There are various pathways for doing this, ranging from starting with electric vehicles, starting with newly registered vehicles or with heavy vehicles.  

There should NOT be pursuit of a central government owned and managed system that is procured centrally with a single provider of technology and account management. This is NOT a model that any jurisdiction has pursued for network wide RUC for twenty years (see Switzerland).  There should ALSO not be pursuit of a PPP with a single integrated supplier of a system to collect revenue, that is ALSO not a model any jurisdiction has pursued for sixteen years (see Germany).  It should be an open market of certified service providers, supported by a government managed enforcement system.  Revenue should be collected by competing service providers, with multiple technical platforms (such as in-vehicle telematics or plug-in devices), but enforcement managed by government.  

Consideration needs to be given as to how to refund/credit fuel duty paid when vehicles that pay fuel duty transition to RUC.

NONE of this matters unless policy is designed correctly.  That means:

• RUC rates that are based on a rational economic assessment of what different types of vehicles should pay.
• Charges that don't vary by time of day until a vast majority of vehicle are on a system
• Charges that vary by road type and location for traffic management purposes, but not to such an extent as to encourage use of vehicles that do not pay RUC
• Hypothecation of some revenue for roads, to go beyond what the National Roads Fund does now
• Care being taken as to how to treat the surplus of revenue beyond what is needed for roads.
• A feasible staged transition path.

It doesn't require investment in alternatives to motoring.

This requires a level of engagement with the public and business that did not happen with National Road Pricing, but is exactly what has been going on in some US States in recent years.  

It would be extremely helpful if the UK looked beyond itself to see that things are moving fast elsewhere.  

Take for example Victoria, Australia.  In a short period of time it went from studying to implementing a basic distance based RUC system for electric vehicles, based on odometer reporting.  Is it the long term scheme? No.  Does it work? Yes. Is it a start beyond which more can be learned and it can be built on? Yes.

I lived in the UK for fourteen years, I worked on Manchester's congestion charging scheme that faltered because of a lack of public support (in part because there was poor communications with those who would pay as to what it would mean for them). I observed the National Road Pricing project going wrong because politicians and civil servants didn't think they needed to seriously and convincingly address concerns of the general public about paying twice, or being tracked. If they still think that, then road pricing isn't going to happen easily.

It's my hope that both DfT and The Treasury can reflect carefully on lessons learned from the past, in the UK and elsewhere, and recognise that for road pricing to be advanced in the UK it might need to think of doing it in incremental steps, that means not all objectives are met at first, and that it doesn't need to re-invent the wheel.