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Last edited 09 Feb 2021
The case for a new road-user charging scheme in London
|A new report by Centre for London argues that the UK capital should move towards an innovative new road-user charging scheme which charges drivers on a per-mile basis and is a test bed for other cities.|
It’s now apparent that, sooner or later, the government will need to overhaul national vehicle taxation. The switch to cleaner and more fuel-efficient vehicles, along with people’s changing travel habits, mean that revenue from vehicle excise duty (VED) and fuel duty has been declining.
The government’s own policies exacerbate the issue: it has, for example, put in place a long-term fuel duty escalator freeze and is committed to ending the sale of all new conventional petrol and diesel vehicles by 2040.
Many have recommended a distance-based system as a way to ensure road funding is sustained and to accommodate a zero-emissions future. However, there seems to be limited appetite in the Treasury for this at the moment. Perhaps this is because the significant revenue drop is not projected for another 10 years or so, or because fuel duty is currently easy to collect, so there seems to be little incentive to overhaul it.
Since the Greater London Authority Act 1999 and the Transport Act 200, cities in England have had the power to implement road-user charging schemes, without holding local referenda or seeking government approval, .
London has also established a new environmental charging scheme, the Ultra Low Emission Zone (ULEZ). At the same time, cities and regions are planning different types of road-user charging schemes ahead of central government. Indeed, the government has now mandated a number of large cities to produce plans to tackle air pollution - and some are looking to implement charging or non-charging clean air zones.
 What will happen to local schemes when a national one comes along?
As the number of schemes across the country multiplies, it poses an important question: what happens to these schemes when a new national scheme becomes a priority for central government?
This should be graduated depending on vehicle class and emissions to encourage cleaner vehicles. Its purpose would be purely to replace existing vehicle taxation, ensuring that a proportion of the revenue is hypothecated towards roads spending.
In contrast, the legislation stipulates that any city road-user charging schemes should not be established to raise revenue but solely to address congestion and air pollution – and it makes sense that cities should decide how best to address these negative impacts of driving on locally-managed roads.
This point is illustrated by the great number of variations in different cities’ CAZ proposals: some are non-charging, some are charging commercial vehicles (vans, trucks and buses) only, while others are proposing to charge private cars as well.
For a national scheme to try to absorb and reflect these various arrangements would be too complex, especially local schemes that vary the charge on the basis of locally observed congestion and pollution levels on the roads in question.
In the meantime, the government should support London with funding to implement a new distance-based road-user charging scheme, just as other cities can access clean air zone implementation funding and the Transforming Cities Fund.
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