The switch to electric vehicles (EVs) will result in the loss of revenue from road fuel duty, as is generally recognised. This prompts the question of whether to replace fuel duty with a charge for use of the roads, as many have suggested. This issue was ducked in the recent Transport Decarbonisation Plan from the Department for Transport, but it won’t go away.
The general replacement of road fuel duty, collected from the oil companies, by a charge collected from many millions of road users, would be a formidable undertaking. My suggestion is that this happens in stages.
First, it should only be EVs that pay a road user charge, the rationale being that they need to contribute to the costs of maintaining and operating the road network in the way that drivers of conventional vehicles do via fuel duty. But while the capital costs of EVs are higher than those for comparable internal combustion engine vehicles, it would be necessary to retain lower untaxed running costs to incentive uptake. However, it is expected that the purchase prices of EVs will fall as battery costs continue to decline. Road user charging for EVs could be introduced once purchase prices of EVs and conventional vehicles are similar.
Second, it would be sensible to stage the adoption of road user charging spatially by starting in London. The congestion charge in London has been operating successfully for nearly twenty years. The technology works, useful revenues are generated to support public transport, and the system is publicly acceptable, with no significant concerns about privacy despite the ubiquity of enforcement cameras. The technology has been used to charge older polluting vehicles, initially in the congestion charging zone, and subsequently within the area bounded by the North and South Circular Roads.
The London congestion charge system levies a daily charge on entry to the charging zone, subject to a variety of exclusions. A more flexible system would be needed for EV user charging. The first step might be to migrate the charging mechanism to a smartphone app, which knows where it is in time and space and so knows if it is subject to user charging. The app would need to know in which vehicle it is located since enforcement of the charging system depends on automatic number plate recognition by fixed cameras.
The incentive for users to migrate to their smartphones would be a reduced daily charge, compared with the present £15. Then it would be possible to flex the charge, for instance to reflect duration in the charging zone, or whether at times of peak use or location within the zone. Such flexing should be publicly acceptable if charges never exceed the standard daily charge. Experience would be gained of how road users respond to varying charges. The congestion charging could be extended beyond the present central zone if that seemed useful to manage traffic and was publicly acceptable.
Once a flexible charging scheme had been proven in London, it could be adopted by other cities that wished to manage traffic and raise revenue to fund public transport and active travel, subject to electorates being willing. Once the charging scheme had been adopted by a number of cities for the generality of motorised vehicles, it could be extended nationally to EVs. Charges would then have two elements: that levied by the local road authority and that levied by central government. There would be scope for local authorities to vary charges to meet local needs, for instance to generate more revenue to fix potholes, or, more ambitiously, to deter car use in town centres and subsidise public transport. More generally, an appropriate apportionment of road user charging between local and national government would facilitate devolution of responsibilities for transport to localities.