The country’s top infrastructure advisor has stated that Britain needs to prepare for road price in order to cover a £35bn tax revenue shortfall from the switch to electric vehicles.
Sir John Armitt (chairman of the National Infrastructure Commission, NIC) said that it was time to have a “proper debate in the public” on the future funding for the road network as well as other important projects.
“Isn’t this a politically very complex issue? Many people say that road pricing will be inevitable. “I don’t understand why road pricing should be different from anything else”, he told reporters on Thursday.
We pay petrol tax for the roads we drive on, just as we do for our other infrastructure. What will the government replace petrol tax with, at [more] than £30bn per year?
Armitt spoke on the sidelines at an event held in Watford by Skanska, the national headquarters of the engineering company. This was after Darren Jones, the chief secretary of the Treasury announced the creation of a new watchdog that would “get a handle” on delays to infrastructure.
Road pricing is the practice of charging drivers for using roads. This includes toll roads, tunnels and bridges, as well as pay-per mile schemes and congestion zones. While some schemes are in place in the UK, such as the Mersey gateway bridge and London Congestion Charge, they are more prevalent in countries like France and Germany.
Armitt stated that the debate over road pricing will only increase as the government continues to lose revenue from its two major motoring taxes, vehicle excise tax and fuel duty. These two taxes together generate about £35bn per year. Electric vehicles are not subject to either tax.
After the ban on new petrol and diesel vehicles in 2035, the Office for Budget Responsibility predicts that by 2045, close to 100 percent of cars on UK roads will be electric.
Armitt stated that this is a very important issue. “At the very end, we will either pay via our taxes or pay at the point of usage if we are going to pay for using the road system.”
Armitt did not suggest a preferred method, but suggested that one could be numberplate recognition.
People may not like the idea of Big Brother watching them, but you can pay different rates depending on where you are in the country and what type of road or time you drove. You just get a single bill.
Jones made his comments as he announced the National Infrastructure and Service Transformation Authority, which will oversee major projects. Next year, the watchdog will replace both the NIC and Infrastructure and Projects Authority (another independent government body). Armitt is expected to remain the chairperson of the NIC through July.
Jones stated that the government will launch a 10-year strategy for infrastructure alongside the Treasury’s Spending Review next year. This includes plans for new housing, schools and hospitals. He attacked the Conservatives for their track record and said that the creation of Nista will “restore confidence to businesses in order to help them invest” and break the cycle low growth.
In its first 100-days in office, Labour cast doubt on the future of a number of infrastructure projects, including the Lower Thames Crossing – the UK’s largest road scheme – announced this week.
Armitt stated that the £9bn Tunnel was “one the most important infrastructure project in the country”. He suggested private funding.
The NIC, after years of spending too much on projects such as HS2 said that it could save 10% to 25% by tackling the four recurring issues. This would amount to £1bn-£2bn a month in the 2030s.
The company cited a lack in clear strategic direction, an inconsistent accountability system, a culture of risk-aversion that led to costly mitigation works and problems with the UK’s supply chain because of underinvestment.
The NIC stated that the UK experience with high-speed railway had been “uniquely expensive”, with HS2 costing around £145m for a kilometre of single-track, “on track to be more costly than any other high speed rail line in the World”.
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