ROAD PRICING

A new report from the RAC Foundation says that charging drivers for each mile they travel is "inevitable" if future traffic gridlock is to be avoided. Stephen Glaister, the RAC's director, argues that there is no credible alternative to a "pay-as-you-drive" system in view of the rising population and the likelihood that the number of cars and lorries will grow by a third over the next 15 years. Prof Glaister believes the public could be won over to the idea if it were combined with a judicious mix of benefits to make the initiative easier to swallow. These would include a cut in fuel duty and the abolition of road tax; guaranteed revenues for road improvements; and compensation for delays.

However, the Department for Transport is having none of it. It insists there are no plans to charge drivers to use existing roads (though not necessarily new ones) because they are "publicly owned and have already been paid for by the taxpayer". Indeed they have. Many times over. Long, long ago our car tax, now known as Vehicle Excise Duty (VED), was called the Road Fund Licence. As the name suggests, it was set up in 1909 specifically to collect revenues for the roads. In the Commons, David Lloyd George, the chancellor, was asked by an opposition spokesman, "Is it intended to go to general revenue?" Lloyd George replied, "My proposal is the whole of the moneys should go on the road."

Within a few years, the Treasury started to raid the fund, blurring the link between what motorists paid and the roads they got in return. As with the National Insurance Fund, ostensibly set up to pay for pensions and welfare, road taxes became just another way of raising money for general expenditure. It stopped being called the Road Fund Licence in 1935. Today, it is estimated that the combined taxes raised from motoring are around £42 billion a year; yet only about £10 billion is spent on new roads and maintenance. Taxing motorists is a significant source of general revenues which the Treasury, in this time of austerity, is hardly likely to give up.

We already pay more for travelling further through the huge amounts of duty and VAT that are raised from fuel. One estimate suggests that a distance-based element of about 5p a mile for cars is already factored into fuel tax, though this is not a formula the Treasury ever talks about. Might it not make more sense, then, to scrap the car tax entirely (winding up the expensive administration for collecting it) and load the cost of driving entirely on to fuel duty, which would also catch foreign cars in the net? Another option is to create a new payments structure where drivers pay their mileage charge when they fill up at the pump. (Source: Daily Telegraph, Jul/10)

Motorists will be asked to volunteer for road pricing as the government moves to reassure opponents of controversial pay-as-you-drive charges. Under the plan, drivers who chose to install satellite-tracking equipment to measure how far they travel, and where and when, could be offered discounts on other motoring taxes. A likely method of payment, modelled on trials under way in the US, is that drivers would pay their tolls at the petrol pump in return for discounts on fuel duty.

Volunteers would also benefit from other uses of the 'black box', such as navigation, help with finding parking spaces, and pay-as-you go insurance. Edmund King, the RAC Foundation's executive director, said, "If drivers have got a meter they'll think more about their actions, they'll cut out some journeys and they'll save themselves some money. There's nothing to lose starting with a voluntary scheme, but it would be political suicide for any government to impose it on people." (Source: The Observer, Feb/07)