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Road pricing is not the way to go

28 Nov 2012 at 15:58

The government announced last month that it was considering plans for a ‘two-tier’ road tax system: drivers would have to pay to use motorways, while motorists confined to local journeys on A- and B-roads would continue to pay the standard rate of Vehicle Excise Duty.

Effectively, the new arrangement would mark the introduction of a road pricing structure, forcing people off the nation’s three lane carriageways and onto smaller roads in a bid to save money.

It’s this that’s led to concerns over congestion and safety. The trunk roads of Britain can’t deal with the volume of traffic that would be placed upon them if a pay-to-drive motorway scheme were to be introduced.

The risk of being involved in an accident would be increased too – exposure to more cars in more vulnerable situations is bound to see the accident rate rise.

There is a way around this, though. As part of the same transport funding review outlining the two-tier VED proposals, a one-off ‘gas-guzzler’ tax of up to £23,000 for the most polluting new cars has been mooted.

This levy would be redistributed to subsidise some super-frugal small cars, but both initiatives are part of larger forces at work.

The government needs to face up to the reality that road tax revenues are falling as more motorists move towards smaller-engined, more efficient vehicles.

In fact, the Office for Budget Responsibility is predicting a £100 million drop per year in funding through VED starting from 2014/2015. In 10 years, the £6 billion the government gets from road tax will have dropped by a whopping 17%.

So how can it raise more money for road repairs and expansion of the network if income is on the wane?

Unfortunately it seems higher taxes are the only way. As our current VED system is based on CO2 emissions and incentivises cars becoming less polluting, the government will need to reassess the banding structure.

But it also needs to take into the account the foremost importance of driving: safety. The number of people killed or seriously injured on the UK’s roads rose for the first time in eight years in 2012.

Pricing people off the road and cramming more cars into less space is only going to see that figure rise.

It’s uncertain how the Treasury will obtain funding for roads, but a pay-to-drive structure – through vehicle taxation or otherwise – isn’t the way to go.