UK road pricing: UK plan to plug the fuel duty gap

The Government’s plan to plug the £30bn gap in lost fuel duty is taking shape with bans on petrol and diesel car and trucks looming

UK road pricing looks to be moving closer to reality. Following the announcement that sales of new diesel-powered trucks will be banned from 2040 hot on the heels of 2030’s ban on the sale of petrol and diesel powered cars, and with new plug-in hybrid models also set to be banned from 2035, there are big changes coming to UK roads. Crucially, a plan is needed to plug the expected £30bn shortfall caused by lost fuel duty and road tax revenues as the UK moves into the electrified future. 

Auto Express submitted a freedom of information request to the Treasury back in November 2018, asking if it was considering nationwide road pricing to make up for projected lost fuel duty revenue. The Government admitted that “HM Treasury does hold information within the scope of your request”, but refused to provide details as the Freedom of Information Act allowed such withholding of information if it related to the “formulation of government policy”. 

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Specifics on how nationwide road pricing would work have yet to emerge, but it is generally considered that a pay-per-mile system, potentially linked to GPS modules in cars, or the UK’s extensive ANPR (Automatic Number Plate Recognition) camera system, would be brought into play. Potentially higher charges for more polluting cars could also be introduced.

The Government has announced that it will ban sales of smaller diesel-powered trucks from 2035, while trucks weighing more than 26 tonnes will be outlawed by 2040. Last year, Volvo and Daimler were among six truck makers who pledged to end sales of diesel models by 2040.

The Government is also understood to be readying a consultation into a California-style ‘ZEV mandate’. Similar schemes currently operational in several American states, two Canadian provinces, and China, compel car manufacturers to sell an increasing number of zero-emissions vehicles as a percentage of their overall sales, or purchase credits from other manufacturers.

According to a Policy Exchange report released last year, the ZEV mandate could ultimately serve as a replacement for the government’s plug-in car grant, and would be cost-neutral for the Treasury. Funds currently earmarked for the PiCG could be redirected to increase the rollout of a nationwide charging infrastructure. Contributing a foreword to the report, Transport Secretary Grant Shapps said the author’s mandate proposals would be studied: “closely as we consider how to make the date a reality”.

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