Road Pricing - Question

– in the House of Lords at 2:55 pm on 29 April 2024.

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Photo of Lord Young of Cookham Lord Young of Cookham Deputy Chairman of Committees, Deputy Speaker (Lords) 2:55, 29 April 2024

To ask His Majesty’s Government what consideration they have given to replacing excise duty on fuel with road pricing.

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

My Lords, the Government have no plans to consider road pricing. As set out in the letter to the Transport Select Committee in January 2023, the Government are focusing on delivering their core priorities.

Photo of Lord Young of Cookham Lord Young of Cookham Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, road pricing clearly touches a raw nerve in the body politic. The OBR has recently said of the Government’s policy on electric vehicles that it is

“rapidly eroding the £39 billion” a year

“revenues from petrol and diesel” taxes. That will leave a large hole in the Budget. The Transport Select Committee in the other place, with a government majority, said that work on road pricing should start straightaway. When I was Transport Secretary 30 years ago, I floated the idea, which is now much more feasible because of technological progress. If taxes made through the fuel duty are not replaced with something else, public transport will become much more expensive, undermining a sustainable transport policy. Should the Treasury be quite so hostile?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

The Treasury sees that there are many options going forward for the fuel duty and many broader motoring taxes—and indeed for all taxes. As we transition to net zero, the Government will need to ensure that the tax system encourages more EV uptake and that revenue from motoring taxes keeps pace while remaining affordable.

Photo of Lord Carlile of Berriew Lord Carlile of Berriew Crossbench

Does the Minister agree that the introduction of road pricing with modern technology would mean that vehicles could be priced on the basis of their consumption of fuels and that differentiation could be made between goods vehicles and passenger vehicles, so that it would be a much fairer system? Does she also agree that road pricing would enable the police very much more easily to detect vehicle crime, particularly on motorways, which has raised car insurance premiums so much recently?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

I recognise what the noble Lord says. Many think tanks and other groups have done a lot of work on road pricing. Jurisdictions around the world are looking at it; however, as yet, very few have managed to introduce it successfully. From the Treasury’s perspective, we welcome work from external stakeholders on road pricing and all other taxes.

Photo of Lord Oates Lord Oates Liberal Democrat

My Lords, the Minister has done good job of telling us what the Government are against but a less good job of telling us what they are in favour of. In light of the reduction in fuel duty revenues that will arise from the UK’s ambitions to shift to electric vehicles, can she tell us what concrete plans the Treasury has to replace those losses in a way that is positive for the environment and fair to rural communities?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

At the moment, fuel duty raises around £25 billion annually. That is forecast to increase in nominal terms to £30.5 billion over the scorecard period to 2029. The change in fuel duty is a medium-term to long-term problem which will allow everybody who has an interest in this to have their say—including taking into account the shift to electric vehicles—and an appropriate solution will be found.

Photo of Lord Kirkhope of Harrogate Lord Kirkhope of Harrogate Conservative

My Lords, many of our motorists feel badly done by, with the extra cost of motoring all the time and the extra cost of insurance for motorists. If the Government have any idea of road pricing, would it not be fairer to look at all those who use our roads apart from those who merely pay the vehicle excise duty?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

My noble friend raises an important point about the cost of motoring. That really is top of mind for the Government. It is why we have frozen fuel duty since 2011 and had a 5p cut on fuel duty since March 2022. We recognise that for many people—particularly those in rural communities—using their car is essential, and it can be quite costly.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, will the Minister assure the House that, were the Government ever minded to introduce road pricing, rural communities and those who drive on rural roads—particularly in North Yorkshire, where we have the longest transit routes for people on their way to work or pleasure—would be protected?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

As I said at the outset, the Government have no plans to consider road pricing. Therefore, I cannot give my noble friend that assurance, because it would be purely hypothetical.

Photo of Lord Livermore Lord Livermore Opposition Whip (Lords), Shadow Spokesperson (Treasury)

My Lords, the state of Britain’s roads has been described as being at breaking point. A recent survey suggests that local roads are in their worst condition for more than 30 years, and the backlog for repairs has risen to a record high. The AA estimates that pothole damage is costing Britain’s drivers nearly £500 million every year. Is the Minister aware of figures compiled by the LGA that show that Labour councils invest 83% more per head on road maintenance than Conservative councils?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

What I can say is that this Government have invested significantly in local highway networks. For example, since 2015, we have invested £11 billion and, as part of Network North, £8.3 billion has been earmarked for local road maintenance over the next 11 years.

Photo of Lord Kamall Lord Kamall Conservative

My Lords, I refer noble Lords to my interests as set out in the register. Many economists like road pricing because it relies on the principle of “polluter pays”. As we shift from polluting vehicles to EVs, hydrogen, et cetera—more environmentally friendly vehicles—we might move from “polluter pays” to the principle that those who contribute to the wear and tear of our national infrastructure have to pay as drivers. I know that the Government have ruled it out at this stage, but in the longer term, have they done any planning on how we pay for upkeep of the roads? Perhaps those who contribute to wear and tear could make a contribution.

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

I am not aware of any work in that area, but, of course, my noble friend raises a very important point. There is the issue of wear and tear on the roads, which all vehicles contribute to, but what is sometimes overlooked is the impact of particulates that come from tyres. That might be from an internal combustion engine vehicle or from an electric vehicle—it is another source of pollution.

Photo of Lord Dubs Lord Dubs Labour

My Lords, over the years, Ministers frequently say that they have no plans to do anything, and then, within a short period, they change their minds. This may well be one of those instances. Does the Minister agree that road pricing would have another benefit, in that it could be used to ease congestion on motorways? There would be different charges for peak times and for off-peak times. Would that not be helpful?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

As I said in my opening remarks, the Government have no plans to consider road pricing. I really cannot say more than that.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip)

My Lords, I find it difficult to fault the analysis of my noble friend Lord Young of Cookham, because he points to an inescapable gap in revenue receipts for the Treasury from fuel duty receipts. I have a difficulty in understanding the Treasury’s opaqueness in responding to this analysis, for which I do not blame my noble friend the Minister. Is that opaqueness attributable to fiscal timidity or dogmatic blindness?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

My Lords, it is not opacity. What is going on here is simply that a number of options can be taken forward as taxes shift and change over time. All taxes shift and change over time with regard to the amount of money they bring into the Exchequer. The Government have forecasts as to what will happen to fuel duty and are considering all sorts of ideas as to how that would be plugged. For example, noble Lords will have seen that electric vehicles will start to pay VED from April 2025. It will not be at the same level as for an ICE vehicle, but it is right that EVs start to pay their way.

Photo of Baroness Blackwood of North Oxford Baroness Blackwood of North Oxford Conservative

My Lords, putting aside road pricing for a second, average car insurance costs in the UK have neared £1,000 after prices rose by 58% this year. Does the Treasury intend to look into whether these increases are justifiable?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

It is concerning to see such large rises in insurance. Officials are monitoring it. The Treasury is unlikely to intervene in what is a private market. However, I will write to my noble friend, because there are various helplines and advisers who can sometimes help people to find cheaper car insurance.

Photo of Lord Harris of Haringey Lord Harris of Haringey Labour

My Lords, the Minister is impressive in her attempts to explain away the huge fiscal holes that this Government are digging for themselves and for future Governments. Can she comment on the rather strange leaflet that many residents of London have received, apparently from the Conservative mayoral candidate, purporting to be a penalty notice for a road pricing scheme that does not exist and is not planned by the current Mayor of London? Given that the Government are so opposed to this, does the Conservative mayoral candidate in London not know what Conservative policy is, or is it that she has enormous faith in the ability of the London government to deliver something that the Minister has said is incredibly complicated?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton The Parliamentary Secretary, HM Treasury

I am seeking out the question in all that, but I think that all noble Lords will be aware that transport in London is devolved. Whether the current mayor will introduce road pricing within the Greater London area has been a matter of speculation for some time. If there was a Conservative mayor, the current candidate would certainly rule it out and ensure that the extension to ULEZ was rolled back, because that is causing significant hardship towards the outer boroughs of London.