How might Cambridgeshire benefit in the future by introducing road pricing now?

The Greater Cambridge Partnership (GCP)’s Sustainable Travel Zone proposals include introducing road charging for motor vehicles. It would be highly beneficial to introduce a local road charging scheme that generates income that is reinvested locally, rather than wait for a national scheme to come into force (as is predicted in the coming years) which would provide income for the Treasury.

Why is the government considering a national road pricing scheme?

As more people switch to driving electric motor vehicles, rather than petrol or diesel cars and vans, the amount revenue paid to the government in fuel duty and vehicle excise duty will decline.

“Taken together, vehicle excise duty and fuel duty raise some £35 billion a year, which comprises approximately 1.5% of UK GDP. That sum is forecast to equate to approximately 4% of overall tax receipts in 2021–22. We estimate that the revenue raised by fuel duty is equivalent to approximately five pence on the rate of income tax. Policies to deliver net zero emissions by 2050 are likely to result in zero revenue for the Government from motoring taxation by 2040”.

House of Commons Transport Committee

The government is therefore actively considering how to make up this lost income. Indeed, it was announced at the recent Autumn Statement that owners of electric cars, vans and motorcycles will be required to pay vehicle excise duty from 2025. In addition, the House of Commons Transport Committee has recommended that:

“[a new organisation] should be tasked with recommending an alternative road charging mechanism to replace fuel duty and vehicle excise duty by the end of 2022. One of those options should be a road pricing mechanism that uses telematic technology to charge drivers according to distance driven, factoring in vehicle type and congestion. If motoring taxation is linked to road usage, the Committee has not seen a viable alternative to a road pricing system”.

House of Commons Transport Committee

It seems highly probable, therefore, that a national road pricing scheme will be introduced in the coming years and the income will go to the Treasury (ie central government), rather than local authorities.

What happens if Cambridge introduces a road charging scheme first?

Local authorities who have already introduced a road charging scheme would likely keep the revenue and be able to reinvest it locally. Legally, all income raised from the road charge must be used to improve transport.

The Greater Cambridge Partnership’s proposal is to invest the majority into the upgraded bus network and services, but the county council (which would receive the money) could also spend this on other transport projects right across the whole of Cambridgeshire. The Cambridgeshire Sustainable Travel Alliance would like to see 20% of annual income invested in walking and cycling improvements.