The Chancellor is set to put her political survival ahead of the environment or the cost of living
Rachel Reeves (Image: Getty)
Motorists are already paying more than £1 billion every year in road pricing – in addition to all the other taxes they’re forced to stump up for. But that’s not enough for Chancellor Rachel Reeves. She’s expected to announce a massive expansion in charges as she clobbers working families with a wave of Budget tax rises.
There are two reasons for this. One is that she is urgently needs to plug a black hole of her own making, after economic growth stalled and welfare spending continues to rise. The other is that the Government’s insistence that we all stop driving petrol vehicles, and switch to electric cars instead, is set to rob the Treasury of tens of billions of pounds in funding – and nobody has worked out how to replace the missing cash.
It seems that the Chancellor’s answer is to ensure motorists who do what they are told is right for the planet, and switch to “green vehicles”, are punished instead of rewarded.
Plenty of towns and cities already have road pricing, although the scheme goes by different names in different places. Bath, Birmingham, Bradford, Bristol, London, Newcastle and Gateshead, Portsmouth and Sheffield are among the places with some sort of congestion charge, clean air zone or ultra-low emission zone.
Whatever it’s called, they result is the same – motorists pay. We know that total fees in the 2022-23 financial year exceeded £1 billion.
But this is just the start. Because a ban on the sale of new petrol and diesel cars, coming into force in 2030, will eventually cost the Treasury £24 billion in lost fuel duty.
There was a time when electric cars were exempt from vehicle excise duty, but the Government has already ended this. Now, Ms Reeves is looking at clawing back the fuel duty too.
She is reportedly set to announce a pay-per-mile road charging scheme. We don’t yet have the details and it’s likely that any new charge would take a few years to come in to force, unlike immediate tax rises set to be announced in the Budget. But leaks from the Treasury make it clear that motorists are in her sights.
It will be a particular blow to people who shelled out on an expensive new electric car, as one of the benefits is supposed to be that they cost less to run – making up, to some extent, for the cost of buying one in the first place.
And road pricing will reduce the incentives for existing petrol-users to make the switch, at a time when British carmakers are already struggling to convince consumers to buy electric vehicles. That means it’s not only bad for our wallets. It’s bad for the planet too.
But if Rachel Reeves does announce that road pricing is coming – and all the signs are that she will – it will mean that, in her desperation, she is putting short-term political survival ahead of the long-term impact on the environment, UK manufacturers or the cost of living for struggling British households.
