The former aide to Mr Hunt said he had to actively “stop work being done” on such a scheme, which included pay-per-mile pricing.
Mr Smith said: “After a letter from the chairman of the Select Committee to the Chancellor arrived in early December, where he rightly complained about the delay, officials embarked on another attempt to suggest we publicly say we’re working on it.
“Long story short we eventually agreed to say: ‘The Government does not currently have plans to consider road pricing’. But it took another month to get that through the system such was the eagerness to give some hint that the door wasn’t closed to the issue.”
He added that Ms Reeves’ decision to stop winter fuel payments for 10m pensioners demonstrated that “she is willing to choose options the Treasury has long favoured but are politically either difficult or a non-starter for the Conservative Party”.
PwC estimates the Government will lose out on £9bn of fuel duty revenues by 2030, when one in four vehicles on the road is expected to be electric.
Mr Hunt announced in October 2022 that electric cars, vans and motorcycles will start to pay road tax in the same way as petrol and diesel vehicles from next April.
Vehicle excise duty (VED) is expected to raise £8.3bn for the Treasury this year alone.
The Transport Committee’s road pricing inquiry made four recommendations, including a requirement to have an “honest conversation with the public on how to maintain funding for roads and other essential public services once the significant revenue from vehicle excise duty and fuel duty declines”.
Mr Smith said: “The Treasury has long been worried about the long-term sustainability of the £32bn a year they collect in motoring taxes.
“As more and more people buy electric cars, revenues from traditional duties will likely drop. That was one of the reasons why Jeremy Hunt announced that from next year electric cars will pay Vehicle Excise Duty.
“The other reason was because he needed the revenue. While he was prepared to make that change because he saw the immediate fiscal benefit of around £1.6bn a year in the OBR forecasts, road pricing was ultimately a step too far.”
The Treasury declined to comment.
I had to block HMT on road pricing – they’ll be cracking on with that now
By: Adam Smith
It did not surprise me that Rachel Reeves announced she would be restricting winter fuel payments to just those pensioners who are also in receipt of other benefits.
This option was on every list of savings measures I saw in my time at the Treasury, something I wrote about in this paper a few weeks ago.
Jeremy Hunt and Rishi Sunak repeatedly ruled it out. It appeals to some because it is hard to justify why millionaire pensioners get it, but there is no easy way to make it fairer without penalising those who desperately need the support.
It would also have been terrible politics for a party reliant on older voters like the Conservatives were.
But if the Chancellor has shown she is willing to choose options the Treasury has long favoured but are politically either difficult or a non-starter for the Conservative Party, then what other decisions could we see in the near future?