Britain must prepare for the widespread use of road pricing to make up a £35bn shortfall in tax revenues from the transition to electric vehicles, the country’s top infrastructure adviser has said.
Sir John Armitt, the chair of the National Infrastructure Commission (NIC), said it was time for a “proper public debate” about the future funding of the road network and other critical projects.
“It’s politically a very difficult issue isn’t it? But many people will say road pricing is inevitable. Personally, I don’t see why it should be any different to anything else,” he told journalists on Thursday.
“We pay for all our other infrastructure services as we use them, and we pay for driving on the road, as we use it, via petrol tax. And if you’re going to lose the petrol tax, at [more than] £30bn a year, what is government going to replace it with?”
Armitt was speaking on the sidelines of an event at the engineering firm Skanska’s national headquarters in Watford, after a speech by the chief secretary to the Treasury, Darren Jones, announcing the launch of a new watchdog to “get a grip” on infrastructure delays.
Road pricing involves charging motorists for driving on roads, including toll roads, entering bridges and tunnels, pay-per-mile schemes and congestion zones. Although some schemes exist in the UK – including the M6 Toll, Mersey Gateway bridge, and London congestion charge – they are far more widespread in other countries such as France and Germany.
Armitt said the debate around road pricing would only grow as the government steadily lost revenue on its two main motoring taxes – vehicle excise duty and fuel duty, which together raise about £35bn a year. Neither are levied on electric vehicles.
Posing one of the biggest risks to the public finances, the Office for Budget Responsibility estimates close to 100% of all cars on the road by 2045 will be electric after the ban on the sale of new petrol and diesel cars in 2035.
“This is a really big issue,” Armitt said. “At the end of the day, if we’re going to pay [for using the road network], we either pay through our taxation or we pay through the point of use.”
Although he did not propose a preferred option, Armitt suggested one method could involve numberplate recognition technology. “People would probably not like this in terms of ‘Big Brother is watching you,’ [but] you could pay a different rate, per time of day, per type of road you were driving on, anywhere in the country, and you just get a bill.”
His comments come as Jones announced the creation of the National Infrastructure and Service Transformation Authority (Nista), which will oversee large projects. The watchdog will replace the NIC and the Infrastructure and Projects Authority, another arms-length government body, next year. Armitt will remain as the chair of the NIC until July.
Jones said the government would launch a 10-year infrastructure strategy alongside the Treasury’s spending review next year, including plans for new schools, hospitals and housing. Attacking the Conservatives’ track record, he said the creation of Nista would “restore the confidence of businesses to invest and help break the cycle of low growth”.
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Labour has, however, cast doubt about the future of several infrastructure projects within its first 100 days in power, including a delay to the Lower Thames Crossing, the UK’s biggest road scheme, announced earlier this week.
Armitt said ministers needed to “press the button and go for it” because the £9bn tunnel was “one of the most important infrastructure projects in the country”, He suggested that private sector funding could be used.
After years of overspending on projects including HS2, the NIC said in a report on Thursday that savings of 10% to 25% could be found by tackling four recurring problems – worth £1bn to £2bn a year through the 2030s on transport alone.
It blamed a lack of clear strategic direction, disjointed accountability, a risk-averse culture leading to expensive mitigation works, and issues with the UK supply chain due to underinvestment in training.
The NIC said the UK’s experience of high-speed rail had been “uniquely high cost”, with HS2, costing about £145m per kilometre of single track, “on course to be more expensive than any other high speed rail line in the world”.