Toll Roads Could Be Introduced As Electric Car Ownership Increases08 April 2022
The push towards electrification in the car industry is a step forward in reducing carbon emissions. However, as people switch to electric vehicles, there is soon to be a significant gap in how the government collects tax as fuel duty decreases.
The potential answer to this – toll roads. Read on as we discuss why and how it could work…
The fuel tax gap
Fuel tax is currently a reasonable source of income for the government. In 2021-22, fuel duties were forecast to raise £26.8 billion. For context, that’s 3.1% of all tax receipts, 1.2% of national income and equates to almost £1,000 per household.
While some fuel tax comes from fuel oil, used for heating, a large proportion of the total is from petrol and diesel vehicles, with a rate of just under 58p per litre charged since 2011-12. Some vehicle-related fuel tax is also raised from biogas at 24.7p per kg and LPG at 31.61p per kg.
But, as we transition to electric vehicles, the money made from fuel duty will be reduced – and ultimately lost. With the sale of new petrol and diesel cars banned by 2030, the government has practically set its own deadline to find an alternative means of income.
Plugging the gap
With the transition to electric well underway, other methods are being considered to recoup lost revenue. One change recently discussed by ministers is implementing a network of toll roads across the UK. This would mean anyone passing through the toll road has to pay, even those with EVs.
While the UK has some minor tolls roads, it only has a couple of major roads with toll charges – namely, the M6 toll and the Dartford Crossing. The M6 toll is situated on the northbound and southbound sections of the motorway just north of Sutton Coldfield. On the other hand, the Dartford Crossing is one of the main routes out of London from east, heading south. Despite being part of the M25, it’s not officially classed as a motorway.
Another key difference is the method of payment. The Dartford Crossing uses numberplate recognition to detect which vehicles have used the road. It’s then up to the drivers of those vehicles to pay online by midnight the following day. In contrast, the M6 toll has traffic-light controlled booths or ‘plazas’. Drivers need to pay by card as they pass through or have a pre-paid TAG device mounted on their windscreen.
Infrastructure wise, the government is looking at the option of introducing tolls on motorway networks similar to the M6. In Europe, particularly France, around 25% of people use toll roads. The major difference is that many of these roads are privately operated. Whereas in the UK, the government controls public access.
How much money do toll roads make?
The Dartford crossing has a standard charge of £2.50 per use for cars and £3-6 for larger vehicles (although discounts are available for frequent users). While its capacity is set at 135,000 vehicles per day, that figure is regularly exceeded with an average of around 160,000. The result is a lot of slow-moving traffic, but also a lot of income, with the Dartford Crossing bringing in over £200 million a year.
The M6 toll isn’t too shabby either, given that it doesn’t have the major appeal of a capital city to drive traffic in and out. The toll itself varies between £3.60 and £7.80 depending on your car class and the time you use it, with even higher charges for HGVs. Total revenue is around £90 million per year.
It’s worth noting that high revenue doesn’t mean equally high profits. The flipside of having a busy road is that it requires more maintenance – including the systems that manage toll payments. It’s estimated that the Dartford Crossing makes around £100m in profit per year, while the M6 Toll makes an average annual loss of £25m.
Alternatives to toll roads
Other ideas have also been pitched to the government. For example, a recent concept from the Commons Transport Committee utilises technology to charge drivers based on a number of factors, including distance driven, level of traffic and type of vehicle.
Of course, there is concern that either idea could cause backlash from the public, especially with the cost-of-living soaring.
However, in 2021, the Treasury said new taxes would probably be introduced to plug the gap in loss of revenue as the UK moves away from fossil fuels. So, it’s likely some type of tax will be added to all-electric car drivers at a later stage.
In 2021, figures from the RAC show that there were 380,552 electric cars on the road, up from 281,706 from the previous year. This is set to rise further as car manufacturers move forward with the ZEV mandate’s new EV models and requirements.
Other potential tax changes for electric car owners
While electric cars are typically cheaper to run than petrol/diesel equivalents, tax changes could increase some costs for EV drivers. There’s also the possibility of a pay per mile scheme, as explained in our recent blog post New Car Tax Proposals – How Will the Pay Per Mile Scheme Work?
In the proposal, the mayor of London, Sadiq Khan, highlighted that London drivers could face charges calculated on several factors. These include distance travelled, time and location.
Outside of London, a report by Greener Transport Solutions also proposed a pay per mile scheme to be imposed from 2030. This scheme would also include charges for electric vehicles, with charges of 2p per km for cars and higher costs for larger vehicles.
While nothing is set in stone, the government will likely move to recoup the lost income from fuel duty in the future. However, it is not entirely clear just yet how they’ll implement it.