Road pricing is back in the headlines again after the Tony Blair Institute for Global Change (TBI) became the latest to urge the Government to implement road user pricing.

The TBI says road pricing would be a crucial first step in reforming motoring taxation for the net zero era

A new paper from the former Prime Minister’s consultancy sets out views on priority reforms for 2025 and says the introduction of pay-per-mile pricing would be a “crucial step in reforming the UK’s system of motoring taxation for the electric-vehicle era”.

The paper aims to look beyond the Autumn Budget – expected to focus on “swiftly implementable tweaks to tax rates rather than wholesale tax reforms” – towards the next fiscal event in 2025.

While Chancellor Rachel Reeves is expected to restore inflationary fuel duty rises as well as ending the temporary cut in the Budget, the TBI says she should instead introduce a simple pay-per-mile road-pricing system of 1p per mile for cars and vans, and 2.5p to 4p for heavy-goods vehicles. With average UK car mileage at around 7,400 miles a year, the charge for car drivers would be just over £70 a year.

This would work out revenue neutral compared with a fuel-duty hike and the average motorist would be no worse off, according to the think-tank.

At the same time, it would be a crucial first step on the road to reforming the UK’s system of motoring taxation for the net zero era while also tackling rising congestion levels.

As electric vehicles become more prevalent on the UK’s roads, the Government stands to lose about 1% of GDP in fuel-duty revenue.

Under the TBI proposal, the Government would hold fuel duty at its current level and instead add a rising pay-per-mile charge on almost all road users – both electric and conventionally powered vehicles.

It’s recommending a flat per-mile charge in the first instance – verified and paid during mileage checks at MOTs – to establish a system that is easy to understand and can be implemented quickly.

The TBI then says road pricing charges would need to rise to replace lost fuel-duty revenue, account for inflation and offset some of the social costs of congestion – including air pollution; health and other costs associated with accidents; road maintenance and infrastructure costs; and congestion.

And it’s recommended that the Government should look to deploy technology to make road pricing more targeted in the longer term. This could include using telematics to lower the per-mile cost during off-peak driving times.

Road pricing has been in the headlines for weeks due to rising speculation of an announcement in the Budget and following comments from the head of the National Infrastructure Commission, Sir John Armitt, that a scheme is “inevitable”.

PwC UK has also spoken out about the need to replace “increasingly dated taxation mechanisms” while the Campaign for Better Transport has called for a per-mile charge on EVs and the Council for Net Zero Transport has said road pricing cannot be “dismissed”.

Other think-tanks including the Policy Exchange, the Centre for Policy Studies and the Resolution Foundation have also previously forward proposals for road user pricing.

The Government, however, has so far denied reports that it’s imminently announcing a pay-per-mile scheme.

In an official statement earlier this month, a government spokesperson said: “We have no plans to introduce road pricing. We are committed to supporting our automotive sector as we transition to electric vehicles in order to meet our legally binding climate targets.”

And new research has also said that pay-per-mile road pricing and tax based on the negative impacts of driving on the environment aren’t needed for this parliament.

The study from New Automotive warned that pay-per-mile road pricing could stall strong EV take-up in the UK, based on sales figures from Iceland and New Zealand. Researchers at the independent transport research organisation said road tax and fuel duty needed “light reform” but radical tax changes to support the EV shift were unnecessary.