Everything appears to be so straightforward. The government plans to prohibit the sale of diesel and petrol vehicles by the close of this decade. Cars will be cleaner and greener, making achieving the goal of a net-zero carbon future easier.
When Boris Johnson hosts the Cop26 summit in early November, he will no certainly wow fellow international leaders with the speed of Britain’s transportation revolution. Rishi Sunak might even be convinced to reveal budget measures to expedite the changeover in October, just a week before this international meeting in Glasgow.
The government’s plan could be jeopardized in two ways. The first is if the changeover takes longer than projected due to the high cost of new battery-electric cars or if the network to keep them powered is not reinstalled.
Alternatively, there’s a chance that demand for the green cars will be as strong – or even stronger – than expected, resulting in increased congestion and lower tax revenue for the government.
Both are intertwined. One of the benefits of purchasing a new electric vehicle is the lower tax rate. According to a document published by Tony Blair Institute for the Global Change, the cost of gasoline, fuel charge, and vehicle excise duty for the typical petrol or diesel automobile are over £1,100 per year, while it is only £320 for electric vehicles.
According to the institute’s analysis, this cuts the overall cost of travelling by 71%. If the conversion to green vehicles increases, it will eat into the Treasury’s tax take – £10 billion by 2030, £20 billion by 2035, £30 billion by 2040.
As driving expenditure falls, motorists will be enticed to travel more, causing traffic congestion to worsen. Gridlock has a hefty cost, regardless of whether a driver is in gasoline, diesel, hybrid, or battery electric vehicles.
All of this begs the question of whether technology advancements must be accompanied by fresh ideas about how drivers are compensated. It brings up the question as to whether a road pricing scheme would solve both the congestion and revenue difficulties.
Actually, the concept of road pricing is not new, and it has constantly had supporters. Harold Macmillan’s government was concerned about traffic jams on Britain’s highways in the early 1960s, so it commissioned research to evaluate the issue. In 1964, the Smeed report appeared, proposing user fees as a solution to traffic congestion.
It was simple to see why ministers were concerned. In 1960, there were 5 million cars on UK roadways, and that number would quadruple over the next decade. With an election on the horizon, no party wanted to risk a confrontation with motorists, so the Smeed study was pushed to the back burner.