The Transport Committee has published a Special Report comprising an exchange of letters between Committee Chair Iain Stewart MP and Treasury ministers regarding its
The report warned the Government it risks losing out on tens of billions of tax revenue if it does not explore new forms of road taxation as drivers increasingly opt for electric vehicles which are not subject to Fuel Duty or, until 2025, Vehicle Excise Duty.
In an exchange of letters, the Committee Chair Iain Stewart MP expressed disappointment at the Treasury’s delayed response to the report, in which its main message was that the Government “does not currently have plans to consider road pricing”.
The Chair wrote to Chancellor Jeremy Hunt MP on 25 January saying: “It is discourteous both to my Committee and to the witnesses who freely gave their time and expertise, both in writing and in person, that your Department has not meaningfully engaged with the substance of our report nor responded to the specific conclusions and recommendations made.”
Treasury Minister James Cartlidge MP replied to the Chair on 13 February, saying: “As set out in the Chancellor’s previous letter the Government does not currently have plans to consider road pricing. Given this, the Government does not have further views on the Committee’s recommendations for the ways in which road pricing should be considered.”
Last year the Government announced that Vehicle Excise Duty will be levied on electric vehicles from 2025. However, the Committee has noted OBR forecasts that this could only raise £1.6 billion a year by 2027/28.
Transport Committee Chair Iain Stewart MP said: “It is disappointing that Treasury Ministers have not followed usual Parliamentary courtesies by not responding fully to the important issues flagged in our report. As petrol and diesel cars reduce in number, so too will the Treasury’s tax revenue. That’s why we asked the Government to set out a range of options to replace Fuel Duty and Vehicle Excise Duty.
“In challenging times for the economy it is all the more vital to get this right, not least because most revenue from motoring taxes actually funds hospitals, schools, police and everything else. Only £7 billion of the £35 billion collected is used to maintain the country’s roads. The Committee recognised that this is a conversation that needs to start sooner rather than later. We were not urging the Government to adopt a particular scheme; we want them to start exploring the options. I hope they will reconsider and respond meaningfully to our suggestions.”