Pay-per-mile car tax could be introduced and then hiked to 12p a mile

Drivers have been warned over the government being under pressure to introduce £70 a year pay per mile road charges. The new Labour Party government has been told to introduce 1p per mile car tax bands, and replace VED.

The Tony Blair Institute has suggested that instead of restoring fuel duty rates as planned, Chancellor Ms Reeves should introduce a simple road pricing system of 1p a mile for cars and vans, and 2.5p to 4p for lorries and heavy goods vehicles.

The report says that fuel duty should be frozen and eventually become redundant as vehicles move towards zero-emission, with the price per mile rising to about 10p to 12p a mile by 2050.

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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.

The report comes after the National Infrastructure Commission, Sir John Armitt, said road pricing was 'inevitable' and Campaign for Better Transport have called for pay-per-mile charges for electric vehicles. Reeves could increase fuel duty in order to fill a '£40billion black hole' in the country's finances.

The Tony Blair Institute also urged her to change fiscal rules for investment, and to overhaul stamp duty while raising council tax on more expensive houses. 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."