Chancellor Rachel Reeves urged to impose 'pay-per-mile' scheme on electric cars

2 September 2024, 22:10 | Updated: 3 September 2024, 05:33

Chancellor Rachel Reeves has been urged to impose a pay-per-mile scheme on British drivers to avoid a "black hole" from lost fuel duty revenue.

Public transport charity Campaign for Better Transport (CBT) is proposing that drivers of zero-emission vehicles (ZEVs), such as electric cars, should be charged based on how far they travel, claiming it would have public support.

Under the plan, drivers with a ZEV before the implementation date would be exempt, incentivising the switch to electric vehicles.

Duties levied on petrol, diesel and other fuels generate around £25bn a year in revenue for the Treasury.

This figure is expected to reduce as more drivers transition from traditionally-fuelled cars to ZEVs.

But previous governments have found the prospect of introducing per-mile charges - known as road pricing - to be too politically toxic.

Silviya Barrett, CBT director of policy and campaigns, said: "The new Chancellor faces a looming black hole. She can avoid it, in a way which is fair and which garners broad public support. But she should start now, as this issue will only get more pressing.

"It should be cheaper to drive a zero-emission vehicle than a more polluting vehicle, but it's only fair that these drivers should pay a share, and a pay-as-you-drive model can achieve this."

Ms Barrett wrote a letter to Ms Reeves stating that "ZEV drivers should fairly contribute towards vehicle taxation" and calling for a "simple charge" based on "regular odometer readings".

"We fully appreciate that such a change would be perceived as difficult and criticised by the opposition and by certain representative groups," she added.

"However, our research demonstrated the general public supports such a move."

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Labour has committed to reverse then-prime minister Rishi Sunak's decision in September last year to delay banning the sale of conventionally fuelled new cars from 2030 until 2035.

Ms Reeves will deliver her first budget on 30 October.

(c) Sky News 2024: Chancellor Rachel Reeves urged to impose 'pay-per-mile' scheme on electric cars