As part of our “Perspectives on Infrastructure” series, Sue Kershaw, Managing Director of Costain's transport division commented on the inevitable shift of revenues for road funding being based on usage rather than taxation.
Although an issue that has yet to be fully grappled with by policy makers, this is a logical and widely held view within the market.
Driven by the increased variety of Electric Vehicles (EV) available in the market, falling prices for EVs and an environmentally aware consumer base, the uptake of EVs (both in terms of market share and absolute terms), is impressive and continues to increase even during the COVID crisis. A continuation of this trajectory means revenue from Vehicle Excise Duty and Fuel Duty will continue to decline as a percentage of the UK's GDP in the future.
This funding hole will need to be plugged in the future (although timing will be critical so as not to stifle the EV uptake) and road user charging, facilitated by in-car technology platforms, seems a logical and inevitable solution. Challenges will exist around public buy-in, privacy/data issues, charging structures etc. However, the advantages offered by road user charging, including management of traffic congestion, improving environmental quality and raising revenue for infrastructure maintenance and other transport measures, means a phasing from existing urban congestion charges into wider road user charging structures will likely form part of our "new normal".
When it comes to funding structures, the trend will inevitably continue to be towards revenues sourced from usage rather than taxation. She says: “There has got to be that shift. With autonomous and electric cars, the old model of taxation at the pump is just outdated. Transport for London put up the congestion charge during the lockdown, partly to keep people out, and they did that at the flick of a switch. That’s extremely powerful, and it is then up to users whether they want to pay.”