Charging ahead: Who should design and deliver a national road pricing scheme?

In a previous article, I set out what a likely national road pricing scheme would look like in response to a number of current key challenges. These include a ~£28bn budget hole owing to depleting fuel duty as a result of the shift to zero emission vehicles (ZEVs). I suggested a national scheme would be introduced initially as a mileage-based charge on ZEVs, using an annual odometer reading (by certified organisations) to validate miles travelled. Like household energy bills, historic meter readings would be used to estimate usage until the end of the annual billing period, and road users would have the opportunity to manually make monthly updates and opt in for monthly billing.

This concept has been introduced in Iceland and more recently in New Zealand, however within the UK, a key question has yet to be tackled: who is best-placed to design, implement, and operate a national road pricing scheme?

A scheme of this nature requires a breadth of capabilities, such as the responsibility for setting the direction and principles of a scheme, or managing the operation of a scheme, and these roles could be taken on by a range of organisations.

A number of Government (arms-length) bodies hold relevant capabilities: National Highways administers congestion charging at the Dartford Crossing (Dart Charge); the UK’s Driver and Vehicle Standards Agency (DVSA) is responsible for MOT tests (compulsory annual road safety standards check) and roadside checks; Driver and Vehicle Licensing Agency (DVLA) is responsible for collecting vehicle excise duty and maintaining vehicle records. Equally, there is a large private sector market, experienced in implementing road user charging solutions globally.

To deliver best value for money to taxpayers, operation of a scheme will require a carefully selected and balanced mix of public and private sector capabilities – but what might the options be and what is more likely?

At a high level there are three roles that will need to be undertaken:

• Role one: an organisation accountable for the efficacy and efficiency of the service and collecting the revenue.
• Role two: organisation(s) responsible for the development and management of the revenue collection and enforcement services.
• Role three: organisation(s) responsible for on-going operations and delivery.

Efficacy and efficiency of the service

Here, role one could be the remit of:

• HM Treasury: Whilst the Treasury might be the recipients of the money, they are not normally this close to the design of a scheme.
• His Majesty’s Revenue and Customs: HMRC is responsible for managing the collection of taxes, which an introductory road pricing scheme is specifically purposed to do, however HMRC does not currently collect transport and road revenue/taxes (this is done by DVLA).
• Department for Transport: DfT is responsible for agreeing funding settlements across transport and responsible for other road usage schemes, such as Dartford Crossing, however it does not usually collect taxes.
• An arms-length body (as noted in the Transport Select review): A plausible option that has the merits of bringing independence, but likely to still be linked to DfT, therefore this could potentially create an unnecessary extra layer of governance.

HMRC and DfT appear the most likely candidates owing to the synergies with their existing roles. If Government anticipated an evolution of the scheme, where a simple tax collection scheme evolves to cater for greater customer centricity with potential for improved capacity/demand management (akin to phases two and three set out here), then DfT would be the most fitting home. Short-term thinking, however, based solely on revenue/tax collection, might steer towards HMRC as the accountable body.

Development and management of the revenue collection and enforcement services

Role two – the organisation responsible for the development and management of the revenue collection and enforcement services – would include back-office functions such as management information, service management, performance management, revenue protection and customer requirements. Whilst HMRC already directly manages tax collection functions, the interfaces required with existing vehicle databases and the synergistic capabilities within the transport-family might make one of those a more logical choice. Here, options might include:

• National Highways: Experienced with administering congestion charge at the Dartford Crossing. However, management of a national scheme is an extension of National Highways scope (the Dartford Crossing is currently the only road user charging scheme that it operates).
• DVLA: The owners of the full vehicle ownership database, already with capabilities that process changes in vehicle ownership, managing collection of vehicle excise duty and the Heavy Goods Vehicle (HGV) levy, including issuing penalty charges.
• DVSA: Owners of a full vehicle database (updated each year via MOT reports), responsible for the accreditation of MOT technicians and enforcing laws on vehicles to ensure compliance with standards and regulations.

There are a greater number of synergies between what is needed for a national road pricing scheme and the capabilities held within DVLA and DVSA. DVLA’s experience of collecting VED and the HGV levy is relevant, and DVSA’s annually updated database (holding odometer readings) makes DVSA well placed.

With over 30 million vehicles in the UK, under this policy it could be expected that a minimum of 30 million updates are made to DVSA’s database and an associated 30 million (minimum) transactions required each year. The DVSA database is likely to be a core tool to operate the service, therefore DVSA could be the most appropriate body.

On-going operations and delivery

Finally, role three involves the need to consider who operates the solution, including contact channels and digital interfaces, payment processing, account management, customer support, and enforcement services. If DVSA (or DVLA) was responsible for developing/managing the service, there will be parts of the service where it is logical to use and/or extend existing DVSA capabilities with other aspects better suited to be delivered by the market. The options here would be:

• Building in-house functionality: Such as increasing DVSA’s existing contact centre, and building a platform to operate account management and digital interfaces.
• Out-source to the market: Such as run a procurement strategy and exercise to buy-in capabilities where there is already an experienced market, such as account management platforms that are in place for existing road user charging operations.

The considerations for roles one, two, and three highlight a myriad of options available, which creates a series of questions before coming to an optimum structure.

If transport leaders are of the view, as many are, that national road pricing is inevitable, the business architecture for the design, implementation, and operations will need clear thought. Transport leaders and policy makers will need to complete assessments before decisions are made, with consideration of existing capabilities and capacity within government bodies and experience/expertise across the market.