Timing is everything: Choosing the optimum point to introduce UK road pricing

Understanding the likely design of the first UK road pricing scheme, and the organisational responsibility for the design, implementation and operation of a scheme will take time. It requires public and private sector collaboration and extensive public engagement – but with political will and urgency – how quickly could a scheme realistically be ‘stood-up’, and when is the optimum time to launch?

To understand this, first we need to consider what would be required from a service, legislative, technical, people, process, and data lens to work out indicative timelines.

The headline activities needed here include:

• Legislation: Legislative change that enables the introduction of road pricing. The use of a Finance Bill could accelerate this, however other legislative and regulatory change will need to be considered, such as the Road Traffic Act, Vehicle Excise & Registration Act, Data Protection Act, and Transport Act.
• Scheme design: The design of a scheme with clear areas such as: what is the per mile charge by vehicle class? What (if any) discounts or exemptions should apply? What ‘account’ services should be offered? What frequency should payments be made?
• Fiscal design: Designing financial flows that clarify who is responsible for the collection, management, and allocation of taxes received, as well as budget management across each organisation that forms part of the solution.
• Solution design: A blueprint for the design of the solution that provides clarity on how the technology, people, data flows, processes, and service is structured and will integrate.
• Technology specifications: Defining technology needs and specifications to deliver the solution, which would range from the use and/or upgrade of existing systems, and introduction of new.
• Data management: Developing a robust plan to capture, validate, store, and protect data and data flows across and between organisations and systems.
• Commercial sourcing and implementation: Designing an optimum approach to put in place capabilities to deliver the solution and include how the capabilities are packaged or grouped, whether they are developed ‘in-house’, or procured from the market.
• Business readiness: Preparing for the business change required to operate the new solution, which includes assessments of organisational readiness to deliver, for example how might the Driver and Vehicle Standards Agency (DVSA) or the Driver and Vehicle Licensing Agency (DVLA) need to adapt if either were to play a role?
• Communications and engagement: The design of communication and engagement activities that enable the least resistance and greatest awareness, for example, simple and clear messaging to the public of what will change and when – an integral part of the schemes success to enable compliance and avoid unwanted penalties.

Based on prior experience, an indicative timeline (best case) for each area has been captured below, sequenced to enable the fastest end-to-end delivery timeline. This presents an indicative timeline of three and a half years to implement UK road pricing, subject to political will to put the scheme in place at pace – critically, within a political term.

To view a zoomable version of the timeline, download as PDF.

Protecting fuel duty revenues

Whilst three and a half years might be the quickest that a scheme could be introduced, the economic and political context also needs consideration – how long can government sustain the fall in budget?

The projected reduction of the annual fuel duty budget shows by 2034 the budget will have reduced to below £14 billion a year, the amount that covers expenditure on the road network today. This could suggest a less-pressing urgency to introduce a national road pricing scheme. However, if Government wanted to maintain the annual budget of £28 billion, the question is, what or when is the tipping point? If greater than a 20 percent decrease (£5-6 billion) is deemed unacceptable, 2027 would be the year a road pricing scheme would need to be in place.

Getting road users onboard

The introduction of a new road pricing scheme will be highly unpopular, evidenced in 2007 when a petition of 1.7 million signatures impacted Government’s interest to introduce road pricing. Whilst there are very few, if any, measures that will make a scheme welcomed by the public, there are options available to ease the introduction. These include:

1. Introduction of an annual allocation of ‘no cost’ miles per vehicle (first 5,000 miles is free) – this both eases the message to the public and promotes reduced car use at a time when congestion is expected to increase. However, to still collect the £28 billion, the impact is a substantially higher per mile cost for each mile over 5,000 miles, anticipated to double the per mile fee after the first 5,000 miles.
2. Introduction of a per mileage-based scheme for new ZEVs purchased after a certain year – this would allow the public to consider this in their own financial planning when purchasing a new vehicle, and allows a softer introduction without penalising those that own ZEVs today.
3. Introduction of per mileage-based scheme for vehicles over a certain price threshold (for example £50,000) – applying the charge on vehicles over a certain price threshold brings complexity to the scheme and results in edge case equity challenges.
4. Introduction of per mileage-based scheme for larger vehicles first – this could be detrimental to the scheme’s equity, with a specific demographic being penalised more than others.

The implications of this non-exhaustive set of approaches would need to be understood fully before being decided upon. However, an approach that provides the public with advance notice of an introductory road pricing scheme (point two above) and considers an amount of ‘free’ miles (point one above) to promote reduced mileage might be welcomed.

The sequence of events and the decision making needed is complex – there are many other countries considering or who have already implemented a successful national scheme, such as Iceland and New Zealand.

Should the UK’s HM Treasury have low appetite on seeing greater than a 20 percent reduction in annual fuel duty, a scheme would need to be in place and operational by 2027. However, introducing a scheme before 2028 would be challenging, therefore, the time is now to consider national road pricing or expect alternative tax increases in other areas of Government.