Budget 2025 - Media briefing from Campaign for Better Transport

Ahead of the Budget on Wednesday 26 November, Ben Plowden, Chief Executive of Campaign for Better Transport said:

“Transport investment is an essential enabler of sustainable economic growth, but not all transport investment is equal. Improved, expanded and affordable public transport supported by improved conditions for walking, cycling and wheeling is unequivocally good for the economy, for household finances, and for our health and wellbeing. With transport costs currently keeping five million people below the poverty line, reliable, affordable public transport can help change this.

“The Chancellor has some difficult choices to make, but ending the fiscally unsustainable 5p fuel duty cut and fuel duty freeze should be seen as a ‘least bad' option that would bring significant social, economic and environmental benefits. The cost of petrol and diesel is much lower now than when the 5p fuel duty cut was introduced five years ago, so the resulting revenue from ending the fuel duty cut and freeze, combined with greater investment in high-return public transport improvements, would help alleviate the ongoing cost-of-living squeeze on households by providing better and more affordable public transport.

“The politics of increasing fuel duty are not easy, but nor are any of the other fiscal choices available to the Government. Correcting this long-standing anomaly in transport taxation would recoup billions in lost revenue which could be used to benefit hard-pressed households and the country, rather than fuel retailers.

"Alongside allowing fuel duty to increase, the Chancellor should set out a clear process and timetable for introducing a simple per-mile charge on electric vehicles, set at such a level as to keep electric vehicles attractive in comparison to more polluting vehicles. This would help restore fairness to transport taxation and avoid a looming budget black hole as the transition to EVs gathers pace."

Reform transport taxation

To help raise much-needed additional revenue, and rebalance pricing signals in favour of public transport, Campaign for Better Transport wants to see the following changes to transport taxation:

• End the 5p fuel duty cut recouping £2.6 billion a year
• Reinstate the annual inflation-linked rise in fuel duty raising £1.6 billion in the first year
• Set out a clear process and timetable for introducing a per-mile charge on EVs
• Tax aviation fuel at 33p a litre (excluding lifeline flights). This would end aviation's tax-free fuel status and raise £594 million per annum
• Tax private jets with a new ‘super' rate of Air Passenger Duty – set at ten times the current higher rate – for all private jet passengers and charge Value Added Tax (VAT) on all private jet landings and take offs. 

Prioritise public transport

Public transport investment – both capital and revenue spending – brings a much higher return on investment than more carbon-intensive forms of transport like roads and aviation. To help boost sustainable economic growth, Campaign for Better Transport wants to see the Chancellor introduce the following measures:

• Boost revenue investment in local bus services and fare concessions
• Invest in maintaining existing transport assets and improving climate resilience
• Approve crucial rail infrastructure improvements such as Northern Powerhouse rail, capacity increases on the West Coast Mainline between Crewe and Manchester, the Ely Area and Haughley Junction enhancements, and the Channel Tunnel to Wembley Yard and Wembley to Dollands Moor upgrades.

ENDS

Notes to Editors

1. Last month, Campaign for Better Transport along with the Walk Wheel Cycle Trust (formerly Sustrans), London Cycling Campaign, Living Streets, Social Market Foundation, Possible and Transport Action Network, wrote to the Chancellor urging her to reclaim £4.2 billion a year in lost revenue by allowing the “temporary” 5p fuel duty cut to come to an end and ending the 14-year fuel duty freeze. The groups also call on the Chancellor to set out a clear process and timetable for introducing a per-mile charge on electric vehicles.
2. Transport costs and poverty figures from Getting the measure of transport poverty: Understanding and responding to the UK's hidden crisis, Social Market Foundation (2023).
3. Between  2011/12 and 2024/25, the fuel duty freeze has cost the Exchequer a cumulative £133 billion based on figures obtained from the Office for Budget Responsibility. The 5p fuel duty cut, introduced as a temporary measure five years ago, has cost a further £13 billion. Together, this foregone revenue is the same as the Government is forecast to spend on the State Pension in 2025 to 2026.
4. Social Market Foundation research found that the richest fifth of households have benefited twice as much as the poorest from fuel duty policies. 
5. Fuel duty revenue is projected to decline as the transition to electric vehicles gathers pace. PwC estimates this will create a £9 billion gap in fuel duty revenues by 2030 and £27 billion by 2040.
6. Campaign for Better Transport operates in England and Wales. Campaign for Better Transport's vision is for all communities to have access to high-quality, sustainable transport that meets their needs, improves quality of life, reduces inequality, and supports a vibrant, productive and decarbonised economy. Campaign for Better Transport Charitable Trust is a registered charity (1101929).