Transport charity finds £20bn to plug Treasury blackhole

A green shake-up of transport priorities could save the country almost £20 billion, cutting the entire budget deficit by half, Campaign for Better Transport has revealed.

The transport charity has shown how:

• Cancelling just five road-building schemes could save £16 billion
• Taxing fuel for domestic flights, not including lifeline flights such as those to Scottish islands, could raise £0.6 billion
• Introducing a pay-as-you-drive scheme which charges electric vehicles a small amount per mile from 2025 could raise £0.6 billion
• Not renewing the temporary cut to fuel duty when it ends in March 2023 could save £2.4 billion.

Norman Baker from Campaign for Better Transport said: “The good news for the Chancellor is that by rethinking some outdated ideas about transport he can save nearly £20 billion. Do we really need massive, destructive road-building schemes? Or tax-free fuel for domestic flights when suitable rail options are available? The black hole in the budget says ‘no’, and so does the planet.

“It’s time for a green shake-up of transport priorities. Cutting road building and taxing domestic flights would mean vital levelling-up projects like Northern Powerhouse Rail could go ahead, lifeline bus routes could be saved, and many non-transport public services could also get a reprieve.”

With many drivers shifting from petrol and diesel to electric vehicles, which pay no VED or fuel duty, the charity is also highlighting the need to replace the current system of vehicle taxation with a pay-as-you-drive system, which charges electric vehicle drivers, albeit at a much lower rate than drivers of more polluting vehicles. Charging just 1p per kilometre for electric cars from 2025, with low charges also for electric vans and lorries, would raise £0.6 billion in the first year alone.

Mr Baker added: “Our research has shown that most people think vehicle taxation needs reforming, and almost three times as many people support the idea of a pay-as-you-drive scheme as oppose it. Pay-as-you-drive can be fair and popular and help to keep public finances afloat.”

ENDS

Notes to Editors

1. According to Transport Action Network, cancelling the Lower Thames Crossing, A303 Stonehenge, A66 Northern Transpennine, A12 Chelmsford to A120 widening and A428 Black Cat to Caxton Gibbet schemes would save £16 billion.
2. Kerosene used by aircraft is not currently taxed. 15 billion litres of keroseneare used annually by aircraft in the UK. 13.8 per cent of flights are domestic. Just over one per cent of flights are Public Service Obligation ('lifeline') flights. Allowing for a PSO exemption, approximate domestic kerosene use is therefore 1.8 billion litres. Taxing kerosene at 33p per litre, which is similar to the figure being considered for the European Union, would consequently raise £594 million per year. Reaching an agreement with the EU to join a scheme for intra-EU flights would raise much more.
3. Campaign for Better Transport is calling for reform of vehicle taxation, with fuel duty and VED being replaced by a pay-as-you-drive scheme whereby all vehicles are charged a per-mile rate based on their emissions, so electric vehicles would be charged at a much lower rate than petrol and diesel. A pay-as-you-drive scheme could be in place from 2025. See Pay-as-you-drive: The British public's views on vehicle taxation reform for more details.
4. By 2025, 9.1 per cent of cars, 3.8 per cent of vans and 0.4 per cent of lorries are projected to be battery electric. This means that, based on current demand (Table TRA0201), an estimated 40.7 bn km per year would be driven by electric cars, 3.4 bn km per year by electric vans and 112 m km per year by electric lorries. Charging these at 1p per km for electric cars, 5p per km for electric vans and 8p per km for electric lorries would raise £586.5 million per year.
5. Last year’s fuel duty freeze cost the Treasury £2.43 billion in lost revenue.
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 and protects the environment. Campaign for Better Transport Charitable Trust is a registered charity (1101929).