Lack of Treasury engagement on motoring tax ‘disappointing’

MPs on the Transport Committee say they are disappointed with the lack of engagement from the Treasury following its report on road pricing.

The Transport Committee has published a report detailing an exchange of letters between Committee chair Iain Stewart MP and Treasury ministers regarding its Road Pricing report, published last year. 

The report warned the Government it risks losing out on tens of billions of tax revenue if it does not explore new forms of road taxation as drivers increasingly opt for electric vehicles which are not subject to fuel duty or, until 2025, vehicle excise duty (VED). 

In an exchange of letters, Stewart expressed disappointment at the Treasury’s delayed response to the report, in which its main message was that the Government “does not currently have plans to consider road pricing”. 

The Chair wrote to Chancellor Jeremy Hunt MP on January 25 saying that it was “discourteous both to my committee and to the witnesses who freely gave their time and expertise, both in writing and in person, that your Department has not meaningfully engaged with the substance of our report nor responded to the specific conclusions and recommendations made”. 

Treasury minister James Cartlidge replied to the Chair on February 13. He said: “As set out in the Chancellor’s previous letter the Government does not currently have plans to consider road pricing. Given this, the Government does not have further views on the Committee’s recommendations for the ways in which road pricing should be considered.” 

Last year, the Government announced that VED will be levied on electric vehicles from 2025. However, the Committee has noted that the Office for Budget Responsibility (OBR) forecasts that this could only raise £1.6 billion a year by 2027/28. 

Stewart said: “It is disappointing that Treasury Ministers have not followed usual Parliamentary courtesies by not responding fully to the important issues flagged in our report.

“As petrol and diesel cars reduce in number, so too will the Treasury’s tax revenue. That’s why we asked the Government to set out a range of options to replace fuel duty and vehicle excise duty.”  

He continued: “In challenging times for the economy it is all the more vital to get this right, not least because most revenue from motoring taxes actually funds hospitals, schools, police and everything else. Only £7bn of the £35bn collected is used to maintain the country’s roads.

“The committee recognised that this is a conversation that needs to start sooner rather than later.

“We were not urging the Government to adopt a particular scheme; we want them to start exploring the options. I hope they will reconsider and respond meaningfully to our suggestions.”