ROAD PRICING:

The Economic and Technical Possibilities
Report of a Panel set up by the
Ministry of Transport
LONDON
1964

FOREWORD by Dr. R. J. Smeed, Road Research Laboratory

Economists have claimed that considerable net benefits could accrue to the nation if vehicle owners had to pay higher charges or taxes when they used congested roads than when they used uncongested ones, without there necessarily being any change in the total motor taxation paid by them.  These charges would be in the nature of prices for using the roads, the prices varying from one place and time to another according to the costs-notably the congestion costs- involved in driving in a particular area at a particular time.  The Ministry of Transport set up a panel, under my chairmanship, to make a preliminary examination of the technical

feasibility of collecting such taxes, and to consider some of the economic implications.  The members of the panel have served in an individual capacity and their report does not necessarily express the views of their respective organisations.

In the 1960s, I was a Traffic Engineer in charge of highway traffic management in Hull.  In those days, there were many more cyclists in the city than cars.   And yet traffic congestion, nothing compared to today,  was a concern.

This paper by Dr Smeed of the Road Research Laboratory about Road Pricing seemed the way forward.  But I wasn’t allowed to pose it as an option for Hull.

Now, 60 years on pay-per-mile car tax changes could be implemented in the government’s budget despite their significant impact on drivers.  

Reports now suggest that the Treasury could be looking at ways to charge motorists based on how much they drive.

This could be compatible with localism and heading in a direction that will be good for the climate.

Despite the forward-thinking nature of the 1964 report, road pricing wasn’t pursued as a policy option at the time.  Instead, traditional methods of taxation continued, with motorists paying fixed fees regardless of how much they drove or where they drove.

The Labour Government’s Potential Revival of Road Pricing

Fast forward to today, and the Labour Party government may be revisiting the idea of road pricing to raise revenue.  

Reports suggest that the Treasury may consider a pay-per-mile system that could be introduced in the upcoming budget.  This move is prompted by the need to find sustainable revenue streams as traditional fuel taxes diminish with the rise in electric vehicles.

In addition to the financial reason for implementing such a system, the government could decide to use the system  to charge  higher rates applied in congested urban areas or during peak hours,

This could create a more flexible and responsive road taxation system, discouraging unnecessary car journeys during busy times and encouraging alternative forms of transport, such as cycling or public transit.

However, with the government’s need to raise revenue quickly, a simple system may be preferred based on the mileage submitted in the annual MOT certificates.

Compatibility with Localism

One potential strength of road pricing is its compatibility with localism. Declining prosperity and affordability of discretionary travel will result in motorists needing to reduce their travel behaviour to local journeys. In time, localism could evolve.

Major Impacts on Drivers

While road pricing could offer environmental and economic benefits, it will likely significantly impact drivers. Introducing a pay-per-mile tax would represent a significant shift from the current system, where road users pay through fixed vehicle taxes and fuel duties. This could increase costs for those relying heavily on their vehicles, particularly in areas with limited public transport options.

To mitigate these impacts, the government must carefully design the system, possibly offering exemptions or subsidies to essential car users, such as doctors.  Additionally, investments in public transportation and cycling infrastructure would be necessary to provide viable alternatives to driving.

The introduction of road pricing could be a vital element of the transition to reducing energy use.