There was a time when all British taxpayers paid for our roads: when cyclists could revel in the opportunity to remind drivers they don’t own the roads. That time ended 24 hours ago, when George Osborne announced that the roads do, in fact, belong to drivers.
In yesterday’s Budget, the Chancellor announced that, in a break with Treasury tradition, road taxes were to be hypothecated for road building. “From the end of this decade,” he said, “every single penny raised in Vehicle Excise Duty will be paid into a Road Fund to pay for the sustained investment our roads so badly need.”
Creating this entitlement for car owners ignores the real problem with road taxes – that they are set to plummet. It’s also economically illiterate and deeply unfair to other road users, especially cyclists, who already put up with the sense of entitlement from drivers quite enough.
The problem Osborne decided to duck, once again, is that the revenue generated by motorists is rapidly declining. Partly this is the result of ever more efficient vehicles (hybrids and electric cars really keep the Treasury up at night). It’s also partly because fuel duty has not kept pace with inflation: “fuel freezes” are popular enough to make them irresistible to politicians, as yesterday proved yet again.
The slow decline in revenues from motoring taxes. Image: RAC.
The romantic idea of a Road Fund was first used in 1920 as a way to charge drivers for construction. But it lacks economic credibility today. Ring-fencing is almost always a bad idea. As well as creating a headache for Treasury officials inundated with similar requests from other revenue raising departments, it sends mixed messages about why we tax drivers in the first place.
VED was never intended as a charge to use the roads. It was a sin tax that aimed, badly, to reduce the damage drivers cause to our health and the environment. In reality, VED is a relatively small fixed cost that has barely any influence on the choice of car purchased, and zero impact on how much you drive. The amount it raises for the Chancellor has no relationship to the cost of maintaining our roads.
The decline in the duty on road taxes. Image: RAC.
But most worrying is the precedent Mr Osborne has set by re-framing VED as a literal “road tax”. He has effectively decided the roads belong to those with a car.
They don’t, of course. Roads exist to enable people to get from place to place, and buses and bikes make much more efficient use of them (moving the most people in the least space). And the fact they cost more to build and maintain than VED can ever hope to raise shows this decision to be little more than cynical politics.
At best, bringing back a road tax will discourage more people to leave their cars behind, further clogging up the roads and making cycling less appealing. It does nothing to tackle congestion which costs the economy billions each year.
At worst it put cyclists at further risk of injury from entitled drivers who can now yell with abandon that they do indeed pay for the roads. Thatcher dreamed of her “great car economy”: George Osborne is no different.
To the Conservatives cars are a mark of independence, individuality and success. Cyclists and passengers on buses, the brave and the poor, are relegated to second place. The social good that roads provide risks being forever lost to a consumer mentality.
David Brown was a transport adviser to the Labour party, and previously worked at the Department for Transport.