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Road tax is back – Chancellor announces Vehicle Excise Duty reforms that will see money raised reserved for road improvements

Fuel duty frozen for the rest of the year

It seems there really is a road tax again. In his seventh Budget as chancellor – the first Conservative Budget in 19 years – George Osborne has announced reforms to Vehicle Excise Duty which will see money raised earmarked for road network improvements.

Osborne said:

“I will return this tax to the use for which it was originally intended. I am creating a new roads fund from the end of this decade – every single penny raised from VED in England will go into that fund to pay for that sustained investment our roads so badly need.”

Road tax was abolished in 1937 and replaced by Vehicle Excise Duty, the proceeds of which have up until now gone into the general Treasury fund. References to "road tax" are of course often made by drivers as a means of suggesting they have more right to the roads than cyclists (or indeed than pedestrians or horse riders).

A new system of Vehicle Excise Duty will be brought in for new cars from 2017 and while no extra revenue will be raised, the Chancellor claims it will be "more secure". It will be emissions-based in the first year, after which there will be three levels – zero emission, standard and premium. Around 95 per cent of vehicles are expected to fall into the standard category, which will cost £140 a year.

Under the new system, cars emitting 0g/km CO2 will pay nothing – the same as a cyclist. Or at least it would be the same as a cyclist if a 2010 study hadn’t found that the people who cycle the most are likely to own at least two cars. Cars with a list price above £40,000 will attract a supplement of £310 per year for the first five years in which the standard rate is paid

The Chancellor also froze fuel duty for the rest of the year.

CTC is concerned that today’s announcements could effectively create a 'road fund' and lead to calls for a similar tax on cyclists to pay for the Cycling and Walking Investment Strategy. The original 'Road Fund' was abolished in 1937 thanks to opposition from Chancellor Winston Churchill who argued that spending motor taxes only on roads would lead to motorists assuming a 'moral ownership' of them.

Roger Geffen MBE, Policy and Campaigns Director at CTC, the national cycling charity, said:

"George Osborne has today reversed Winston Churchill's most sensible transport decision. Given this, it is therefore a relief that Parliament and the Prime Minister are already committed to cycling investment, and to 'cycle-proof' all road and traffic schemes to ensure cycling is properly designed into them from the outset.

"However, CTC still believes this is a doubly regressive policy, raising more tax from cleaner cars to build more roads, when councils are struggling to maintain the ones we’ve got. And we still want to know how much the Government will allocate to the promised Cycling and Walking Investment Strategy, and when they will confirm this.”

Jason Torrance, policy director at Sustrans, commented:

"Vehicle Excise Duty is a tax on pollution: those cars which create the most greenhouse gases are taxed most heavily. Siphoning that revenue into a new Roads Fund will inevitably lead to further pollution and undermines its original purpose.

"Over this parliament alone £15bn will be spent on new roads. Research proves that creating more road capacity will lead to increased demand, and therefore more miles driven.

“The Chancellor has kept the tax on fuel frozen at 57.95p a litre for more than four years, which is a populist policy but one which fails the public in that it serves only to lock them into having to use their cars.

“With physical inactivity, pollution and congestion increasing across the UK, investing in cycling and walking is an economic silver bullet and government must act across all departments to secure significant investment. Government must create a Cycling and Walking Investment Strategy that guarantees long-term funding for active travel.”

Alex has written for more cricket publications than the rest of the team combined. Despite the apparent evidence of this picture, he doesn't especially like cake.

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