Frozen Fuel Duty

A few short months after the UK Chancellor George Osbourne’s spending review, he has produced his eighth budget. Despite a bleaker economic outlook than in November 2015, much of the transport agenda remains the same. Yes, there were new announcements about northern infrastructure projects and Crossrail 2, but I don’t need to rehash my views on the prioritisation of major rail and road building over investment in local, sustainable and active transport. I did that after the spending review announcements: https://go-how.com/2015/12/01/spend-nationally-speak-locally/.

But there was one other transport-related, noteworthy item: fuel duty, also known as gas tax, is to remain frozen. Frozen in time at a rate that becomes ever more insignificant. Why? When increased tax receipts are so desperately needed? When prices at the pumps are lower than ever and people would barely notice? When back in 2010, the Conservative Party Manifesto suggested stabilising fuel prices, so tax would be lower when oil prices were higher and vice-versa? I haven’t even mentioned the recent commitments made in Paris to tackle greenhouse gas emissions, but then the budget also included financial aid for the oil and gas industry, so draw your own conclusions.

Why? Politics of course.

Then I went to the #smartertravellive conference, with hundreds of other transport planners, engineers and related professionals. I went to run a speed-learning session on bikeshare, but I also went to learn. And I learned that fuel duty may well become obsolete anyway. Cars and how people use them are changing. Shared. Electric. Autonomous. These are three trends in automotive circles that are accelerating and merging.

Congestion occurs when roads are filled to capacity with vehicles. Yet the vehicles are not filled to capacity, but often ¾ empty. Furthermore, most cars are only in use 5% of the time. The other 95% of the day, they are idle resources. The sharing economy is all about making better use of idle resources, and ever more people are changing their ideas of access and ownership. At #smartertravellive we were told that car manufacturers are selling vehicles to small groups rather than individuals. They are running car clubs or carsharing schemes like Zipcar, which are proliferating. In England and Wales, London leads the way, but even outside London, there are 22,500 members of car clubs sharing 700 vehicles and Carplus, a research and advocacy organisation for shared transport, reports that these members have sold or otherwise disposed of 2,700 private cars in the last 12 months alone.

Meanwhile, electric cars are still a small minority of the vehicles on the road, but their popularity is increasing rapidly, with over 50,000 registered in the UK in 2015 compared to 3,500 in 2013. The UK Government is investing in electric automotive technology, supporting both consumers and manufacturers. At the beginning of this month came the announcement that a 1,100 km network of rapid charging points (charging batteries to 80% capacity in 30 minutes) had been installed across the British Isles with 74 rapid chargers located at strategic points to enable longer distance travel by electric vehicles.

The UK government is also supporting the virtual and actual testing of autonomous vehicles, known to most of us as driverless cars. The clear intention is that the UK wants to be at the forefront of adopting the new technology.

Shared. Electric. Autonomous. Fewer vehicles filled with more people won’t raise as much fuel duty as the still current trend of mainly single-occupancy, commuter-driven cars. Electric cars won’t raise any fuel duty at all. In Oregon, USA, where electric and hybrid cars have long been popular, a voluntary mileage-based tax was introduced for a small number of drivers last summer. Car-sharing schemes are also going electric. And if the vehicles become autonomous too, then why own. If shared and stored at depots, why not have charging points there?

Professor John Miles asked the #smartertravellive conference delegates: Will we carry on using cars in 5 years’ time? He then provided the answer. Yes. But not necessarily on the same terms many do now. So if I could have a word with Mr. Osborne, I’d tell him that if he doesn’t take the opportunity to raise some much-needed tax receipts from car fuel now, future Chancellors may soon have no such receipts to raise. What will they make political capital from freezing then?

2 thoughts on “Frozen Fuel Duty

  1. Interesting insight on the future of cars. The stable gas tax, how will that shortfall be restored for infrastructure? Higher tax on something like alcohol? Drunk driving fines increase?

  2. Pingback: Live Local, Go Slow, Walk | Go-How

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