Bring on proper road pricing – not more taxation of the motorist

Manchester has decided to make itself a little less attractive to business and investment. It has added its twists to the knife this government places near the heart of every motorist, by imposing a £5 congestion charge to go into and out of the City centre by car each day. The charge, we are told, is to pay for more public transport. Don’t they realise the motorist already pays many times more than the cost of the service he provides? Where does all that money go? Why can’t they order decent public transport which is mainly paid for by fares? All journeys pollute – more public transport does not take us anywhere near zero carbon.

In a world where the rich travel more than the poor, where the government wishes to intensify the market signals to save energy by raising the price still further, and where both motorists and public transport users need public infrastructure to travel, I accept that there should be charges and taxes on motoring. I also think it would be better to charge those of who drive long distances more than the amount we charge those who drive less. The more you use the roads the more you should pay. The more you travel by whatever vehicular means, the bigger the fare or travel tax you should pay.

I am therefore proposing important reforms to the whole system. The principles of reform are:

1. No increase in the total taxes paid by motorists (In due course when spending is under better control they should come down)
2. More payment by use, less for just owning a vehicle
3. Better management of the roads
4. Reductions in public debt and public sector risk for transport investment

The scheme is:

1. Sell long leases on a substantial proportion of the principal highway network to the private sector.
2. Allow the private sector to charge tolls up to a specified maximum for use of this network.
3. Abolish Vehicle Excise Duty, making sure the total cost of VED foregone is the same as the first year’s toll charges on the highways.
4. Set contracts for the private sector to improve and maintain the highways to better standards than at present, encouraging them to expand capacity of the present route network.

A simple rough presentation of the kind of numbers I have in mind is:

1. Sell £110 billion of road leases.
2. Repay £110 billion of public sector debt, saving £5 billion a year of interest payments
3. Abolish VED, losing £5 billion of revenue
4. Allow private tolls of around £5 billion a year in the first year, rising as the private sector succeeds in making more capacity available and in setting flexi tolls to encourage better use of the road through out the day.

This scheme would save those on lower incomes more money, because they tend to have low mileage cars hit disproportionately by VED. It would charge people for use of the roads, improve the maintenance and performance of the roads as the leaseholders have an interest in maximising use, and act as some disincentive to each of us to drive more. Can you imagine a private owner of a road closing all or part of it down for long periods for maintenance as the nationalised owner does? Can you imagine them refusing to add an extra lane when they have a winner? There will b e more miles travelled whatever we do, so they might as well be less congested miles. It would help remoter rural areas where there are no main routes which would be tolled.

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31 Comments

  1. Stuart Fairney
    Posted June 9, 2008 at 10:10 am | Permalink

    It does seem a really odd time to start talking about imposing further motoring costs. However, if the good people of Manchester wish to tax themselves into poverty, that is their affair. For my part, I would welcome any Manchester metropolitan business wishing to relocate to Hampshire.

  2. Cliff
    Posted June 9, 2008 at 11:01 am | Permalink

    Are you related to Mr Brown John? 🙂
    It seems a very complicated scheme to me, likely to require a whole host of administrators to implement and monitor. Are you moving closer to Labour?

    If you wish to charge for usage, I suggest in general terms, we already do, the more you drive, the more fuel you use, therefore, those that travel more, already pay more tax for the privilege via fuel duty. Whilst I do think the motorist, like everyone else in Labour's Britain, is ripped off, it seems to me that, the charging for use scheme is already in place and costs the public very little to collect as most of the collection costs are borne by the garages and oil companies.

    Where I do agree with you is this; Where HAS all the money gone? It is a question that I doubt will be answered by Mr Brown, but I suspect it has, on the whole, been wasted. Perhaps it has dissappeared into that black hole known as the EU. Now how much a year does our membership of the EU cost us?

    Reply: Yes, you could simply replace VED with higher fuel taxes. However, you would not gain the other advantage of my scheme, which is betetr management and improvement of the roads at no taxpayer cost.

  3. Tonybaker
    Posted June 9, 2008 at 11:13 am | Permalink

    The current arrangement of taxing fuel is surely the best way to go.
    It charges those who travel long distances more than those who only drive short distances
    It also disprportionately charges those running 'gas guzzlers'

    It is an easy tax to collect, requires no tollgates with their tendency to cause traffic jams (Dartford crossing anyone) and certainly does not require a tracker device on the car.

    Or is this too simple

  4. Adrian Peirson
    Posted June 9, 2008 at 11:40 am | Permalink

    I could solve this Problem without taxing anybody, It's really very simple, though pehaps I have the advantage of being an engineer with 30 yrs background in fault diagnostics.

    Simply reduce the Population.

    Similarly I could reduce the housing shortage, crime, pollution, NHS and welfare overstretch, landfill problems.

    Westminster is now a money making enterprise between the Global Elite and their Puppet MP's who lobby through laws that make profits possible such as closing down our Post offices and replacing them with Global Companies like Federal Express.

    I'd like a society where instead of both parents slaving away for 5 days a week people work three days a week, spending the rest with their family, enjoying this ( once ) beautifull country, it's heritage and history.
    Surely that is what we as society should aim for, Pleasure and Beauty rather than Profit.

    As for arbon emmissions I suggest Billions of Trees should replace the Billions to be raised in in Taxes.

    Global warming is Psychological manipulation of the masses, an attempt to steer Nationalities into thinking Globally rather than Nationally.
    Rather like the declining number of home grown Footballers in our National teams, Mass Immigration.

    http://www.infowars.com/articles/nwo/rockefeller_

    YOU are being farmed.

  5. Neil Craig
    Posted June 9, 2008 at 1:15 pm | Permalink

    As a rule of thumb petrol usage rises with the distance travelled & the amount of congestion (waiting in traffic jams still uses petrol). Therefore tax on petrol already provides a cheap to administer way of doing what all the road pricing schemes affect to do at vast expense. There are also civil liberties problems with those schemes which would involve satellite or computer tracking of cars to assess their liability (such as the LDs have proposed). This is essentially an ID card on wheels.

    The problem with transport is that not only is not enough spent on it (transport infrastructure spending is one of the very few forms of government spending which is positively correlated with growth) but that it is spent on political rather than economicly justified targets. Hence the vast proportion spent on rail, when it is a vanishingly small proportion of traffic & the refusal to spend the rail money on innovative stuff (automated rail, lighter trains, overhead monorails) which would not safeguard to jobs of rail union members.

    Reply: It is not a poll tax on wheels: it is a private sector charge for a private sector service.

  6. M Peck
    Posted June 9, 2008 at 1:46 pm | Permalink

    Usually I like your suggestions, Mr Redwood – but not this one!
    It would appear to be very complicated and to have the potential motorists to be 'fleeced' by both the Government (who could decide to change the rules at any time) and the private sector. What is wrong with fuel pricing – simple, easy to collect, transparent and the user pays.

  7. Surreptitious Evil
    Posted June 9, 2008 at 2:19 pm | Permalink

    I'm not sure that £5 billion of income p.a. in return for a required investment of £110 billion (especially for a lease rather than a purchase), is likely to attract much investment in these cash-strapped times – that is below the current base rate and with all the hassle involved too. Even if you allow a doubling of income over the first 5 years (completely random numbers), you are still ending up with some very unattractive margins.

    Did you intend that the repair costs will come from this income stream (which, I suspect, would make it economically unfeasible) or will those continue to be separately funded? There are almost certainly some interesting possibilities for gaming the funding systems if repairs (under contract to .gov.uk, the freeholder of the property) are conducted by a separate company to that running the toll system.

    Reply: The numbers are subject to markets and negotiaiton. However, this would be a real or indexed retrun given the buoyancy of motor travel. Look at how low indexed bond yields now are.

  8. adam
    Posted June 9, 2008 at 2:27 pm | Permalink

    I think the reason the government is keen on road pricing is it comes with a tracking grid built in. They can use the tech to track people.

    That and it fits the UN PPP model.

    Certainly your suggestion of repaying some of the national debt is something i would welcome.
    You could argue the Bank of England created the British Empire and now thats all over, is there any need for this loan.

  9. David Burch
    Posted June 9, 2008 at 2:53 pm | Permalink

    Sort of modelled on France with the toll charges although we would not have to make them too high as we are far more crowded. THe British motorist (Londoners are experts) will always resort to the "rat runs" to avoid charges or hot spots and the thought of avoiding the M4 with a long distance rat run would be a challenge!. On thing I have noticed about France is their non major roads get you knowwhere quick in effect forcing you onto the autoroute. I do thought think that moving someway towards what you are suggesting is the right way.

  10. Kit
    Posted June 9, 2008 at 3:44 pm | Permalink

    A few years ago I was visiting a office in deepest darkest Essex. Returning I missed the train and had to wait an hour for the next train. The station was deserted the entire time and yet along side the station was a dual carriageway with the traffic bumper to bumper.
    I thought the rail companies could make a fortune if they rip up the tracks and make it into a toll road. Something to consider when you are back in power. 😉

  11. Brian Tomkinson
    Posted June 9, 2008 at 4:02 pm | Permalink

    Much of the traffic congestion has been created by politicians forever meddling – "traffic calming measures"; more and more sets of traffic lights; lane reductions on good roads; making dual carriageways into single lane roads thereby further reducing capacity; more paint on roads than on buildings; a plethora of road signs. I am sure there are many more examples. When will politicians understand that we, the public, are sick to the teeth of their incompetence for which we as ever have to pay the price? They need to understand that the taxpayers' pockets are virtually empty and people's tolerance has been exhausted.

  12. Derek W. Buxton
    Posted June 9, 2008 at 4:21 pm | Permalink

    I agree with most, although we are charged for the mileage, heavily, what is it 60% of the fuel price goes to the exchequer. That is enough. There is no justification for the high take on VED, it is just put into the general pot and wasted.

    One thing you could usefully do if in power, is to prohibit councils deliberately narrowing or even closing roads. Manchester and Stockport are classic examples of manufactured congestion, they copied Livingstone's action in London. Now they want to charge us extra. If there were any justice they would be in gaol now for a long time. I recall that to close roads except in special circumstances was illegal for any purpose. The London Marathon is therefore illegal.

  13. James
    Posted June 9, 2008 at 6:12 pm | Permalink

    I have to agree with Brian Tomkinson.
    There would be far less resistance to Congestion Tax(Charge) if many measures proposed by the man on the street were implemented.
    Untaxed, uninsured, unlicensed drivers – however small a minority they are, they contribute to the overall effect. Could we not target these, and remove such vehicles/drivers from the road?
    Traffic light timings – I can't speak for most of the country – but in the South Yorkshire area they really are appalling. In fact, in some areas you can almost begin to suspect that they can't be so bad accidentally?
    Filter lanes – these could be added at minimal cost at many roundabouts, traffic lights, etc.
    Road narrowing, speed bumps, chicanes – all lower the volume of traffic that can pass in a given time period, (coincidentally?) also impacting on the fuel efficiency of the majority of vehicles due to the incessant and unnecessary changing up and down through the gears.
    Can all of these be implemented? Unfortunately they're rather less than headline grabbing, but might make a practical difference.

  14. Mark Wadsworth
    Posted June 9, 2008 at 6:16 pm | Permalink

    What Tony Baker says, although there can be no objection to private companies building their own roads and bridges and charging tolls.

    Brian Tomkinson touches on a quick win solution – turn off all the traffic lights*, scrap all the 'traffic calming' nonsense, this saves money and gets the traffic moving (and I don't even own a car, but I do use buses sometimes, it is infuriating). Make up the difference by having more properly enforced zebra crossings.

    * And at junctions where it really doesn't improve things, just turn 'em back on again.

  15. GeoffH
    Posted June 9, 2008 at 6:25 pm | Permalink

    And while we’re at it (getting government out of roads and motoring taxation) let’s do something similar over refuse collection.

    Most local authorities (regretfully, I must say, including many Tory-controlled ones) seem hell-bent on charging more for doing less.

    Get them out of that business, too. Make it a legal requirement for each household to dispose of its waste (in all forms) through a regulated but competitive set of waste management contractors and let them charge the users for the service.

    Make immediate mandatory cuts in Council Tax equivalent to their current spending in this area and leave it to competition to deliver a service each household is happy with and content to pay for.

    Don’t like Biffa’s fortnightly collection for £150 a year? Then go for a weekly one from Sita for £175.

    There’d be room for some improvement in other services, such as recycling, separation of waste etc that could also flow from this.

    One thing’s for sure, Local Authorities are hopeless at it.

  16. Matthew Reynolds
    Posted June 9, 2008 at 6:33 pm | Permalink

    Very well put John ! That is a super idea ! I do hope that Tory Shadow Transport Ministers pay close heed to your wisdom on roads policy .

  17. GeoffH
    Posted June 9, 2008 at 7:17 pm | Permalink

    Couldn't agree more.

    Privatise the road network, charge for usage and abolish all taxation on cars and their usage.

    Build in some competition between roughly parallel routes (M1 or M6 to the North). Make the network responsive to demand and get the government – both national and local completely out of the picture.

  18. Freeborn John
    Posted June 9, 2008 at 7:19 pm | Permalink

    I don’t think the current combination of car tax plus fuel tax really has any fundamental flaws and see no reason not to stick with it in future. I would not like to see any grandiose vehicle tracking schemes that could be used to snoop on us.

    Yours is a radical proposal, but I feel it puts the doctrine of privatisation (which I am not necessarily against) ahead of practical problem solving. The practical problems I see are a lack of roads in crowded parts of the country (notably the South East) and a poor public transport system in almost all the country which goes to places people wanted to go to in the 19th century but not today.

    I find it puzzling that Manchester is introducing a road congestion charge scheme when that city has an excellent road network and much lower levels of congestion than London, but has very poor public transport compared to the capital, with no underground network at all. Even the much-lauded Manchester tram system was only a marginal improvement on the train lines it replaced.

  19. Matthew Reynolds
    Posted June 9, 2008 at 7:33 pm | Permalink

    Very well put John ! That is a super idea ! I do hope that Tory Shadow Transport Ministers pay close heed to your wisdom on roads policy .

  20. Bazman
    Posted June 9, 2008 at 9:33 pm | Permalink

    Here’s a better idea. Just make petrol £10 a gallon.

  21. DBC Reed
    Posted June 9, 2008 at 10:44 pm | Permalink

    It is virtually impossible for transport companies to make money from fares alone while providing a full service. However since improved transport generally increases property prices, you could pay for new roads and railway lines by a Land Value Tax e.g. the Jubilee Line increased property values by many times more than it cost to build . Steve Norris has said that faced with a choice of no Crossrail and Crossrail financed by a Land Value Tax (on central London property values), the second option is a “no brainer”. He is surely right.
    I cannot see the justice in forcing some poor soul to pay to travel down a privatised road on essential business in his beaten up Ford (you are going to privatise public highways are you not?) while Mr Bonnington Jagworth pays the same toll for non-essential travel in a 3-litre juggernaut. I appreciate the same caveat can ,but does not always, apply to Congestion charges which your old mate Dave Wetzel has called a” Land Value Tax on wheels” but the point is that there is the alternative of plentiful public transport, the use of which the London Congestion charge is specifically trying to encourage.
    Also allowing owner occupiers to keep the non-stop capital gains windfalls they get from local transport improvements and low interest rates is precisely why we now have a collapsing house price bubble and the near ruin of the financial system.
    The Conservatives (and New Labour) have really got to think out a new approach because the old system of pandering to owner occupier voters , leaving manufacturers to hang out to dry, has come to the end of misbegotten life.

  22. haddock
    Posted June 10, 2008 at 12:11 am | Permalink

    John, I'm sure I speak for a great many of your readers when I say I admire the effort you put into your work and this blog.
    It is a pity that the effort will be wasted, this present government or the next will only do what they are told to do by our real government overseas. Do you yet know what they have in store for transport in this euroregion ?
    I don't understand economics but I do understand that privatisation of the railways has not saved me any money, ditto gas, electricity, water etc etc…. there is no saving to Joe Public if incompetent public sector is replaced by greedy private sector.

  23. Adrian Peirson
    Posted June 10, 2008 at 1:00 am | Permalink

    I agree, simply implement tax via fuel charging. Simple, gets rid of the cost of the civil sevants involved with collecting the road tax.
    In fact if you simply got rid of road tax, you would save all that money you wouldn't even need to put up the Petrol prices.

  24. mikestallard
    Posted June 10, 2008 at 8:55 am | Permalink

    "Inflation might reach 3%!" said the BBC Economics Editor yesterday I wonder where she got those figures from? Everything is going up fast now – not much fun for the retired actually.
    Conversely, our investment – house – is going down in the sense that it is now unsalable.
    We are beginning to feel the pinch. What is happening to the people who depend on a car to get to work or who made the mistake of getting into debt, I simply dread to think.

    So yesterday Ruth Kelly – shorn of most of her condescending working class accent now – announces – another tax!
    And, people, it will be imposed the people of Manchester after (natch) a CONSULTATION!!!!!
    If they refuse, they won't get the squillions of pounds to build a tramway and have some more buses!

    Words fail me…..

  25. Acorn
    Posted June 10, 2008 at 10:08 am | Permalink

    Nice idea John, it will be a nightmare drafting the Bill to introduce it mind you. Privatising the Highways Agency to start with; then the County Highways departments. Then, can you imagine getting any road modifications through Planning!!! You may end up loving the new super-quango, the Infrastructure Planning thing.

    You could extend your "Pay-As-You-Go" economy to education and health as well. It worked brilliantly for the mobile phone market, even the most deprived kids have got a mobile phone now.

    Think of a personal health credit card, pre-loaded with a few grand a year from the state. Use it in any medics surgery or hospital. Do the same with education. Personal education credit card, pre-loaded for use in any school, anywhere in the country.

    Remember; "free at the point of use leads to abuse"; and, "the state being purchaser and provider does service to neither".

  26. Neil Craig
    Posted June 10, 2008 at 12:01 pm | Permalink

    Haddock such cynicism is too easy. Some of John's work will in due course bear fruit, even if in a watered down form, if the Tories get in & perhaps even if they don't, seeing how parties pinch ideas from each other.

    In a country of 60 million none of us should expect more. Changing national direction is like turning a super tanker. Both require continuous effort over a long time & you don't see much change, because both have enormous inertia. A country which could easily & instantly change direction on one person's say so, even mine, would be a chaotic dictatorship.

    Milton Friedman once pointed out how closely 1970s American policies were to several aspects of the American Socialialist Party of the 1930s despite it being tiny & having no electoral success it had moved the agenda because, unlike the trimmers of the big parties they promoted policies rather thann themselves. The same can be done in better causes.

  27. Pascal
    Posted June 10, 2008 at 1:04 pm | Permalink

    Very good proposals. What chance of them being adopted by the Tories ?

    This has been done in France with regards to motorways sale, and the suppression of road tax.

    The motorways in France are just so much superior to the UK ones, the extra toll cost appears worh it.

    As for the road tax, I own 3 cars. And although I can only use one at a time, I have to pay ludicrous amount of tax just to be able to use them when I want to (which is not often, as they are sunny days type of vehicles). I'd rather have an ibcrease in fuel duty and get rid of the disc.

    An anecdote: one of the argument against the road tax (vignette) removal in France was what to do with the civil servants in charge of collecting it! Yes minister territory.

  28. James
    Posted June 10, 2008 at 6:47 pm | Permalink

    John – agree with your ideas.

    To debunk one common comment. Fuel tax is not the entire solution. It penalises UK haulage companies compared to their foreign competition and rural communities where there is no viable public transport network (and where it would be extremely inefficient to create one from scratch).

    An integrated transport policy that allowed the market to provide real options would be preferable to the current system. Park and ride schemes could flourish just outside the taxing zones.

    However, one other point about the Manchester scheme. You mention that the people of Manchester have decided to make the city less attractive to business and investment. They haven't – central government has unfairly made that decision for them. At least with the London congestion charge – people voted for the man who implemented it. This is surely a huge argument for devolved politics and the need for mayors in all major urban centres.

  29. Bazman
    Posted June 10, 2008 at 9:12 pm | Permalink

    If there was any justice there would be no tax on motorcycles as they do little damage to the road surface due to low weight, take up a small space and generally have small modern efficient engines, but are still faster than your car.

  30. Bazman
    Posted June 10, 2008 at 9:22 pm | Permalink

    Put a 32 lane toll motorway from south wales to the center of London. Lower house prices in London and improve transport. Make petrol £15 a gallon to pay for it.
    A more sensible option would to have a very high speed rail link from Manchester to London. Can't afford not to have this.

  31. Julian Melford
    Posted May 16, 2009 at 9:36 am | Permalink

    Road pricing on thisscale would not be like the tolls on the QEII bridge, by the M25 at Dartford.

    It could only be done using intrustive tracking technology, like the sort proposed by the EU to support its Galileo spy satellite.

    Whereas I appreciate your concern that drivers should not have to pay more overall, I don't see it as possible, given that the costs of developing this nightmare have been reckoned at over £60 billion. Whoever can get their hands on that sort of money will demand a substantial return on investment.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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