The government has issued a stark warning to electric vehicle owners, stating the current motoring tax system must be made 'fair' for all drivers, sparking fears of new pay-per-mile charges being introduced in the upcoming Budget.
Transport Secretary Heidi Alexander appeared on the BBC's Sunday with Laura Kuenssberg, where she was pressed on speculation that the government plans to make driving an electric vehicle (EV) more expensive.
The Fairness Question and Fuel Duty Shortfall
The central issue is a looming financial gap for the Treasury. While drivers of petrol and diesel cars pay fuel duty, EV drivers do not contribute through this mechanism. As the national shift towards electric transport accelerates, government income from this duty is set to plummet, creating pressure to find new revenue streams to maintain the UK's road network.
Host Laura Kuenssberg questioned the minister on the apparent contradiction of potentially making it more costly to run an EV while simultaneously offering support to buy one. This follows the revelation that Chancellor Rachel Reeves will announce a £1.3 billion boost to an electric car grant in Wednesday's Budget, which could slash the upfront cost for buyers by up to £3,750.
Minister's Statement and Treasury Position
Heidi Alexander declined to reveal specific Budget details, stating, "I am not going to pre-empt the Budget. The Chancellor will be on your show next week."
She elaborated on the government's dual challenge, saying: "As we make the transition to EVs, two things can be true at the same time. We need a fair vehicle tax system for all motorists because EVs, like drivers of petrol and diesel cars, are driving on roads that require maintenance."
She pointed to the UK's ageing infrastructure, including motorways built in the 1960s and 1970s, as a key reason for needing a future-focused taxation model. However, she sought to reassure motorists, adding, "we are not going to do anything to jeopardise the transition to EVs and that will remain front and centre."
The Treasury has been similarly guarded. In response to a Telegraph report suggesting EV drivers could even be charged for mileage accrued abroad, a Treasury spokesperson stated: “Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.”
Industry Reaction and Criticism
The prospect of a pay-per-mile scheme, particularly one that includes foreign travel, has already drawn criticism from motoring experts.
Paul Barker, managing editor at Auto Express magazine, commented: “It wouldn’t be reasonable to charge drivers for mileage clocked up abroad when they’re not using UK roads or infrastructure, so getting the balance right will be vital to any sort of acceptance by motorists.”
This highlights the delicate balancing act the government faces: securing sustainable funding for roads without disincentivising the public from adopting cleaner vehicles. All eyes will now be on Chancellor Rachel Reeves's Budget announcement on Wednesday for clarity on the future of motoring taxation.
