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Labour must consider road pricing to prevent a black hole emerging in the public finances, a civil servant has said.
Michael Dnes, the head of future roads technology at the Department for Transport, called for ministers to consider a controversial “per-mile” tax on drivers to ensure “electric motorists keep paying their share”.
With the number of electric cars on the road growing, the Treasury is facing a £25bn shortfall – about half the annual defence budget – if it cannot replace revenues from fuel duty.
This is because electric car owners do not need to buy petrol, on which fuel duty is levied.
In a series of social media posts on X, formerly known as Twitter, which have since been deleted, Mr Dnes wrote: “The obvious answer is to find another tax so electric motorists keep paying their share.
“But electric vehicles don’t use special electricity that you can tax. And a purchase or a registration tax won’t restrain gridlock.
“So you need some kind of per-mile cost. And that leads you back to road pricing. The principle is you pay a small fee for every mile you drive. Just like you effectively do through fuel taxes today.
“In the fancier versions, you adjust the prices so you pay less on empty roads and more on busy ones.”
He predicted pay-per mile pricing would be unpopular and insisted there was no “secret plan” to introduce it.
He suggested one way of implementing the tax would be to levy it on future buyers of electric cars only, making it more politically palatable.
Mr Dnes is a career civil servant who has worked at the Department for Transport since 2009, bar a one-year stint at High Speed 2 from summer 2021. He is currently responsible for leading government policy on the development of road infrastructure, according to his profile on LinkedIn.
The pay-per-mile suggestion is by no means new and comes after the Left-leaning Resolution Foundation and Sir Tony Blair’s think tank, both of which have links with Labour under Sir Keir Starmer, have also advocated for road pricing.
A report published by the Tony Blair Institute for Global Change in 2021 warned that Britain would spend 50pc more time in traffic as driving became cheaper, with the resulting rise in congestion and crashes over the next 50 years set to cost the economy tens of billions of pounds.
Last year, the Resolution Foundation called for a road tax of 6p-per-mile on electric vehicles, which it said would help meet the Government’s shortfall while also keeping electric cars cheaper to run than petrol or diesel equivalents.
Previously, there has been little appetite from senior politicians to consider such a move, with polling by Go Compare earlier this year showing over half of drivers were opposed.
But the unusually public comments by a senior civil servant about the idea will fuel speculation that the policy proposal is set to be dusted off under Sir Keir Starmer following Labour’s landslide election victory last week.
A ‘regressive’ scenario
In his social media posts, Mr Dnes warned that a failure to address the issue would lead to a “regressive” scenario where owners of electric cars are able to drive largely tax-free while drivers of petrol cars end up paying more.
He said a decision on the issue was “above my paygrade” but suggested that one “magic trick” to overcome public opposition would be to introduce road pricing – but only for future buyers of electric cars.
Under this model, drivers of electric cars that are on the road today would never have to pay.
It would also require little new infrastructure, because a driver’s mileage could be easily tracked by cutting-edge technology now incorporated into most electric cars, Mr Dnes added.
However, he warned that such a measure would only be feasible “when there are very few EVs on the roads”, adding it would “get a lot more complex politically if you wait”.
He said: “There’s a perfect ‘window’ for doing this – plenty of EV sales, but not many EVs already on the road.
“It’s well above my pay-grade. People like me exist to deliver the will of elected governments, not second-guess it.
“The only thing I will say is that the UK will be firmly outside that window by 2029. So, whatever the choice, the new Government will be the one making it.”
On Monday, Sir Iain Duncan Smith MP, the former Conservative leader, warned that road pricing would be a mistake. He warned that reported proposals to introduce such measures in London – which Sadiq Khan, the Labour mayor, has denied – threatened to make the capital “a no go area” for elderly motorists who didn’t want to travel by underground but were already deterred by congestion charging.
Sir Iain said: “I can understand the problem posed for tax revenues by electric cars, which pay literally no fuel duty and are heavily subsidised at the moment.
“But I am against any road pricing being introduced. Right now drivers of petrol and diesel cars already get hammered by taxes, whereas electric cars are a huge fillip.
“It used to be that people could drive into London to go to a restaurant or the theatre, but that has become more and more difficult and the costs are now astonishing.”
‘Civil servants should not promote’
He also criticised the civil servant’s initial decision to post publicly about the matter, adding: “Civil servants should not be promoting something – they are there to exercise the policies of the Government.
“So I am not in favour of civil servants being exponents of policy.”
The Department for Transport has been asked to comment.
Labour’s election manifesto did not set out the party’s plan for fuel duty or vehicle excise duty, commonly known as “road tax”, which electric car drivers will start paying from next year.
It said: “Cars remain by far the most popular form of transport. Labour will maintain and renew our road network, to ensure it serves drivers, cyclists and other road users, remains safe, and tackles congestion.”
However, one of the party’s signature pledges has been to reinstate the 2030 ban on sales of new petrol cars. Previously they were set to be banned from 2035.
A government spokesman said: “These are the views of an individual and do not reflect government policy. We have no plans to introduce road pricing.”