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Two-tier road taxes would be a wrong turn Two-tier road taxes would be a wrong turn
(35 minutes later)
The Tory press is in a lather over confirmation that Whitehall's deep thinkers have been contemplating a two-tier reform of vehicle excise duty (VED). It would charge extra to drivers who want to use Britain's motorway network – and fine anyone else whose cars are caught on M-roads by what the tabloids call "spy cameras" whenever it suits them.The Tory press is in a lather over confirmation that Whitehall's deep thinkers have been contemplating a two-tier reform of vehicle excise duty (VED). It would charge extra to drivers who want to use Britain's motorway network – and fine anyone else whose cars are caught on M-roads by what the tabloids call "spy cameras" whenever it suits them.
Are the frothing newspapers right? On this occasion I think they are. The problem facing transport officials is the obvious one: a deepening shortage of the green folding material. The tree-grown theory of money, beloved of bankers, voters and politicians for decades, has been fatally undermined. But the answer is surely not this divisive proposal.Are the frothing newspapers right? On this occasion I think they are. The problem facing transport officials is the obvious one: a deepening shortage of the green folding material. The tree-grown theory of money, beloved of bankers, voters and politicians for decades, has been fatally undermined. But the answer is surely not this divisive proposal.
Among all the other cash problems, VED – which generates £6bn a year for the Treasury – is a wasting asset, increasingly complex and subject to the trend towards low-emission cars that attract less tax (rightly so). But as with other "sin taxes" – booze and tobacco, for instance – we are two-faced: we want to consume less, but are vaguely aware the lost taxes would have to be raised elsewhere.Among all the other cash problems, VED – which generates £6bn a year for the Treasury – is a wasting asset, increasingly complex and subject to the trend towards low-emission cars that attract less tax (rightly so). But as with other "sin taxes" – booze and tobacco, for instance – we are two-faced: we want to consume less, but are vaguely aware the lost taxes would have to be raised elsewhere.
That awkward truth underlines the inherent absurdity of today's report from the Institute of Economic Affairs (IEA), the free-market thinktank founded in 1956 to challenge the Keynsian orthodoxy of the time. Quite right too, orthodoxy should always be challenged, and the IEA was a neglected gadfly for decades. But since the Thatcher/Reagan 80s, free-market nostrums have become the new orthodoxy. I don't share Andy Beckett's black-and-white denunciation of Thatcherism in Saturday's Guardian and urge you not to either. But the IEA's proposal that our roads should be privatised – sold off for £150bn – should get the raspberry it deserves. Moon it too if you feel strongly.That awkward truth underlines the inherent absurdity of today's report from the Institute of Economic Affairs (IEA), the free-market thinktank founded in 1956 to challenge the Keynsian orthodoxy of the time. Quite right too, orthodoxy should always be challenged, and the IEA was a neglected gadfly for decades. But since the Thatcher/Reagan 80s, free-market nostrums have become the new orthodoxy. I don't share Andy Beckett's black-and-white denunciation of Thatcherism in Saturday's Guardian and urge you not to either. But the IEA's proposal that our roads should be privatised – sold off for £150bn – should get the raspberry it deserves. Moon it too if you feel strongly.
The IEA makes it all sound terrific. Local communities would maintain very local roads, as they do in (large and empty) Sweden, private firms – uninhibited by state regulation, of course – would have access to capital to fix those time-wasting bottlenecks and mend those potholes. Competition would help and VED could be abolished, and fuel taxes slashed by up to 75%. Owners (private firms) would decide their own road pricing policies. The IEA makes it all sound terrific. Local communities would maintain very local roads, as they do in (large and empty) Sweden; private firms – uninhibited by state regulation, of course – would have access to capital to fix those time-wasting bottlenecks and mend those potholes. Competition would help and VED could be abolished, and fuel taxes slashed by up to 75%. Owners (private firms) would decide their own road pricing policies.
If it sounds simplistic, it is. The IEA's executive summary pdf doesn't mention why road programmes have been slashed in recent years, it just assumes that bigger roads are a social and economic good, whereas anyone who has ever driven on the great highways of Los Angeles as I did last year (are some of them 20 lanes wide now?) knows how self-defeating they can be.If it sounds simplistic, it is. The IEA's executive summary pdf doesn't mention why road programmes have been slashed in recent years, it just assumes that bigger roads are a social and economic good, whereas anyone who has ever driven on the great highways of Los Angeles as I did last year (are some of them 20 lanes wide now?) knows how self-defeating they can be.
It's not green, it's not smart and it's very expensive just to keep building. I didn't spot the anti-regulation IEA admitting that badly regulated banks that offered credit cards to babies, free homes to their parents and tons of cash to Greek tax dodgers (they've just arrested the whistleblower) are the biggest single reason why modest road programmes have stalled lately.It's not green, it's not smart and it's very expensive just to keep building. I didn't spot the anti-regulation IEA admitting that badly regulated banks that offered credit cards to babies, free homes to their parents and tons of cash to Greek tax dodgers (they've just arrested the whistleblower) are the biggest single reason why modest road programmes have stalled lately.
It would be nice to think that the Cameroons' "greenest government ever" credentials played a bigger part than they did, but Ian Birrell knocks a large hole in that one elsewhere in today's Guardian. In any case, the road lobby complains that its taxes are never ringfenced for road improvements, but mostly go to the exchequer. It follows that if the private sector takes over the roads there will be a deficit to be filled by taxes elsewhere.It would be nice to think that the Cameroons' "greenest government ever" credentials played a bigger part than they did, but Ian Birrell knocks a large hole in that one elsewhere in today's Guardian. In any case, the road lobby complains that its taxes are never ringfenced for road improvements, but mostly go to the exchequer. It follows that if the private sector takes over the roads there will be a deficit to be filled by taxes elsewhere.
And no, don't tell me about all the money privatisation will save the taxpayer. I think (and realise you may not) that Britain's long-neglected rail network – track, rolling stock service - has been generally much improved by private management, but it has cost the taxpayer huge sums. It is not the only public utility to suffer this mixed experience. And no, don't tell me about all the money privatisation will save the taxpayer. I think (and realise you may not) that Britain's long-neglected rail network – track, rolling-stock service – has been generally much improved by private management, but it has cost the taxpayer huge sums. It is not the only public utility to suffer this mixed experience.
Personally, I doubt if Whitehall will go much further with the two-tier VED scheme based on motorway use. The road tax has evolved in recent years in directions that embrace the "polluter pays" theory, which is fine by me, though inconsistently applied. I seem to remember being assured that diesel was a cleaner and more fuel-efficient tax, whose merits would be reflected in a lower price. When I fill my car with diesel (which is most of the time but, alas, not when I was in a hurry last month) I notice it now costs more. Personally, I doubt if Whitehall will go much further with the two-tier VED scheme based on motorway use. The road tax has evolved in recent years in directions that embrace the "polluter pays" theory, which is fine by me, though inconsistently applied. I seem to remember being assured that diesel was a cleaner and more fuel-efficient tax, whose merits would be reflected in a lower price. When I fill my car with diesel (which is most of the time but, alas, not when I was in a hurry last month), I notice it now costs more.
Yet the road pricing idea that would seem to underpin the two-tier idea must be the way ahead, if properly handled. Ken Livingstone grasped the nettle with central London's congestion charge, but brave talk about extending it worldwide has not got far: Stockholm, Milan and pioneering Singapore, which is a tiny island state.Yet the road pricing idea that would seem to underpin the two-tier idea must be the way ahead, if properly handled. Ken Livingstone grasped the nettle with central London's congestion charge, but brave talk about extending it worldwide has not got far: Stockholm, Milan and pioneering Singapore, which is a tiny island state.
Boris Johnson abandoned the Livingstone zone's extension into rich inner suburbs of west London, which – paradoxically – would not have been paid by its well-heeled residents. So getting it right, fair but effective, is tricky. It's a form of co-payment, in which the cost is shared by the taxpayer and the user, like student tuition fees.Boris Johnson abandoned the Livingstone zone's extension into rich inner suburbs of west London, which – paradoxically – would not have been paid by its well-heeled residents. So getting it right, fair but effective, is tricky. It's a form of co-payment, in which the cost is shared by the taxpayer and the user, like student tuition fees.
But you have to watch it because it is open to abuse. On-street parking charges have become a tremendous racket for cash-strapped councils, a major scandal in many parts of the country as the tree-grown theory of money declines.But you have to watch it because it is open to abuse. On-street parking charges have become a tremendous racket for cash-strapped councils, a major scandal in many parts of the country as the tree-grown theory of money declines.
As for speed cameras, when I asked Godfrey Bloom MEP, one of John Prescott's challengers to become Humberside's police commissioner, if it was true he opposed such cameras outright, he said no. But Bloom does oppose those located primarily to raised money from unwary motorists. It was hard to disagree with that, so I didn't.As for speed cameras, when I asked Godfrey Bloom MEP, one of John Prescott's challengers to become Humberside's police commissioner, if it was true he opposed such cameras outright, he said no. But Bloom does oppose those located primarily to raised money from unwary motorists. It was hard to disagree with that, so I didn't.
Yet one form of road pricing, reasonably fair and efficient, stares us in the face. Across the channel toll booths that charge per journey start a few miles from Calais and extend south and west, though not far east because German roads are free. The US has extensive road tolling. Canada has a privately owned toll road around Toronto (its rates much higher than in the US, and controversial), Australia has some. Yet one form of road pricing, reasonably fair and efficient, stares us in the face. Across the channel toll booths that charge per journey start a few miles from Calais and extend south and west, though not far east because German roads are free. The US has extensive road tolling. Canada has a privately owned toll road around Toronto (its rates much higher than in the US, and controversial). Australia has some too.
Britain has the M6 relief road north-west of Birmingham. Its tolls on heavy lorries are so high that they stick to the public road, leaving the taxpayer to fund the consequent repairs, and traffic has always been lower than predicted since it opened in 2004.Britain has the M6 relief road north-west of Birmingham. Its tolls on heavy lorries are so high that they stick to the public road, leaving the taxpayer to fund the consequent repairs, and traffic has always been lower than predicted since it opened in 2004.
But a nationwide system, uniformly imposed – not the case in France – would have the merit of charging the motorway user (we are now doing that to foreign lorry firms, much as they have long done to our transcontinental lorries) without imposing an apartheid tax that will either exclude poorer motorists or impose a regressive extra tax. Smart technology (Singapore's cars have it) is making such options more do-able.But a nationwide system, uniformly imposed – not the case in France – would have the merit of charging the motorway user (we are now doing that to foreign lorry firms, much as they have long done to our transcontinental lorries) without imposing an apartheid tax that will either exclude poorer motorists or impose a regressive extra tax. Smart technology (Singapore's cars have it) is making such options more do-able.
Even in thin and crowded Britain, so much less convenient a shape than hexagonal France, most of us can usually avoid using motorways a lot of the time if we choose not to do so. It's the trade-off between time and money. We drove the cross-country back roads from London to Cambridge this weekend and it proved a Friday rush-hour nightmare, one that lasted three grim hours. We came back down the M11 and M25.Even in thin and crowded Britain, so much less convenient a shape than hexagonal France, most of us can usually avoid using motorways a lot of the time if we choose not to do so. It's the trade-off between time and money. We drove the cross-country back roads from London to Cambridge this weekend and it proved a Friday rush-hour nightmare, one that lasted three grim hours. We came back down the M11 and M25.
Personally I'd have preferred the train, but Mrs W had good reasons for driving and warned me the Royston route would prove a bad idea. So would two-tier road taxes, which impose a binary choice where most of us prefer multiple choices. There's enough dividing lines in Britain 2012 without adding another. Personally I'd have preferred the train, but Mrs W had good reasons for driving and warned me the Royston route would prove a bad idea. So would two-tier road taxes, which impose a binary choice where most of us prefer multiple choices. There are enough dividing lines in Britain 2012 without adding another.