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Viewpoint: Spending crossroads

Cuts are coming. Is there a sting in the tail?

We are at a crossroads for UK transport policy, looking into a precipice with that icon of mobility and cornerstone of transport policy - the oil filled car – standing out as an unsustainable addiction.

We are legally committed to cutting our CO2 emissions. The transport sector makes up around 25% of our carbon emissions and to achieve the required 20% drop by 2020 we are going to have to dramatically improve the efficiency of our vehicles.

This will first mean biofuels, hybrid technologies and modal shift to public transport. However, it is only the next step, a move towards electric vehicles, that will ensure we reach our targets and governments across the world are banking on the private sector to deliver technical solutions soon. Yet electric vehicles will not be the simple silver bullet. They are a change that requires huge infrastructure investment and threatens the very existence of a major government revenue stream – fuel duty.

Electric cars: green friend, or foe?

In the UK cars delivers approximately £26bn in duty to the public purse every year – money that no Government can afford to do without. Yet the advent of the electric car is a direct threat to what accounts for approximately 5% of Government’s income.

Petrol and diesel is simple to tax. It is not the same for electricity. While we all have access to electricity in our homes, offices, it is not subject to fuel duty. Of course it may be fairly easy to design a specialist plug and socket. Of greater challenge is the need to cope with the new and varied sites for charging stations on streets, in car parks and at home rather than simply focusing tax revenue collection on instant returns via filling stations as at present.

And the electric car won’t be viewed as a green success if driving becomes cheaper and we begin to rely on our cars even more than today. We could end up increasing electricity demand while reducing our passenger numbers on public transport and increasing the need to build more roads.

“The electric car won’t be viewed as a green success if driving becomes cheaper and we begin to rely on our cars even more than today. We could end up increasing electricity demand, while reducing our passenger numbers on public transport”

Is that progress?

Perhaps this is Jeremy Clarkson’s dream – the car reborn guilt-free? If so, with the revenue, emissions and congestion challenges, what might a solution look like?

The transport revenue shortfall could partly be made up by congestion charging schemes. However, other than in cities, successful trials have been few and far between and, to date, national road pricing has fallen in the political ‘too difficult’ box.

Yet these Intelligent Transport Systems (ITS) represent an enormous opportunity for industry and government in defending revenues, maintaining fairness, while also reducing congestion and our car dependence.

The technology is readily available. What is needed is the vision and drive from politicians to bring these varied tools together to form comprehensive solutions.

Perhaps the potential loss of billions in fuel duty revenue could compel governments into action. Because as we move to a greener future, the sooner our political leaders wake up to the need for this change, the sooner we can start to invest in the first truly holistic solution to our car-driven needs.

  • George Hutchinson is chairman of the Public Affairs Practice at Burson-Marsteller UK

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