The government is forecast to collect £28.3 billion in fuel duty this financial year, and yet those who drive pure-electric vehicles will contribute precisely zero to that figure. So what will happen when we’re all humming about in electric vehicles?
Such a future now looks inevitable, with impending bans on the sale of petrol and diesel vehicles, cities plotting access restrictions for non-electrified vehicles and the EU rapidly imposing reductions on the fleet-average CO2 figures of manufacturers for new cars sold.
All this means that by 2025 more than one in 10 car sales across Europe will be purely electric, analyst firm LMC believes, even if those sales in the UK are currently skewed more towards plug-in hybrids than pure EVs.
The think tank Policy Exchange estimated last year that the government could lose up to £170bn by 2030 by allowing electric cars to slip through the duty net. It stands by the figure today.
“If anything, the case for reform has accelerated because of the increased uptake of plug-ins,” said Josh Burke, a senior fellow at Policy Exchange’s environmental unit.
So what is the plan? And will those of us planning to hold on to petrol or diesel cars for as long as possible be affected? The government is laying very low on the subject. “It’s almost as if no one is addressing this issue,” said Edmund King, president of the AA. “We know that duty is going to disappear, but no one is facing up to it.”
A couple of pieces of evidence show the government is moving silently in the background. One was buried at the bottom of a web page run by government financial forecasters the Office for Budget Responsibility, which mentioned this year that it had agreed with the tax office to “investigate the potential impact of compositional changes in the vehicle stock and its implications for trends in fuel efficiency”. And the second from Burke, who told us that a Treasury official mentioned to him at a recent gathering that the government was looking at alternatives, including the dreaded words: road pricing.
Everyone we spoke to agrees that fuel duty is on its way out. “It will disappear, it’s inevitable,” said Phil Summerton, managing director of think tank Cambridge Econometrics.