The ongoing debate over pay-per-mile car taxation has seen a significant development following comments by Transport Secretary Heidi Alexander. On Thursday, Alexander emphatically stated that there are no current proposals to introduce a national pay-per-mile road pricing scheme, insisting the government supports drivers and their interests.
However, insiders close to the Labour MP for Swindon South have since suggested that Alexander may have “misspoken,” clarifying that her comments were intended only to dismiss a fully national road pricing system, leaving the door open for more localized or targeted measures.
The government acknowledges the challenges posed by the transition to electric vehicles, especially since electric cars are not subject to the traditional fuel duty that applies to petrol and diesel vehicles. A government spokesperson emphasized the need for a fair taxation system that funds road maintenance and infrastructure while encouraging the shift to electric mobility. To support electric vehicle adoption, the government has invested £4 billion, including grants that reduce upfront vehicle costs by up to £3,750.
Chancellor Rachel Reeves is expected to announce pay-per-mile taxation plans for electric vehicles in the upcoming Budget on November 26. This move aims to compensate for declining fuel duty revenues as more motorists transition away from fossil-fuel-powered cars. Reports indicate the new taxes could come into effect from 2028.
Lisa Brankin, Ford UK’s managing director, warned that imposing a pay-per-mile tax at this stage could deter drivers from adopting electric vehicles. In a recent interview, she described the policy as ill-timed and potentially damaging to fragile electric vehicle demand, arguing that policymakers should focus on incentives rather than additional costs.
The debate highlights the delicate balance the government must strike between maintaining revenue for public services and supporting the transition to greener transport options.