Announcing the Levelling Up Mobility Allowance

TRL's CEO Paul Campion takes a fresh look at road pricing and how telling a different type of story will persuade the electorate of the benefits.

Published on 17 March 2022

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Press release: Whitehall, March 17th 2020:   Announcing the Levelling Up Mobility Allowance

“The Government is pleased to announce the Levelling Up Mobility Allowance (LUMA) which implements the levelling up agenda by lowering the barriers of transport cost and accessibility that prevent people taking part in the economic, social and political life of the nation. The Allowance will provide everyone with an annual travel allowance that can be spent on public transport, on e-scooter or e-bike hire, on taxi and private hire cab fares (providing the operators are using low emission vehicles) or even be put towards the purchase of a bicycle, e-bike or home EV charging point. The allowance will be credited to a new Levelling Up Account, with a linked card, that can be used to pay for public transport and many other transport options. People will be able to add money to their account to pay for travel beyond their allowance, and debits on the account will be collected through the tax system. 

The Levelling Up Account will also be used to collect taxes on petrol, diesel and electricity used for charging EVs: in order to fairly spread the costs of public infrastructure like roads, and to reflect the nation’s legal obligation to decarbonise transport, these taxes will be levied based on the number of miles travelled at rates which will vary depending on the type of vehicle.

The Transport minister said “This new scheme will enable everyone to use public transport and low carbon vehicles more cheaply. By having one account which enables you to use public transport and pay the charges on taxis, cars and other transport you will be much more easily able to access all types of transport, and manage your household budget more effectively.”

The Chancellor said “This is not a tax-raising measure: the allowance we are giving, and the road and fuel taxes we are collecting through this new scheme will balance out so that there will be no impact to the public finances…and so, on average, people will not be paying more. What is more it will let us adjust the way that we, as citizens and user of the nation’s transport systems, pay for them to reflect the different costs and benefits of different ways of travelling: you will be able to use whichever type of legal means of transport you like, but more polluting engines, for instance, will, rightly, attract higher taxes to reflect the higher burden on the public purse of cleaning up after them.

Please forgive my rather exuberant entry into the Fantasy Transport Policy competition: of course there is no plan for such an announcement, nor is it even dreamed of, so far as I am aware. But there is a serious point to the whimsy: and it relates to the recent recommendation of the Transport Select Committee. The Committee notes that the transition to electric vehicles (EVs) will reduce the tax take from fuel excise duty and vehicle excise duty. These duties (in everyday language, the tax on petrol and diesel, and the ‘road tax’ you pay on your car (unless it is an EV…which is the point)) currently generates the non-negligible amount of £35bn per year. For context this is about 1/8 of the annual cost of the NHS, or 2/3 of the total government spending on transport. We have chosen not to levy these duties on EVs in order to encourage their uptake, but the more successful this incentive is, the higher the impact on government income and the more difficult it would be to reverse this concession. Now there are perfectly legitimate debates to be had about government spending and taxation (see “The Deficit Myth” by Stephanie Kelton for a bracing alternative to the conventional wisdom)…but it’s not the Transport Select Committee’s job to get into those, and nor is it mine, so let’s assume this government income needs to be replaced. How should it be done? The Committee suggests that road pricing could be the answer.

Simply put, road pricing is a tax on the number of miles travelled in a vehicle. Today taxes are split between an annual tax per vehicle and a separate fuel tax (which is, in practice, an approximate tax per mile travelled). The suggestion is that these could be replaced by a single charge which would be levied on the miles you drive, recorded by tracking the movements of the vehicle in some way. In the same way that taxes on vehicles vary depending on type (e.g. personal car, van, lorry) and fuel and fuel consumption, road pricing could vary depending on the vehicle or, even, the type of journey or road(s) used.

This has advantages over the current tax regime not least because it is, at the moment, essentially imaginary; it depends on a technical solution that has not been implemented at a large scale yet, although long-standing systems like the London congestion charge and various insurance company ‘black box’ schemes have demonstrated many of the critical parts of a potential solution. There are all sorts of technical challenges to overcome but I have faith in engineers: they will be solved. The bigger barriers to the implementation are political and social and this is why I started with my imaginary press release.

The key challenge here is that people are unwilling to vote for taxes. Even though the majority of people routinely, and, I am sure, in good faith, say they would be willing to pay more taxes for better services in the abstract, when it comes to a specific tax people are notoriously unenthusiastic. Politicians know this and are, therefore, unwilling to propose anything that smells like a tax.

But “Road pricing” doesn’t just smell like a tax: it explicitly names a specific, new charge for using something people are used to getting “for free”. Never mind that roads are not free, and that everyone is careful to use phrases like “revenue neutral”; technical detail will not cut through whereas the headline, the very name of the scheme, describes a new cost.

This is a perfect example of an area where we need a “better story”. As transport specialists we are comfortable with the technical detail (in fact we often enjoy our mastery of arcane and complicated jargon and concepts). But as soon as we talk about “modal shift” and abstractions like “active travel” (rather than “walking” or “cycling”) we are indulging in “in group talk” and we are leaving the public behind.

In particular when we want to change behaviour we have to find ways to bring people with us, and to do that we will have to use their language and accept the way that they think. My pretend press release is an (amateur, poor) attempt to reframe “road pricing” as a positive story. If we focus not on the need to replace a diminishing tax, but on the benefits we could bring to people from the system that would be needed to collect the tax then we have a chance to have a more fruitful conversation. If we trigger people’s natural aversion to having new taxes imposed on them they will stop listening and the merits or disadvantages of our proposed scheme become irrelevant.

There are a lot of people more skilled than me in thinking of stories that people will be willing to listen to…if we don’t recruit them to help explain the changes that we must make to decarbonise and level up our transport system then our technical expertise as transport specialists will count for nothing.

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