The Transport Secretary appeared to rule out a national pay-per-mile charging scheme during parliamentary questioning Thursday, but government sources later clarified her comments – leaving the door open for potential road pricing measures.
Heidi Alexander told MPs there were “no proposals” for mileage-based charging when Conservative Charlie Dewhirst warned such systems would “disproportionately impact rural drivers.” Alexander insisted the government had no plans for a national pay-per-mile scheme.
A source close to Alexander later said she’d misspoken.
The clarification revealed Alexander had only intended to rule out a national road pricing system – the broader category that includes tolls and congestion charges. The distinction has sparked fresh speculation about whether Chancellor Rachel Reeves might still pursue mileage-based taxation in next week’s Budget.
Alexander emphasized the government was “firmly on the side of drivers” during the Commons exchange. She highlighted £24 billion in capital investment for motorway upgrades, A-road improvements, and local infrastructure repairs.
But the numbers tell a different story about future revenue challenges.
Revenue Gap Looms
Fuel duty generated nearly £25 billion in 2024-25, according to government figures. The accelerating shift to electric vehicles threatens that revenue stream as more drivers abandon petrol and diesel cars.
Reports emerged earlier this month that Reeves was considering a 3p-per-mile charge specifically for EV drivers. The proposed system would take effect from 2028 following public consultation.
Unlike digital tracking systems, the framework would charge drivers based on estimated annual mileage rather than real-time monitoring.
A government spokesperson said at the time that ministers wanted “a fairer system for all drivers whilst backing the transition to electric vehicles.” The statement confirmed any mileage-based charges would come alongside grants of up to £3,750 to offset EV purchase costs.
Political Calculations
The apparent backtrack on Alexander’s parliamentary remarks creates uncertainty ahead of the Budget announcement. Treasury officials face mounting pressure to address the revenue gap without undermining EV adoption targets or alienating rural constituencies.
Industry analysts have long warned that fuel duty replacement represents one of the most complex challenges facing the transition to electric transport.
The government’s position now seems deliberately ambiguous – rejecting “national road pricing” while potentially leaving room for targeted mileage-based measures on specific vehicle categories.
Whether that distinction will hold up under Budget scrutiny remains to be seen.
