It’s all too easy to criticise governments, and while we have been given significant cause to do so over recent years, the new pay-per-mile EV road tax, dubbed eVED, is that rare thing: a good policy. Yes, there’s a ‘but’ coming, but let’s first consider what makes eVED decent.
It certainly isn’t the name, because electric cars already pay VED, so Road Tax² or eDuty would be more accurate – but we’ll let that pass.
Nor am I talking about the fact that eVED is essential if the government is to avoid a catastrophic loss of revenue from the £25bn (equivalent to 2% of all tax receipts) of fuel duty that forecourts diligently collect from petrol and diesel drivers each year, which is set to dry up as more and more EVs take to the road.
No, what makes eVED a good policy is that it’s a bit scrappy, a bit rough around the edges, a bit make-do-and-mend – allow me to explain.
Why eVED is a neat solution
From the taxman’s perspective, the perfect method for making up lost fuel-duty revenue would be to fit GPS telematics devices to every electric car in the country. These gizmos would talk to a central government server and take micropayments from drivers’ bank accounts at the end of each trip based on the mileage covered, as well, possibly, as what types of roads were driven on, and at what time of day.
If that sounds like an authoritarian privacy nightmare, it is. But this isn’t some tinfoil-hat conspiracy theory, it was actively being considered, with the Transport Select Committee writing in 2022 that it had “not seen a viable alternative to a road pricing system (based on telematics)”.
Fortunately, an alternative was found, and while I won’t go into granular detail of how it will work (this article does that), from April 2028 EV drivers will estimate how many miles they will drive each year, then pay in advance for these at a rate of 3p per mile, or 1.5p if they have a plug-in hybrid.
What makes this so neat is that rather than requiring a vast and expensive new government project complete with overspends, overruns and yet more central IT infrastructure, eVED is being grafted onto two existing systems, both of which generally work well – namely the DVLA’s road-tax payment portal, and the DVSA’s MOT system, with the latter being used to verify drivers are covering the miles they claim or predict they will be covering.
Sure, there are imperfections. Holidaymakers who take their cars to the continent will have to pay the for miles they drive there despite eVED being rolled out partly to cover the “wear and tear on [UK] roads” cars generate. But while this isn’t entirely fair, we’re talking about such infrequent occurrences and so little money that this is something of an edge case.
There’s also the issue that cars under three years old don’t need MoTs but will still probably have to be taken to “an accredited provider” to have their mileages checked at “around their first and second anniversary”. While the Treasury says it “welcomes views on whether these additional checks should be required”, if this measure goes through it will represent a new admin burden for drivers – but the check will be free, and we’re not talking about anything too onerous.
There is also concern eVED could bring about a rise in clocking cars to them to make them appear to have covered fewer miles than they have. But all EVs are modern cars and therefore difficult to clock, partly as they store their mileages in multiple electronic systems. I’d wager this will be a minor issue, not least when the small potential savings (maybe £300 a year) are weighed up against the hefty fines and prison sentences that fraud and tax evasion bring.
So we’ve avoided having every journey monitored by the state, as well as a new multibillion public IT project. Sure, we’re talking about a new tax so these are small mercies but, given the general state of things, I’d call that a win.
There’s also something vaguely admirable about the fact that minsters could have opted to go with a sophisticated new system that would have seen tech firms attempt to court them with jollies and hospitality, but have instead chosen an unglamorous solution that’s a bit quick and dirty, but should do the job.
eVED is the embodiment of the Pareto principle, which tells us that getting a project to a state where it achieves 80% of its aims takes 20% of the effort, while striving to get the final 20% accomplished takes 80% additional effort. Is the EV pay-per-mile system perfect? No, but it’s good enough.
Some might say the elephant in the room is that eVED will put people off buying an electric car, but if authorities continue to insist that EVs are the only way forward, replacing fuel duty with a charge on these vehicles a non-negotiable. The only possible alternative to mileage payments would be a new tax on EV electricity, which would bring all manner of dangerous meter tampering and so be even less desirable.
Notes of caution
What I’m concerned about is mission creep, and evidence of this is already emerging, as the 3p per mile rate will be “uprated” with inflation in 2029. Additional increases are entirely possible, too, because experience tells us that this almost always happens.
For example, the Congestion Charge was only £5 when it was introduced in 2003, should be £9 adjusted for inflation, but currently stands at £15. Similarly, ULEZ used to cover a tiny area of central London, but now extends out to Heathrow, while cities including Bristol, Oxford and Birmingham continue to ratchet up charges for drivers. In short, authorities love nothing more than a new way of taking money from motorists and, once installed, rarely leave such levers unmoved.
It’s also feasible that at some point in the future a government decides to follow France’s lead and mandate that heavier cars should pay more to reflect the extra strain they place on our roads. Given eVED will be linked to the DVSA’s systems, which also hold a comprehensive set of UK vehicle data, it wouldn’t take much work to mandate that cars weighing more than, say, 1,700kg are charged 50% extra per mile.
And while one has to take the Treasury at its word when it says “protecting motorists’ privacy as part of eVED is a priority” and that it has “ruled out charging tax based on when or where people drive”, in the same document it notes that “the large majority of EVs and PHEVs have in-built vehicle telematics” and is considering “how various types of technologies could be used on an opt-in basis in future to simplify the system”.
Even if this administration sticks to this commitment, governments, by their nature, change, and once drivers have become used to the pay-per-mile mode, all manner of options are available. Heck, just the removal of five words – “on an opt-in basis” – would change everything.
