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‘Fair distance-based’ road charge idea when £250,000 prize

‘Fair distance-based’ road charge idea when £250,000 prize

An idea for ‘safer and more reliable roads’ by scrapping Vehicle Excise Duty and fuel duty and introducing a ‘fair distance-based charge’ has won a recent graduate from UCL the £250,000 2017 Wolfson Economics Prize.  

The Prize posed the question: ‘How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?’   Gergely Raccuja entry, “Paying for Road Use could be Miles Better”, went head to head on a shortlist of five, judged by senior policymakers including the former Chancellor of the Exchequer Lord Darling.  

The entry argued that to restore trust between politicians and motorists, fuel duty and Vehicle Excise Duty should be scrapped and replaced with a simple and fair distance-based charge that also captured road and environmental impacts.  

The lighter and cleaner the vehicle, the lower the per mile charge. The system, it was claimed, would boost investment and update the way roads functioned ready for a new generation of electric and autonomous vehicles.

Drivers won’t be asked to pay more overall, paying in proportion to the distance they drive each year. The charge would be collected by insurers who already managed all data necessary for calculating the charge. When a driver paid their insurance, they would also pay their ‘road bill’, thus avoiding issues of privacy and reducing administration costs.  

The Office of Rail and Road would ensure drivers were guaranteed fair treatment by setting the base charge and ensuring a fair proportion of the proceeds were ring-fenced for spending on both local and national highways, pledging a “pothole-free Britain” within five years.  

The Treasury won too, according to Mr Raccuja. With both the number of vehicles on the road and total vehicle mileage projected to grow, government revenue would rise over time. That, it is claimed, would stop and reverse the growing loss to the Treasury from falling fuel duty, estimated at an extra £2.3 million a day.  

For his final submission, Mr Raccuja received input from the RAC Foundation, one of Britain’s largest motoring organisations.  

The 2017 Wolfson Economics prize, the third to be run, received more than 120 entries from seven countries.  

Mr Raccuja said: “I’m over the moon. The key to our entry was to keep things simple, yet come up with an answer that was sophisticated enough to deal with an upheaval in cars and road transport which hasn’t been seen since the introduction of the motor car well over a century ago. I hope I can persuade our politicians too that everything to do with our roads could be better.”

Director of the RAC Foundation, Steve Gooding said: “The really crucial thing is what happens next. The common themes of several entries have been both the pressing need for change and the belief there is a better option to balance what drivers contribute to the finances of the country and what they get in return.  

“Even if policy makers aren’t immediately persuaded by our arguments they know the clock is ticking for them to show they have got a plan that offers the country’s tens of millions of drivers a fair deal and keeps the country moving in increasingly challenging times.”  

The founder of the Prize, Lord (Simon) Wolfson of Aspley Guise, said: “The 2017 Wolfson Economics Prize sought a better way to pay for better roads as congestion, pollution and potholes remain a source of daily misery for millions of people: undermining our economy, environment and quality of life.

“Gergely’s entry met that challenge, and is ground-breaking, yet simple - with the backing of a major motoring organisation.  

“Policymakers can learn much from this year’s Prize, and I hope they will take forward solutions to solve one of the greatest infrastructure challenges of modern times.”