Chancellor announces new Roads Fund

08/07/2015 | HIGHWAYS REPORTERS

Money raised from vehicle excise duty will be spent on roads, Chancellor George Osborne has announced in his first Conservative Budget.

From 2017, there will be a flat rate of £140 for most cars, except in the first year when tax will remain linked to the CO2 emissions that cars produce. Electric cars won’t pay any road tax at all and the most expensive cars will pay more.

Existing cars won’t be affected – no one will pay more for a car that they already own. The money brought in from road tax in England will be spent on England’s roads from 2020.

Speaking in the House of Commons, the Chancellor said: “Four fifths of all journeys in this country are by road, yet we rank behind Puerto Rico and Namibia in the quality of our network.

“In the last 25 years, France has built more than two and a half thousand miles of motorway – and we’ve built just 300.

“In the last Parliament I increased road spending, even in difficult times, and set out a plan for £15bn of new roads for the rest of this decade. But we need a long-term solution if we’re going to fix Britain’s poor roads. Vehicle excise duty was used to fund our roads, but not anymore.”

The Chancellor revealed that from 2017, for brand new cars only, the government will introduce new VED bands.

The duty in the first year will be set according to emissions, like today, but updated for new technology.

Thereafter there will be three duty bands – zero emission, standard and premium.

Mr Osborne added: “In total we’ll only raise the same amount of revenue from VED in the future that we do today – but that revenue will be secure for the long term. And I will return this tax to the use for which it was originally intended.

“I am creating a new Roads Fund. From the end of this decade, every single penny raised in vehicle excise duty in England will go into that Fund to pay for the sustained investment our roads so badly need.

“Tax paid on people’s cars will be used to improve the roads they drive on. It is a major reform to improve the infrastructure and productivity of our economy – and deliver a fairer tax system for the motorist.

“Mr Deputy Speaker, productivity means building more roads, it also means giving people the skills they need to secure a better job.”

In other news, the Chancellor confirmed £30 million of funding for Transport for the North (TfN).

This means that cities and counties in the north will be given even more control over local transport. Transport for the North (TfN) will be supported by £30m in funding over three years, and will have more responsibility for setting out policy and investments.

 

REACTION:

RAC chief engineer David Bizley said: “Today’s budget announcement on vehicle excise duty marks a return to the days when road tax was collected and used to fund improvements in the road network. As new cars become more efficient, VED was always destined to bring in less and less money for the Treasury. For the first time, motorists will be able to see for themselves how the money they pay benefits the road network that they use – although it is a pity that we will have to wait five years for the Roads Fund to take effect.

“The devil, of course, will be in the detail but this new transparency has to be a good thing; indeed the RAC has previously called for ring-fencing of funds in this way. The changes to VED will guarantee a minimum level of spending on the roads and this, combined with the Road Investment Strategy, suggest that that the critical role that road transport plays both in our economy and in motorists’ everyday lives has finally been given the attention it deserves.”

 

James Stamp, head of transport at KPMG UK, said: “In the last budget, the government announced a major road investment program worth £15 billion. Today, the Chancellor announced that road tax (VED) income will be "ring fenced". This provides some clarity about where funding for the ambitious road projects will be found.

“However, we note that while road tax raises around £6bn per year, this is dwarfed by income collected from fuel duty which is around £27bn. We believe that more of this income should be reinvested in roads and transport infrastructure in line with the Chancellor’s statement that money raised from drivers should be spent on the roads they drive on.”

 

Institution of Civil Engineers (ICE) director general, Nick Baveystock, said: “The renewed commitment to the northern powerhouse, and efforts made to identify new ways to fund local roads are encouraging. The Chancellor is absolutely right; government must be bold in its commitment to infrastructure if the UK is to achieve a rebalanced economy, increase productivity and maintain our competitive edge. We hope this also translates into bold decisions on aviation capacity, resilience and our future energy mix.

“Bold and strategic investment choices are also needed. We are at a critical point - the scale of the UK’s needs is large and growing yet public finances remain tight. As the spend review approaches, we hope to see government make decisions for the long-term.”

Highways InProfile

latest magazine issue
Highways jobs

Street Lighting Project Engineer

PO2 - £41,442 to £44,331
Help us keep our streets safe, efficient and ready for the future Greenwich, London (Greater)
Recruiter: Royal Borough of Greenwich

Principal Engineer - Highways Development Management

£47,181.00 - £50,269.00, Grade 11, 37 hours, Permanent
We are seeking a dedicated Principal Highways Development Management Engineer to join our team. Wakefield, West Yorkshire
Recruiter: Wakefield Council

Highways Development Management Engineer

£32,061.00 - £46,142.00, Career Grade 7-10, 37 hours, Permanent
Do you want to join a team helping to shape the future of Wakefield through HIghways Development Management? Wakefield, West Yorkshire
Recruiter: Wakefield Council

Highways Project Engineer

£31,537 - £42,839 per annum
Would you like to be part of our friendly, welcoming Highways team, proud to manage all aspects of the highway network? Boroughbridge, York
Recruiter: North Yorkshire Council

Highways Project Engineer

£31,537 - £42,839 per annum
Would you like to be part of our friendly, welcoming Highways team, proud to manage all aspects of the highway network? Skipton, North Yorkshire
Recruiter: North Yorkshire Council

Technician - Highway Inspector

Grade 8 £29,719 - £31,691 per annum
Within the Highways Maintenance Team we are looking for an enthusiastic, customer focused and experienced person Derbyshire
Recruiter: Derbyshire County Council

Highway Design and Construction Manager

Grade N, scp50 £62,443 to scp53 £65,663 per annum, plus essential car user allowance
We embrace AI to enhance our operations and to innovate our services. Bolton, Greater Manchester
Recruiter: Bolton Council

Technician - Highway Inspector

Grade 8 £29,719 - £31,691 per annum
At Derbyshire, we have been on a journey to transform the way we deliver highway services. Derbyshire
Recruiter: Derbyshire County Council

Team Leader (Maintenance Operations)

Grade 10 - £48,226 - £51,356
Cardiff is growing faster than any other capital city in Europe. Cardiff (Caerdydd)
Recruiter: Cardiff Council

Highways Supervisor

£Competitive
We have a fantastic opportunity for a permanent Highways Supervisor Forfar, Angus
Recruiter: Amey

Tree Surveyor

£Competitive
We are excited to offer fantastic opportunities for Permanent Tree Surveyors Scotland
Recruiter: Amey

Chief Operating Officer – South West Wales Corporate Joint Committee

£Competitive
We’re looking for a bold, visionary leader to take on the role of Chief Operating Officer Carmarthenshire (Sir Gaerfyrddin)
Recruiter: Carmarthenshire County Council

Clerk of Works - Highways

£Competitive
We have a fantastic opportunity for a Clerk of Works to join our dynamic NMC SW Account team at Polmadie. Glasgow, Glasgow City
Recruiter: Amey

Highways Supervisor

£Competitive
We have a fantastic opportunity for a permanent Highways Supervisor to join our NMC NE account in Kinross. Perth and Kinross
Recruiter: Amey

Planner - Highways

£Competitive
We have a fantastic opportunity for Permanent Planner – Highways to join our NMC SW Account. Glasgow City
Recruiter: Amey

Highways Maintenance Manager

£51,356 - £55,539 per annum
We are looking for an experienced Engineer to join the team as a Highways Maintenance Manager Selby, North Yorkshire
Recruiter: North Yorkshire Council

Highways Maintenance Manager

£51,356- £55,539 per annum
We are looking for an experienced Engineer to join the team as a Highways Maintenance Manager Brompton on Swale, Richmond
Recruiter: North Yorkshire Council

Permit Officer - Internal works promoter - WMF2244e

£34,434 - £35,412
The streetworks Permit Officer role within the highways service Kendal, Cumbria
Recruiter: Westmorland and Furness Council

Highways Development Management Engineer

£41,816 - £45,175
You will be based in the Highways Development Team and work closely with colleagues across the wider transport service. Northamptonshire
Recruiter: West Northamptonshire Council

Transport Project Officer

£34,203 - £37,067
We are seeking an enthusiastic and motivated project officer to work in our Highways and Transport Service. Northamptonshire
Recruiter: West Northamptonshire Council
SUBSCRIBE NOW

Latest Video

Subscribe to Highways today to ensure you keep your finger on the pulse of everything happening in the UK road network throughout the year.

SUBSCRIBE NOW