Electric vehicles Will pay-per-mile plan raise cash-or drive people away?

Three pence: a small charge per mile for an electric vehicle, but a giant conceptual leap for Britain. Chancellors have long resisted any form of road pricing as politically toxic. That may be about to change next week: Rachel Reeves, perhaps inured to criticism, is expected to introduce a charge explicitly linked to how far EVs drive.

- Gwyn Topham

The Treasury has all but confirmed some kind of charge will be announced at next week's budget, but the details have not been revealed. According to an initial report in the Telegraph, from 2028 EV drivers could pay a supplement based on how far they had driven that year on top of their vehicle excise duty (VED). That could be a self-declared estimate of distance or a check on the odometer at an MOT.

According to Department for Transport (DfT) figures, battery electric cars - with lower running costs than petrol - are used more: clocking up about 8,900 miles on average in 2024. At 3p a mile, that would bring in roughly £267 a car from the 1.4m EVS currently on the road about £375m annually.

The transport secretary, Heidi Alexander, was at pains to rule out a national road pricing scheme in the face of Commons attacks on Thursday - although a later "clarification" made clear that EV pay-per-mile was still on the table.

The long-term picture is a looming shortfall in motoring tax revenues, as income from fuel duty evaporates in the transition to EVs.

Petrol and diesel cars in effect pay a charge linked to how far they drive - but through fuel consumption at the pump.

Fuel duty of 52.95p a litre (roughly 5p a mile in average cars) will bring in £24.4bn this financial year, according to the latest forecast from the Office for Budget Responsibility, but the billions will dwindle away from 2030, when the ban on new pure petrol and diesel cars comes in.