Vehicle Excise Duty was introduced by the then-chancellor Lloyd George in the People’s Budget of 1909. The proceeds were ring-fenced to fund road maintenance and investment, but this hypothecation for the ‘Road Fund’ was ended in 1936. Today the money collected annually – around £6 billion – ends up in the Treasury’s consolidated fund.
Now Brian Wadsworth of the Road Ahead Group argues that link should be re-established to pay for the large programme of works set out in the medium-term Road Investment Strategy (RIS).
In his paper Funding our Roads: A better way Brian Wadsworth says that such a move would provide stability against short-term fiscal pressures and provide a rationale for the setting of VED rates, something that is currently arbitrary.
He explains that “Road investment doesn’t deserve special status because spending on roads is ‘better’ than other spending, or because road users contribute handsomely to government coffers. Rather, road investment needs special treatment because without a ring-fenced fund it is particularly at risk in the Budget decision-making process.”