Reeves accused of treating drivers ‘like cash machine’ amid reports of pay-per-mile tax on electric vehicles
The Conservatives have accused Labor of treating drivers “like a cash machine”, amid reports that electric vehicle drivers could face a new pay-per-mile tax in Rachel Reeves’ Budget.
The Chancellor is considering a plan to see electric car drivers charged 3p per mile. Telegram.
The scheme is due to come into effect from 2028, and up to six million people will drive electric cars by then.
The 3p fare will equate to around £12 for a journey from London to Edinburgh, the paper said, and it also said drivers will have to estimate their own usage rather than be tracked electronically.
Shadow transport secretary Richard Holden said: “Britain cannot afford a spineless government that treats drivers like a cash machine that will plug the holes created by Rachel Reeves and Sir Keir Starmer, rather than standing up to its own supporters to stop the exponential rise in benefit payments.”
“Families are no ATM for Rachel Reeves, but anyone who trusts a Labor-led tool is lining up for another try.”
It comes as the Treasury faces a decline in fuel duty revenue as more people switch from petrol cars to electric cars.
A government spokesman said ministers wanted to make the system “fairer” for all drivers.
They said in a statement: “Fuel duty covers petrol and diesel but there is no equivalent for electric vehicles. We want a fairer system for all drivers as we support the transition to electric vehicles, so we have invested £4bn in support, including grants that will reduce up-front costs by up to £3,750 per eligible vehicle.
“Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning an electric vehicle more convenient and more affordable.”
Electric cars have been subject to vehicle consumption tax since April this year, following the change introduced by the conservative government in 2022.
In 2023, the think tank Resolution Foundation, whose then director Torsten Bell is now Treasury secretary, recommended the introduction of a national pay-per-mile system that would lead to “EV drivers paying 6p per mile (plus VAT) from 2027”.
The AA warned the policy could be seen as a “poll tax on wheels” and urged Ms Reeves to “tread carefully”.
Edmund King, the organisation’s chairman, said: “Whilst we recognize that the Treasury is losing fuel tax revenue as motorists switch to electric, the government needs to tread carefully unless its actions slow the switch to electric vehicles.
“ZEV’s mandate that 28 percent of new car sales this year be zero-emission will not be met because sales are only running at 22 percent. We need to see the details of this proposal to determine whether these new taxes will be fair or whether they are a poll tax on wheels.”
The Chancellor has already warned the country that big tax rises could be coming this month, saying “we all need to contribute” in an unprecedented pre-Budget speech this week.
He faces the prospect of Labor breaking its manifesto pledge not to increase income tax, national insurance or VAT, and has signaled it will not keep that promise, warning of “difficult choices” ahead.
Weekend, Independent He explained that Ms Reeves would face a backlash from the cabinet if she did not keep her promise to voters.
Some senior ministers fear that breaching Labour’s manifesto pledge not to increase income tax, VAT or workers’ national insurance contributions could hinder hopes of a political recovery, with the party remaining weak in the polls.
“What those who say we shouldn’t stick to that promise fail to realize is how important that is in winning the election,” said a senior minister.
