The Transport Secretary, Heidi Alexander, has dismissed rumours of a nationwide pay-per-mile scheme being introduced. Facing questions in the Commons about the implications of next week's Budget for motorists and rail passengers, she assured that there were no such plans.
This comes as Sir Keir Starmer promised a "fair Budget" to tackle the cost of living. Conservative MP Charlie Dewhirst expressed concerns that a pay-per-mile charge would unfairly burden drivers in rural areas.
The Bridlington and The Wolds MP asked: "Would the Secretary of State agree with me that the introduction of a pay-per-mile charge for motorists in next week's Budget would disproportionately impact rural constituencies like my own, because people are more reliant on cars to get about, and represent yet another slap in the face from this Government for the countryside and for our motorists?"
In response, Ms Alexander said: "There are no proposals to introduce a national pay-per-mile scheme. This Government is firmly on the side of drivers."
She further highlighted the Government's commitment to improving infrastructure, stating it was already "pumping £24 billion of capital into motorways and local roads", with repairs to "run-down bridges, decaying flyovers and worn-out tunnels". She noted that fuel duties, such as those on petrol and diesel, raised just under £25 billion in the 2024/25 financial year, but acknowledged that a shift to electric vehicles (EVs) could potentially affect the Treasury's revenue.
Earlier this month, The Telegraph reported that Ms Reeves was set to announce a 3p-per-mile charge for electric vehicle (EV) drivers, in addition to other road taxes. This would come into effect from 2028 following a consultation period.
It is believed that drivers would be charged based on their estimated travel distance, without any widespread electronic tracking of their movements.
A Government spokesperson at the time advocated for "a fairer system for all drivers whilst backing the transition to electric vehicles". They highlighted the availability of grants to reduce the initial costs of eligible vehicles by up to £3,750.
The spokesperson added: "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 electric vehicles more convenient and more affordable."
Ms Alexander had previously defended the Government's transport policy, accusing the Conservatives of "dither and delay" during their tenure.
Shadow transport secretary Richard Holden addressed the Commons, stating: "No passenger growth commitment in the Railways Bill, just the expectation of inflation-busting fare rises in the Budget. Holidaymakers used like a pinata with 13% APD (air passenger duty) rises already in prospect, plus airport business rates to be passed on to them too.
"Ports throttled by delayed decisions on connectivity with the rail infrastructure. Motorists facing the potential fuel duty rises, insurance premium tax rises, pay-per-mile all hanging over them. Which of these above measures is supporting rather than hammering economic growth?"
In response, Ms Alexander told MPs: "We've given the green light to over 50 road and rail projects in the spending review. We've given planning permission to airport expansion at Luton and Gatwick, and invited proposals for a third runway at Heathrow, in stark contrast to the dither and delay approach of the previous Government when it came to the aviation sector. So, I'm not going to take any lectures from him when it comes to economic growth and improving the transport system in this country."
Liberal Democrat transport spokesman Olly Glover questioned whether Ms Alexander backed "the idea of a rail fares freeze", and whether she had discussed one with Ms Reeves. Ms Alexander refused to reveal the specifics of her discussions with the Chancellor, but said she was "acutely aware of the importance that the travelling public place on affordability".
She went on to say: "Of course, I want to find a way to help those who rely on our railways, given the cost-of-living pressures people are experiencing. I've spoken before, though, about the scale of the public subsidy we are currently putting into the railways and so we do have to get the balance right between supporting rail users and being fair to the taxpayer."
Insiders at the Treasury have indicated that Chancellor Rachel Reeves is likely to support the extension of the Docklands Light Railway (DLR) to Thamesmead in south-east London, aiming for "much-needed new homes, new jobs, and quicker commutes – the building blocks for boosting growth, putting more pounds in pockets".
The project, which is expected to cost around £1.7 billion, has won the support of Mayor of London Sir Sadiq Khan, who described it as a "win-win and a massive vote of confidence in London".
The source added: "This Budget will choose growth over austerity by supporting renewal in every part of the country."
Sir Keir also shared his thoughts on the Budget with broadcasters during a visit to a school breakfast club in Reading, Berkshire, on Thursday. "What I can tell you is it will be a fair Budget," he informed BBC South Today.
"It will bear down on the cost of living. It will make sure that our economy is in a fit state to grow and bring in the wealth that we need to fund breakfast clubs and so many other things that are needed."