Fuel duty could fix Britain’s broken transport system – but only if the chancellor does this

It’s often portrayed as being regressive, but the old stabiliser policy worked. Had it remained in place, the exchequer would be getting an extra £9bn a year

As we head towards the first Budget of Boris Johnson’s majority government, his core promise of “levelling up” regional inequalities hangs in the balance and looks near impossible to deliver.

Having bailed out failing airline Flybe on the grounds of regional connectivity, it has collapsed a mere month later leaving passengers stranded and thousands without jobs. Meanwhile, coronavirus threatens to tank the economy, after stock markets have plunged lower than the crisis of 2008. This is a lot for an inexperienced chancellor to grapple with, but there is a clear route forward.

If the government is serious about tackling the twin problems of regional inequality and connectivity, the chancellor must kick-start a real transport revolution, connecting people to other parts of the country, as well as to their own local communities.

To achieve this, the single most effective thing the chancellor could do is reinstate the fuel duty escalator. Introduced in 1993 to stem the rise of pollution and road building, it accounted for 2.2 per cent of national income before ending in 2000. Had it remained in place, the exchequer would be getting an extra £9bn a year.

Gordon Brown took the bite out of it by capping it with inflation in 2000. In 2011, George Osborne froze it altogether. This has continued to encourage private car use in a time of climate emergency, resulting in the biggest road building programme since the early 1990s, while public transport becomes more expensive and unreliable.

Fuel duties are often portrayed as being regressive, but in fact they take about the same fraction of income across low, medium and high earners. Still, we only have to look to France to see what happens when you get this policy wrong. With a fuel duty that was perceived to punish the working class, a movement of direct action through the Yellow Vests rose to resist Macron’s policy.

There must be two responses to this. Firstly, we must think creatively and ambitiously about how to embed economic justice into tax policy, so that the highest polluters pay the most. In London, I am an advocate of smart, fair road pricing which charges drivers based on the availability (or not) of public transport, the length of journey and how polluting your car is, rather than a flat rate like the congestion charge.

Secondly, the additional revenue raised must be invested to make people’s lives better. We won’t incentivise people away from private car use if their local bus services are expensive, unreliable or simply non-existent. That’s why the chancellor must ring-fence this additional revenue to invest in better conditions for walking and cycling, and in public transport, making the services reliable, comfortable and affordable, tending towards free.

Around the world, we see real leadership on this. In Luxembourg, public transport has become free of charge across the city. Closer to home in Scotland, the Scottish Greens have secured free bus travel for everyone under 18. This is the vision we must bring to cities and communities across England and Wales – embedding social and economic justice in environmentally sound policy.

So far, the government’s clearest intervention on regional connectivity has been to bail out Flybe – a company which was both economically and environmentally unsustainable, and which folded just a month later. Now, stranded passengers are offered free rail travel in order to get to their destinations. It’s easy to wonder why this wasn’t the connectivity solution we should have been pursuing in the first place.

Forget propping up the most carbon-heavy and polluting journeys imaginable, especially when half of the country doesn’t step on a plane in any given year. The route to regional equality lies in our buses and trains. By investing in clean public transport, we can connect people to economic opportunities across the country, and in their local communities. After all, a job in your nearest town might as well be halfway across Britain if there’s no bus service and you can’t afford a car.

That’s why the Budget must include bold proposals on transport, to switch the incentive from private car ownership to public transport. In addition to reintroducing the fuel duty escalator, we should cancel HS2 and invest that £100bn in reliable regional railways, and we should introduce a frequent flyer levy to ensure the most polluting passengers pay the most for our clean transport revolution. This is what levelling up looks like.

There’s no point in pursuing pointless vanity projects that trash our climate like the third runway at Heathrow, new and bigger motorways, road projects like the Lower Thames crossing and Silvertown Tunnel and HS2. We need equally distributed transport networks across the country, connecting people to their nearest town as well as far flung cities. This is what will build resilient regions and communities while improving quality of life for people wherever they live.

Caroline Russell is a member of the London Assembly and​ Green Party councillor for Highbury East