If one part of government acts in a patently unfair way then does this excuse others from their obligations to act fairly? This question has been coming up regularly in policy and project development for electric vehicle (EV) charging. The UK Treasury position is that they need the revenue from the 20% VAT on public charge point use, similar to the 20% VAT on petrol sales, and that they cannot put VAT on EV home charging up from 5% to 20% since it would make home electricity bills unaffordable. Does this mean that the transition to EVs is unworkable due to its inherent unfairness, as many critics allege? How can local project and policy design overcome these problems to ensure that the phasing out of petrol and diesel cars is fair to all citizens and consumers?
The EV charging challenge is a microcosm of the climate change debate more generally. A minority of the world population has polluted the planet, and wealth remains concentrated in legacy industries with links to fossil fuels. Successful solutions depend on well-designed transport markets. Many public authorities are not trusted because they appear to be saying one thing and doing another, because they have not successfully aligned transport aims with market incentives. If people lose trust in a sustainable future they may seek greater certainty in the false promise of returning to an unsustainable past.
Despite the challenges of the existing national taxation rules, local authorities, housebuilders, housing facilities managers, and others can still act fairly to all citizens and customers in their local designs and management of EV charging. Parking with EV tariffs equivalent to domestic electricity tariffs can be made available for all homes unable to charge cars from domestic electricity supplies. National rules cannot address all of the local complexities, so local design needs to be strengthened to ensure targeted local solutions overcome all important inequities.
Central Government must be held to account, and industry bodies and government committees at the House of Commons and House of Lords have all recommended that VAT rates should be equalised for EV charging at home and at public charging points. Tarriff design is also important for EV charging, since off peak charging of cars on many domestic tariffs also enables significant savings compared to public charge points. All users should be able to benefit through smart tariff design, but current EV users who are unable to charge on a domestic electricity tariff typically pay at least as much per mile to charge their EV as they would have paid to fuel a petrol or diesel car. In contrast, those charging EVs at home can cut these bills by at least 50% saving average households over £1k per year.
Similar concerns apply to the design of tariffs for many public transport journeys relative to the costs of car travel. Change is needed in tariff design for every part of the transport system, with smarter approaches being needed to improve the competitiveness of costs and journey times for net-zero travel choices. If we can demonstrate good market design for relatively simple parts of the system like EV charging and bus fares, people will increasingly understand how circular economies bring benefits to everyone, enabling more complex tariffs for road, rail and air travel.
Sustainability principles have always emphasised the need for good local design. National taxes and charges can never all be customised to local needs, but incrementally increasing costs for unsustainable approaches to generate local revenues for sustainable solutions can be managed through site based travel plans, personalised travel plans and other smart solutions for people and places. Within these targeted approaches, I have never found the term 'congestion charging' particularly helpful, since it emphasises personal sacrifice for collective
reward rather than good social market design. Altruistic approaches are not viewed positively by everyone in society making them vulnerable to political change. Equitable tariff design, including fairer use of road space has much greater potential to support consensus building on sustainable transport. Existing powers available to local authorities enable them to ensure fairness in the charges they make for road use, including applying a charge to more polluting vehicles to pay for fair and expanded EV charging tariffs and facilities for electric vehicles.
The wider use of trading schemes with extended producer responsibilities is becoming better understood as one of the most effective ways to align national and local policy aims with market design. The Vehicle Emissions Trading scheme for new vehicles in the UK should have ideally been implemented at least a decade earlier. Countries such as Norway have shown the benefits of threading good market design across local parking and road pricing policy to manage the transition to electric cars and vans. Norway will not even need any controversial and divisive policies such as banning petrol and diesel vehicles, since expanding the scope and effectiveness of good market design is far more inclusive and sustainable.
In December 2024, the Scottish Government published a new 'vision' for EV charging that seeks to phase out the publicly run ChargePlace Scotland network, including the sale and transfer of many of the charge points to private providers and encouraging local authorities to establish concession contracts with private sector delivery partners to meet the needs of all residents. The new vision highlights that the cost differential for charging EVs between different households "should be looked at further in order to ensure a fair and just transition to EVs".
This recognition that current Scottish policy is unfair, and that even the new draft vision needs further work to become fair, is a welcome honesty about the weaknesses in current market design that results in 80-90% of motorists being unconvinced about switching to EV use. Hopefully improvements to the new Scottish approach can be made through the consultation period. A circular transport economy, consistent with national standards like PAS2080, where every component in the transport system can be remanufactured, recycled or renewed, including fuel supplies, is only achievable if more attention is paid to align local market design with policy aims, drawing from the capabilities across society in public, private and community organisations.
There is overwhelming support for Government to act on the challenges of climate change, but local market design must be vastly improved to unite society behind solutions, as well as objectives. Local trading schemes can enable fair transport tariffs aligned with policy, but current practice is a long way from making the best use of existing powers to achieve these goals. Far stronger leadership is needed from public bodies, to tap into the market design skills of operators and providers to ensure that the details of transport design are resolved fairly within communities.
Derek Halden is a director of DHC Loop Connections https://dhc1.co.uk/, and secretary of Scotland's transport think tank https://stsg.org/
