Sadiq Khan launches £500m road tax ‘raid’ to replace greater London boundary charge

Oliver GillTue, 9 February 2021, 6:54 pm

Sadiq Khan
Sadiq Khan

Sadiq Khan is demanding that Boris Johnson hands over £500m in “road tax” paid by Londoners after ministers shot down his plan to charge drivers up to £5.50 to enter greater London.

The Mayor’s proposal, revealed last month and intended to help balance the Transport for London books, was branded “taxation without representation” by Transport Secretary Grant Shapps.

In response, Mr Khan has written to Mr Shapps urging him to allow TfL to retain £500m in Vehicle Excise Duty – colloquially known as road tax – instead.

The letter, whose co-signatories include the Conservative and Liberal Democrat leaders of the London Assembly, reads: “This substantial tax contribution goes to the Treasury to fund road maintenance primarily outside London, rather than benefiting roads in need of maintenance and the wider transport network in the capital.”

TfL is seeking a multibillion-pound bailout from Westminster to keep underground, bus and rail services running next year.

The greater London boundary charge was part of TfL’s “financial sustainability plan” sent to Mr Shapps last month, which sets out how it will balance its books over the next two years.

Mr Khan, TfL’s chairman, has already agreed to an inflation-busting 2.6pc increase in public transport fares, a condition that came attached to government funding agreed in November. TfL has also pledged to cut costs and reduce bus services.

Mr Khan’s letter continues: “The impact of the pandemic on TfL makes this matter extremely urgent.

“TfL will continue to suffer an immense loss of revenue until public transport ridership has recovered. A full return to previous levels remains uncertain, however, given potential longer-term changes in travel patterns.

“It is not fair to expect Londoners to effectively pay twice for the maintenance of our roads.”

The calls are likely to meet resistance from the Department for Transport, however.

Mr Shapps told the Commons Transport Committee last week: “We have a national government and the Chancellor has to decide where resources are collected and spent. I don’t think there can simply be a part of the national tax base that the mayor simply says: ‘It will sort my problems out if you give it to me.’

“It is important to remember that there are responsibilities on both sides. The mayor will need to make savings and I don’t think he can simply raid the national budget.”