Digital Transformation – The Roads

If we were setting out to digitally transform transactions that are road (and road travel) related, we would have a few things to look at, including:

  • Vehicle Excise Duty (aka car tax, road tax, vehicle tax) – that is the “tax disc” of old, paid every 6 or 12 months through a transaction direct with DVLA
  • Fuel tax (paid at the pump when filling your tank with petrol or diesel)
  • Congestion charging (essentially pay as you go but with an option to set up a direct debit for easier payment, mostly to avoid fines when you forget to pay)

The money raised from these charges doesn’t necessarily go to managing, repairing or building roads. It’s not, as they say in government, hypothecated, or ring-fenced. The money goes into the Treasury’s general funding and is allocated according to policy and/or departmental bids. They are, then, focused on revenue raising. You have a car, you have to pay tax to keep it on the road and more tax the further you go and even more if you go into some specific areas.

There are ways to reduce how much you pay as a driver – having a fuel efficient car (reducing VED and fuel tax), driving an Electric Vehicle (taking VED and fuel tax to zero, at the cost of an increased electricity bill), driving fewer miles (reducing fuel tax), don’t drive in marked congestion zones etc. Obviously, those without cars pay none of the above charges, but may incur some of them indirectly.

DVLA would argue that they have transformed Vehicle Excise Duty. Not long ago you would show up at a Post Office with your MOT and insurance and get a paper tax disc, for display in the window of your car. Now the transaction is entirely online and the paper tax disc is virtual. This has been a long journey – see this piece I wrote in 2006.

But, in many ways, the cow path has been paved. It’s beautifully done, for sure, and DVLA’s work is amongst the very best that UK government has managed in the 20 years of working to move transactions online. The customer experience has, without doubt, been transformed – from a visit to the Post Office to point and click and done. The what and why remain the same, the how has changed (dramaticlaly).

Transformation is, though, about fundamentally re-engineering the process, the business model, the people and the systems. It requires looking at the what, the how and, particularly, the why.

With EVs expected to become more prevalent over the next few years, these taxes will all fall to zero without a change in policy. Some taxes – fuel duty – will be impossible to collect in the same way as they are now. And that means there’s a great chance to look at they why of each of them, and decide on what a better outcome (or set of outcomes might be).

We might for instance decide that the combination of policies we put in place should:

  • Work to reduce congestion at peak hours across the board (not just within certain geographic areas) … and so driving between certain hours attracts a higher “fuel tax” on a per mile basis. We’re no longer collecting that tax from the pump, but direct from your mileage, as reported by the car (or your phone, or sensors/cameras in or alongisde the roads etc)
  • Encourage people to use certain roads, balancing usage across all grades of roads, moving people off busy roads onto quieter roads, or away from residential areas during school hours … and so the type of road you are on will affect how much you pay
  • Charge you more based on what the list price of the car you are driving is … proxying VED but linking it directly to the original purchase price of the car. If you want to drive an electric Veyron, that’s fine, but you’re going to pay for the privilege
  • Make the question of car versus bus versus train versus plane a calculation for every journey, with the aim of persuading people to take the greenest option every time
  • Drive (ahem) a shift in road usage so that deliveries are consolidated with a mix of pull from customers (looking for greener and cheaper solutions) and push from delivery companies (who are subject to rising costs for peak road usage, inefficient vehicles etc)

Direct taxation (VED) and indirect taxation (fuel duty) could blend into a model that could, indeed, be varied so as to raise enough money each year, or over a period of 5 years, to build and maintain the road network. The types of tax and the methods of collecting it would be transformed, and digital technology would be required at every point of the process to manage who was paying, what are they paying and how are they paying.

Various people working in e-government predicted the demise of the tax disc many years ago, certainly as long ago as 2003 and likely before. The tax disc is, and was, just a way to raise money tied to something you had (a car), just as stamp duty is a way to raise money tied to something you are transacting (buying a house, or a share). We have evolved the uses of each tax, contrived to find ways to raise more money for each, and, at every stage, taken the tax further and further away from its original point.

Every so often we get an opportunity to rethink these things at a fundamental level. We get a chance to think what a true transformation could achieve … to question the why and the way… and then figure out “how” we might pull it off. And in thinking about that “how” we should be looking for the simplest solution – not the one that requires a nationwide infrastructure build that will be costly, expensive, prone to failure and take years, but one that makes best use of what we already have – what’s on the roads, what’s in the cars and what’s in the pocket of drivers.

The trick, of course, will be figuring out how to do this whilst recognising that some of the approaches and decisions will be wrong and will need to unwind. Some of the charges set will prove to be a peverse incentive, some of the routing will be wrong, some things will be gamed or outright defrauded. Transformation isn’t a before versus after big bang thing. It’s just as DVLA showed it to be – you keep working at it and every so often you look up and go “wow.”

Leave a Reply