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Back to National Funding of Road Infrastructure

Roads in England were built and maintained through statutory labor, tolls, and ultimately taxes raised from vehicles paid into a specific fund to provide roads.  All of these methods of funding and maintaining roads ultimately failed through corruption or misapplication of funds.  Currently, all taxes and duties obtained from vehicle taxes and excise duties on fuel are paid directly into the government’s main fund, and monies provided for roads are allocated from the budget.  The government has announced that it will likely need to reconsider how vehicles are taxed, given the advances in technology that are reducing the amount of taxes collected through traditional methods; however, it has yet to propose any changes.

I. Introduction

The United Kingdom of Great Britain and Northern Ireland is comprised of England, Wales, Scotland, and Northern Ireland.  The four countries have recently undergone a period of devolution, with the power to legislate in certain areas reverting back to Scotland, Northern Ireland, and Wales.  Transportation is a “reserved matter,” meaning that Scotland, Wales, and Northern Ireland have the ability to legislate and create policy independently in this area.  This report focuses on England, with the exception of the subheading relating to heavy vehicles, as the levy on these vehicles applies across the UK.

Road funding has a long history in England, dating back to the well-constructed and well-maintained roads of the Romans.  England and Wales currently have a sizeable network of roads, and funding is currently provided at two different levels.  The major roads (the strategic road network) are funded by the central government and managed by the Highways Agency.  Local roads, on the other hand, are the responsibility of local authorities.  The maintenance and improvement of these roads are funded through local council taxes, fees, and central government grants.

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II.  History of Road Funding 

The history of roads in England dates back many centuries to Ley Lines, which were simple, straight trackways of rudimentary construction.  In 43 AD, the invasion of the Romans led to the construction of “Roman roads,” many of which are still in use today.  However, after the Romans left, the roads were left unmaintained and in disrepair until the late thirteenth century, when local councils stepped in and repaired some of these roads.[1]  The Highways Act 1555[2] saw the first attempt to create a statutory responsibility to provide for road upkeep.  The Act put responsibility for the maintenance of roads on local parishes, imposing a statutory duty on each man with a team of horses to provide labor for six days annually for road upkeep.[3]  In 1654 parishes were provided the power to collect money through levying a local rate (tax) to supplement the labor provided by the horses for the upkeep of roads.[4]  The standards of road maintenance across England varied greatly and, as most travel was local, parishes focused solely on local roads.  In 1835, the system of statutory labor was abandoned as it was considered largely ineffective, and parishes were expected to maintain roads “solely through a local rate.”[5]   

The Industrial Revolution and the increase of travel by stagecoach led to the expansion of travel and an increase in trade.  Between 1720 and 1840, 1.1 million Turnpike Trusts were created, providing 32,000 kilometers of road.[6]  The Turnpike Trusts charged users tolls to use their roads in return for providing roads and maintaining them.[7]  However, corruption within these Trusts was rife, and oftentimes money was either misappropriated or not used effectively.[8]  The roads were not able to bear heavy loads, and the Industrial Revolution instead saw an expansion of the canal and rail network to transport both goods and people.  This lessened demand for travel by road and, as a result, the Turnpikes saw a reduction of monies collected, leading to neglect in road maintenance and the closing of large numbers of the Turnpike Trusts in the late 1800s.  As a consequence, the maintenance of roads once again reverted back to local parishes.[9]  By 1888, the national roads were in such a state of neglect that Parliament acted and imposed responsibility for the maintenance of roads on the newly created county councils.[10]

The 1909 budget introduced the first tax on all vehicles in England (with rates based on horsepower) and a tax on oil.[11]  The Development and Road Improvement Fund Act 1909[12] established a road fund, through which all roads in England were funded.  All car taxes that were collected by county councils were paid into this fund, which was then passed along to local authorities to finance road improvements and maintenance.  In practice, the fund was “never spent in full and was notorious for being raided for other purposes.”[13]  It was formally ended in 1936 after Winston Churchill asserted the following:

[I]t is a monstrous assertion that any important body of taxpayers should claim proprietary rights over the particular quota of taxation which they contribute, and that all should not be brought into an area freely justiciable by the House of Commons.[14]

Since 1937, all monies raised from these taxes have been paid directly into the Consolidated Fund, the government’s general bank account held at the Bank of England.[15]  The annual budget determines the allocation of these funds.  

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III.  National Road Infrastructure Funding

The Department for Transport is the government department responsible for the provision of roads in England.  The maintenance, operation, and improvement of the strategic road network in England, made up of 4,300 miles of motorways and major roads, or “trunk roads” (the most significant ‘A’ roads),[16] is the responsibility of the Highways Agency,[17] which was created in 1994.  The strategic road network comprises less than 2% of roads by length in the United Kingdom but carries the vast majority of traffic.[18]  The Highways Agency has a statutory responsibility to maintain these highways;[19] in FY 2012/13, a third of the Highways Agency’s budget was devoted solely to maintenance.[20]

The money provided from the government is put forth each year in the annual budget, which allocates annual spending from the Consolidated Fund.[21]  The exact amount to be spent on highways is then determined by a Spending Round, a government led “process to allocate resources across all government departments, according to the government’s priorities.”[22]  From 2010/11–2014/15 the government is slated to provide over £1.6 billion (approximately US$2.7 billion) for the maintenance of highways.[23]  However, during the most recent Spending Round, the government announced that to provide certainty for the Highways Agency, it will provide long-term funding over time periods of at least five years in length.[24]  Accordingly, it has allocated £12 billion (approximately US$19.9 billion) to maintain the local and national highway networks from 2015/16–2020/21.  Half of the funds have been allocated to the Highways Agency for the renewal of the strategic road network and half to local authorities for local maintenance and renewal.[25]  The Secretary of State for Transport is responsible for the government’s policy on strategic roads and determines the financial resources for these roads.[26]  Any strategic road project that requires funding of more than £10 million (approximately US$16 million) is generally financed through public funds, or through a private-public partnership.[27]

The maintenance of local roads remains the responsibility of local authorities in each area.  The Department for Transportation provides policy, guidance, and funding to local authorities to help them with their road networks.  This funding covers operational costs, maintenance, and the development of new major transport schemes.[28]  There is no single point of funding for local authorities to spend on roads; instead, road funding is taken from a number of available sources, including government grants, locally charged council taxes, and other fees and charges.  The cost of road maintenance in 2011/12 was £1.63 billion (approximately US$2.7 billion).[29]    

The government’s current focus regarding road infrastructure is on improving the efficiency and effectiveness of existing roads, rather than building new ones.  The government has stated that it does not intend to actively seek out private financiers to build new toll roads.[30]  Despite this, funding continues for various projects in process, and new funding has been allocated for fourteen new projects that will alleviate congestion and improve roadways.[31]

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IV.  Transportation Taxes and Duties

A. Vehicle Taxes

England taxes car owners in two ways.  The first is a vehicle excise duty (VED), which is charged on every registered “mechanically propelled vehicle” and is a tax on ownership.[32]  The second is a fuel duty, a tax on the use of cars.  Historically, the monies raised from these taxes were specifically used for building and maintaining roads.  In 1937 this changed, and these taxes are now a means of raising “general revenue.”[33]  Any changes to rates are made in the annual Finance Acts, which implement that the budget the government announces each year.[34]  

The current rate of VED for cars is tied to the carbon dioxide emissions of vehicles built after 2001.  Since 2001, there has been a first-year tax that is charged at a higher rate than the subsequent annual tax.  The rate varies according to the level of carbon dioxide emissions, and ranges from charges of £0 for vehicles that emit less than 100g of CO2 per kilometer up to £1,065 (approximately US$1,700) for vehicles that emit over 255g of CO2 per kilometer.  After the first-year tax, the subsequent annual tax ranges from £0 for vehicles that emit less than 100g of CO2 per kilometer up to £490 (approximately US$780) for vehicles that emit over 255g of CO2 per kilometer.[35]  For heavy goods vehicles (HGVs) the rate of the annual tax does not vary from year to year and is tied primarily to weight.  It ranges from £165 (approximately US$265) to £1,850 (approximately US$3,000).  There is a discounted rate for low-polluting HGV’s, which ranges from £160 (approximately US$255) to £1,350 (approximately US$2,200).[36]  It is an offense to keep a vehicle without paying the VED, unless a statutory off-road license is in effect.[37] 

B. Fuel Taxes

The second manner in which England taxes car owners is the fuel duty—a tax on gas, or on the use of a vehicle.  The two main fuels used by vehicles in England—ultra-low sulfur petrol and ultra-low sulfur diesel—are charged excise duty at 57.95 pence per liter (approximately US$0.95 per liter, or approximately US$3.59 per gallon).[38]  When the value-added tax (charged on almost every good sold in the country) is factored in, taxes make up around 60% of the price paid for gas and diesel fuel in England.[39] 

C. Heavy Goods Vehicle Road Levy

England is part of the European Union (EU), which provides for free movement of goods and people within EU countries.  England is also physically connected to continental Europe by the Channel Tunnel, while ferries provide an easy connection to France.  These factors have led to England’s road haulage companies facing competition from European road haulers, who do not pay England’s road taxes and can often avoid the high fuel duties by filling up across the Channel before arriving in England.  In an attempt to counterbalance the financial burden of taxes and duties faced by road haulers, the government introduced the HGV Road User Levy Act 2013.[40]  This Act implements a road levy specific to HGVs, with the aim of ensuring that these vehicles make a contribution for the wear and tear they cause to the road network.[41]  The road levy is due to enter into effect in April 2014, and the funds generated will be paid into the Consolidated Fund.  Both English and foreign haulers will be required to pay the levy on vehicles weighing more than twelve tons, with a maximum daily charge of €11 (approximately US$15), set in accordance with vehicle excise duty bands.[42]  HGVs and foreign HGVs will pay the levy prior to entering the UK.  UK HGVs will pay the levy as part of their vehicle excise duty and get a reduced rate on the HGV levy portion of the duty, with the result that the majority of UK-registered operators will not pay more than they do at the moment.[43]  There is a penalty of up to £5,000 (approximately US$8,000) for nonpayment of this levy, which is expected to raise £80 million (approximately US$130 million) from 2014–2017/18.[44]

D.  Tolls

Despite the historically prolific use of tolls in England, the collection of tolls on modern roads has been very limited.[45]  The government has the authority to implement a toll on any road that has received consent for construction under the Planning Act 2008.[46]  In 2013, the government looked at using this provision to introduce a toll on a road it was improving that required significant amounts of investment.  After hearing concerns from residents and businesses, the government decided against implementing a toll when the road is finally constructed.[47]  The charging of tolls by the public sector is regulated by section 167 of the Transport Act 2000.[48]  This section provides that a toll may be implemented only on a trunk road that the Secretary of State has authority for, and that the road must include either a bridge or tunnel that is at least six hundred meters long.  The current government published a report in 2013 that looked at future models for roads in England and stated that the use of tolls for new roads remains a possibility, but that it is unwilling to introduce tolls for existing roads.[49]  Any revenue generated from tolls goes to the highway authority and must be used for the road network or related transportation measures.[50]  Local authorities may introduce tolls on roads, but only if there is a local transport plan in place to achieve such aims as reducing congestion or preventing traffic growth.[51]  The London congestion charge (see discussion, Part V(B), below) implemented in 2008 by London’s first elected mayor, Ken Livingstone, was introduced under similar provisions as those provided in the Transport Act 2000, but at the time the powers to implement such charges were available only in the Greater London area under the Greater London Authority Act 1999.[52]

Tolls by private companies are regulated by the New Roads and Street Works Act 1991.[53]  This Act provides that in return for financing, constructing, building, or maintaining a road, the operator may charge a toll.[54]

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V.  New Initiatives on Transportation Taxes and Duties

A.  “ Road-Pricing” Structure

The VED and petrol tax system is the one currently in operation in England and Wales.  However, a former Transport Minister has noted that the movement towards cleaner gas-driven and electric cars will force whichever government is in power to change the tax structure towards a “road-pricing” structure.  Under this structure, users would pay on a usage basis—those making heavy use of the roads would pay more, and those making smaller journeys would pay less.  The Minister stated that

[i]n the medium term, there’s no question that we’re going to have to move towards road-pricing and I would like it to be on a revenue neutral basis for the average motorist.  So what you pay in using the roads, you get off in road taxes and fuel so that you end up even on it.  It wouldn’t be an extra tax, it would be just a different way of raising money.[55]

As of yet, no new initiative has been put forward in legislation.

B. London Congestion Charge

The London congestion charge has been in existence since February 2003.  It was introduced by a statutory instrument,[56] issued under the powers provided to the Mayor by the Greater London Authority Act 1999.[57]  The congestion charge requires users of central London roads to pay a fee each day they drive their vehicle in a specific area during the period of 7:00 a.m.–6:00 p.m., Monday through Friday.  The current charges are £9 if paid automatically, £10 if paid on the day of travel, or £12 if paid the following day (these charges range from approximately US$14–20).[58]  There are penalties of up to £130 (approximately US$200) if a vehicle enters the congestion charge area and does not pay.  There are no toll gates for this area; instead it is monitored by closed-circuit television, and license plate numbers are read and checked against a database to check for payments or exemptions.[59] 

The Transport Act 2000[60] provided the power to the Secretary of State to charge other local road users throughout the rest of England and Wales.  To encourage the spread of road charging plans by local authorities, the Labor government provided incentives in the form of a £9.5 billion (approximately US$15.2 billion) Transport Innovation Fund, which was available from 2005–10.  Very few areas implemented such plans and the fund was dissolved in 2010.  The reasons cited for the failure were the lack of public acceptance for charging, and the fund’s overly narrow focus in addressing solely the issue of congestion.[61]

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Clare Feikert-Ahalt
Senior Foreign Law Specialist
March 2014

[2] Highways Act, 1555, 2 & 3 Ph. & Mary, c. 8.

[3] Bayliss, supra note 1.

[4] Id.

[5] 1 William T. Jackman, The Development of Transportation in Modern England 242 (Cambridge University Press 1917).

[6] Bayliss, supra note 1, at 5.

[7] Id.

[8] Jackman, supra note 5.

[9] Bayliss, supra note 1, at 5.

[10] Local Government Act 1888, 51 & 52 Vict., c. 51, § 11,

[11] 4 Parl. Deb., H.C. (5th ser.) (1908–09), 495–98 and 502–05, available at sittings/1909/apr/29.

[12] Development and Road Improvement Fund Act 1909, Edw. 7, c. 47.  See also 24 The Laws of England (Rt. Hon. Earl of Halsbury et al. eds., 1912).

[13] Louise Butcher, Roads: Vehicle Excise Duty (VED), House of Commons Library Standard Note, Jan. 17, 2013, H.C. SN01482, at 4,

[14] 311 Parl. Deb., H.C. (5th ser.) (1935–36) 327, available at 1936/apr/23/amendment-of-law.

[15] Consolidated Fund,, (last visited Jan. 14, 2014).

[16] What We Do, Highways Agency, (last visited Jan. 13, 2014).  A map of the roads that the Highways Agency is responsible for is available at wp-content/uploads/2012/07/Highways_Agency_Network_Map_-_November_2011.gif?9d7bd4 (last visited Jan. 13, 2014). 

[17] Id

[18] Id.

[19] Highways Act 1980, c. 66, § 41,

[20] Louise Butcher, Roads: Maintenance, Repairs and Street Works, House of Commons Library Standard Note, Aug. 5, 2013, H.C. SN739, at 3, briefing-papers/SN00739.pdf.

[22] HM Treasury, What is the Spending Round?, GOV.UK (June 14, 2013),

[23] Butcher, supra note 20, at 6.

[24] Department for Transport, Action for Roads: A Network for the 21st Century ¶ 4.9 (July 2013),

[25] Department for Transport, Gearing Up for Efficient Highway Delivery and Funding (Jan. 2014),

[26] Louise Butcher, Roads: Highway Infrastructure, House of Commons Library Standard Note, Nov. 2, 2010, SN/BT/1448, at 2, SN01448.pdf.

[27] Highways Agency’s Major Road Schemes Programme, Highways Agency, (last visited Jan. 14, 2014).  See also Private Finance Initiatives – Design Build Finance and Operate (DBFO), Highways Agency, (last visited Jan. 14, 2014).

[28] What We Do, Department for Transport, (last visited Jan. 13, 2014). 

[29] Butcher, supra note 20, at 3.

[30] Transport Committee, Uncorrected Transcript of Oral Evidence: The Secretary of State’s Priorities for Transport, July 2010, HC 359, at 26, cmselect/cmtran/uc359/uc35901.htm

[31] Butcher, supra note 20, at 3.

[32] Vehicle Excise and Registration Act, 1994, c.22, § 1,

[33] Butcher, supra note 13, at 1.

[34] Id.

[35] Driver & Vehicle Licensing Agency, Rates of Vehicle Tax, V149 (2013), uploads/system/uploads/attachment_data/file/175492/V149_rates_of_vehicle_tax.pdf.

[36] Id.

[37] Vehicle Excise and Registration Act, 1994, c.22, § 29,

[38] Fuel Duty, HM Revenue and Customs, (last updated Sept. 26, 2012).

[39] Antony Seely, Taxation of Road Fuels, House of Commons Library Standard Note, Jan. 10, 2014, SN824,

[40] HGV Road User Levy Act, 2013, c. 7,

[41] HGV Road User Levy, Department for Transport (Sept. 26, 2013),

[42] Louise Butcher, Roads: Lorry Road User Charging, House of Commons Library Standard Note, Apr. 17, 2013, SN588, at 2,

[43] HGV Road User Levy, supra note 41.

[44] Butcher, supra note 42, at 2.

[45] For a description of the major toll roads currently in operation in England, see Louise Butcher, Roads: Tolls, House of Commons Library Standard Note, Oct. 2013, SN442, SN00442.pdf.  

[46] Planning Act, 2008, c. 29, § 144,

[47] Butcher, supra note 42, at 14.  

[49] Butcher, supra note 42, at 8.

[50] Id. at 10.

[51] Transport Act, 2000, c. 38, § 163,

[52] Greater London Authority Act, 1999, c. 29, § 295,

[53] New Roads and Street Works Act, 1991, c. 22,

[54] Id. § 1.

[55] Road Tax to Be Scrapped, Sunday Express (Sept. 23, 2012),

[56] The Road User Charging (Charges and Penalty Charges) (London) Regulations, 2001, S.I. 2001/2285, http://www.

[57] Greater London Authority Act, 1999, c. 29, § 295,

[58] When to Pay, Transport for London, (last visited Jan. 27, 2014).

[59] Id.

[60] Transport Act, 2000, c. 38, pt. III,

[61] Louise Butcher, Transport Innovation Fund (TIF), 2005–2010, House of Commons Standard Note, Aug. 2010, SN/BT/3711,