Alistair Darling, the transport secretary, this weekend indicated that fuel duty will have to be scrapped in order to pave the way for a new road pricing scheme. This would dramatically cut the price of petrol — duty currently accounts for 47p per litre — but motorists would face a new charge of up to £1.34 a mile. Journeys at peak times and on the busiest roads would cost most.

In his first interview since the election, Darling said the changes were necessary to prevent roads reaching “complete gridlock”. He wants a pilot project to be approved during Labour’s third term.

The move, which is also likely to see road tax scrapped, would mark the biggest shake-up in motoring taxation since fuel duty was introduced in 1909.

“The idea of distance[-based] charging is that instead of paying the present form of taxation, you’d be charged on the distance you go,” Darling said.

“You are certainly not talking about a charge on top of another charge. You can’t have both. This would be a completely different concept, a completely different way of doing things.”

Fuel duty on petrol and diesel provides the Treasury with about £22 billion a year. A further £4.6 billion is raised annually through road tax.

Darling is confident that the technology will be in place within the next 10-15 years for a nationwide scheme. A satellite tracking system would monitor black boxes inside every car. “Top-of-the-range cars have got satellite navigation kits fitted almost as standard now,” Darling said.

“In another 10 years I expect every car will be fitted with this equipment. So it makes sense to see whether or not you can’t use that to good advantage and give drivers a better deal.”

Darling will outline government plans to take road pricing forward at a lecture this week organised by the Social Market Foundation think tank.

Although a nationwide scheme would not be introduced for a decade at the earliest, Darling plans to present a bill in the current parliament to set up a pilot project in a large conurbation, such as the West Midlands or Greater Manchester, within “five or six years”.

He says a decision on road pricing will have to be taken “during the course of this parliament”, providing political consensus can be reached across the parties.

“If we don’t do anything it’s pretty clear to me, when you look at all the trends, we would face complete gridlock,” he said.

“More and more cars will grind to a halt and the generations to come will curse those people of my generation who didn’t do anything about it.”

Scrapping fuel duty and road tax is likely to make road pricing more acceptable to motorists. “We’ve got to take the British people with us,” said Darling.

Last year a government- commissioned feasibility study on road pricing concluded that distance-based charges could cut congestion by half.

Drivers would be charged different rates depending on the time of day, their location and the distance travelled.

Charges would start at 2p a mile for rural roads, while journeys on the busiest urban routes would cost up to £1.34 a mile at peak times, according to the study.

The report claimed that about half of drivers would pay less in road charges than they currently do in fuel duty.

“If fuel duty were removed completely . . . [rural drivers] would be paying much less and the other side of the coin is that city dwellers would pay much more,” said Stephen Glaister, professor of transport and infrastructure at Imperial College, London.

Environmental groups fear that replacing existing taxes with distance-based charges would discourage drivers from switching to greener cars. Large gas guzzlers that are less fuel efficient than small vehicles would cost less to run if fuel duty were scrapped.

“If the government scrapped fuel tax and road tax, this would remove incentives for people to buy greener cars and climate change emissions could rise,” said Tony Bosworth of Friends of the Earth.

Last year the number of cars on Britain’s roads was 25.8m. This is set to rise to 31.9m by 2015, according to the Commission for Integrated Transport, which advises the government.

Explore UK News

• Crime News

• Education News

• Health News

• Science News

• Scotland News

Times Recommends

• DIY video helps the WI get to grips with sex
• Artists urge nation to save Titians
• Go home, Iraqi leader tells Britain