How much would car tax be if we treated cars like cladding?

Are we approaching the cladding crisis rationally?

Cladding is in the news at the moment.  In response to the tragedy at Grenfell the UK government has introduced regulations requiring buildings with "unsafe" cladding to be patrolled.  This is obviously expensive and in most circumstances the cost is borne by the leaseholder.  The average paid per leaseholder is £137 per month (with a median of double that).  If we assume an average of two occupants per flat that comes to £822 per occupant per year.

Obviously these actions may save lives.  But there are many other risks that we face day in and day out and it is worth considering whether we price these risks the same.  After all, that money has consequences - it has bankrupted people, particularly those who face the tail end of the cost distribution.  So let's try to work out how much car tax would be if we treated the risk of dying in a traffic accident in the same way, and loaded the cost per life onto drivers the way we do with leaseholders.

Micromorts

A Micromort is a 1 in a million risk of death.  The Micromort chart on wikipedia gives a list of examples: smoking 1.4 cigarettes or walking 17 miles incurrs a single micromort of risk.  What about living in a flat with flammable cladding?

• According to the List of high rise facade fires on wikipedia 80 people in the UK have died in 30 years (72 at Grenfell, 8 elsewhere)
• Inside Housing says that the official figure of 56,000 people living in flats with flammable cladding is a gross under-estimate because it only takes into account one particular type of flammable cladding.  The figure could be as high as 10 times that.

So, the risk per year of living in such a flat is 80/(56000 x 30) which is about 50 micromorts.  However, it could be 10 times lower, if Inside Housing are right.  And given that Grenfell was thankfully an extreme event it is up for debate whether it should be included.  To be very generous to the government lets stick with a figure of 50 micromorts per year.  This is the risk of travelling 11,500 miles by car.

VSL

The department for transport uses the concept of a Value of Statistical Life to work out whether bearing additional cost is in the public interest.  According to the wikipedia again, this is currently 1.6 million pounds.  I.e. they are prepared to spend £1.60 to eliminate one micromort of risk.  Let's work out what the equivalent figure is for avoiding risk of death by fire in cladded building:

• The average cost is £822 per occupant per year (though often much higher)
• The worst case estimate risk is 50 micromorts per occupant per year (though likely much lower)

This indicates that we are prepared to force occupants to spend £16.44 to eliminate each micromort of risk. (Although the actual figure is higher because the patrols only eliminate part of the risk.) That's a lower bound that could be out by one or two orders of magnitude, but it's still 10x the VSL used by the Dept. for Transport.

What would be the effect on road tax be if we valued life lost on the road the same?

That's difficult to establish.  About 2000 people die on the roads in the UK each year.  If the VSL used by the Dept. of Transport went up by a factor of 10, more money would be spent and fewer people would die.  But we don't know how many lives would be saved before the cost of saving additional lives would reach the new VSL figure, and how the cost would change as it did.  Essentially the minimum extra cost would be zero, and the maximum would be £16.44 x 1000,000 x 2000 i.e. £32 billion, or about £1100 per car.

What we do know, is that money spent on avoiding risk is not determined in a rational way.  The amount we ask people to pay for the same risk depends massively on the political context associated with that risk, with who does the paying, and with how much choice they have in the matter.  In this case, the risk is highly political and the cost is borne by a less well-off minority that cannot vote with their feet.