I doubt you'd get anyone in government confirming that VED revenues fund the upkeep of the road network. So let's be honest it's simply just another tax system to extract revenues from the UK population.
I recently read an article that the council responsible for maintaining the Snake Pass could easily spend their entire annual road network budget maintaining just that one road. As a result they have appealed to the government to accept it as a national highway and maintain it centrally.
As for the DVLA rates of vehicle tax; the decision to tax EV's in addition to the introduction of the luxury car tax, for vehicles costing above £40k, in April 2021 just highlights how inappropriate the existing CO2 based pricing model currently is. But will it change anytime soon - well I think the new EV model just highlights they have no intention of moving away from the CO2 based scheme.