Budget Special: Breathing space for cleaner technology

THE BUDGET AND YOU: Green measures
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The Chancellor set out to clear the air with a package of measures designed to cut air pollution from vehicles. The number of gas-powered, low-emission lorries, buses and cars is expected to increase as a result.

Environmental groups also rejoiced at a major cut in the roads programme, with the Secretary of State for Transport, Sir George Young, dropping more than 100 longer-term schemes worth pounds 6bn which his department had been hoping to construct in the next century.

Greens were also pleased that the tax on air travel - which is making a growing contribution to the threat of man-made climate change - is being doubled.

The most significant of the green moves was the intention to cut vehicle excise duty by up to pounds 500 in 1998 on lorries which have very low emissions of particulates - microscopic, sooty particles found mainly in diesel exhausts which are thought to be among the most dangerous types of air pollution.

While duty on petrol and diesel is going up by 3p - part of the Government's pledge to raise fuel duties by 5 per cent a year - the increase on cleaner- burning low-sulphur diesel will be 2p, provided the Government reaches agreement with the European Commission on giving this fuel a tax break.

And compressed natural gas, which now costs the same as petrol, will have its duty cut by 25 per cent, giving high-mileage motorists and fleet operators a strong incentive to convert their vehicles. It costs about pounds 2,600 to alter a car to take this fuel.

The gas, which is the same as that used in homes, produces considerably less pollution and carbon dioxide than petrol and diesel. But there are only about 400 vehicles running on this fuel, and 14 filling stations.

Tom Gorman, head of British Gas's Natural Gas Vehicles division, forecast there would be 200,000 vehicles in six years - many of them buses which currently run on diesel. After years of pressure, the Government has conceded that vehicle excise duty - the tax disc - should be cut for road transport which leads the way in reducing emissions. Although the initial concession applied only to lorries, there are hopes that it paves the way for this to be extended to cars in future.

But there was disappointment that Kenneth Clarke did nothing further to cut taxes on employing people by raising taxes on pollution instead. This is a principle which the Chancellor had accepted in earlier Budgets when he introduced a landfill tax on waste dumping. It came into effect last month, and the pounds 500m a year it will raise will be used to cut employers' National Insurance contributions.

Charles Secrett, director of Friends of the Earth, said he had hoped this taxation idea would be extended to sand, rock and gravel extracted from quarries - but it was not to be.