Budget 1999: Motoring - Buy smaller car, drivers are warned

MOTORISTS were given a clear warning to get out of their vehicles and use public transport, or buy a smaller car, as the Government imposed hefty rises.

The price of a gallon of unleaded petrol will top pounds 3 for the first time after the Chancellor announced a 6 per cent rise in fuel duty.

He also unveiled a package of measures to reward the use of "greener" cars, initiatives to encourage workers to share vehicles or to come to work by bicycle, and a crackdown on company car tax-breaks for 1.5 million drivers.

Motoring organisations warned the measures would hit rural drivers and the elderly and accused ministers of raising a green "smokescreen". But environmental groups gave the Budget a cautious welcome.

From 6pm yesterday, duty on unleaded fuel rose by 3.79p a litre. This means a rise in a litre of fuel of 3.79p to around 67p and to pounds 3.13 from pounds 2.91 for a gallon. Leaded fuel duty rose by 4.25p per litre to 74.4p. Diesel rose by 6.14p per litre to nearly 71p.

The 6 per cent rise implements the Government's commitment to "escalate" fuel duty as part of its climate change strategy.

The Chancellor announced a reform of the Vehicle Excise Duty (road tax) on cars based on the level of pollution emissions. VED for all private and light goods vehicles will be increased by pounds 5 to pounds 155 from today. But from 1 June smaller cars with engines up to 1,100cc would pay a rate of pounds 100. From autumn 2000, the rate for new cars will be determined primarily by their carbon dioxide emission rate.

The RAC said that an average motorist driving 10,000 miles a year using unleaded fuel in a hatchback car would be pounds 60 worse off. Edmund King, head of campaigns, said: "Many motorists, such as the elderly, disabled and rural residents are totally dependent on the car."

He said the two-tier VED system was a "tax on luxury not use" as it did not punish drivers of larger cars for heavy mileage. "The Treasury is dressing up tax rises in greenery."

The AA said the rises in fuel duty meant motorists were paying a record pounds 8.50 to the Chancellor for every pounds 10 spent on the garage forecourt. John Dawson, head of policy, said: "The Chancellor's environmental excuses for hitting drivers again with the fuel escalator are wearing extremely thin."

Mr Brown announced a reform of tax on company cars to encourage the use of fuel efficient cars. The current system that cuts the tax by a third for people who do more than 2,500 business miles and by half for more than 18,000 will be abolished in 2002. It will be replaced with incentives to encourage the purchase of cars with lower CO2 emission. Mr Brown said the reform would cost the typical user about pounds 1 a week.

The Chancellor was applauded by environmental groups for removing tax penalties on employers who offer green benefits such as works buses, discount fares and allowances for using cycles.

Tony Bosworth, of Friends of the Earth, said: "This Budget represents the Government's first halting steps towards green economies."

Transport 2000 director Stephen Joseph said: "We're now seeing the tax system starting to swing behind integrated transport and away from rewarding gas guzzlers and business car travel."

The Chancellor said there would be more money for public transport. However, the Government said the details would not be published until John Prescott, the Deputy Prime Minister, returned from India.

The changes are unlikely to meet Mr Prescott's target of cutting the number of car journeys. One think-tank, the Centre for Economics and Business Research, said road usage would be cut by just 0.51 per cent.

Mr Brown offered some good news for the freight industry. VED will be frozen for 98 per cent of all lorries and cut by up to pounds 1,000 for lorries and buses with clean engines.

The Freight Transport Association welcomed the move but condemned the 6.14p rise in duty on diesel, which it said effectively doubled the world price of bulk diesel. "The Chancellor's crude strategy of bleeding the transport industry to pay for Government expenditure should be about helping industry - not stealing from it," it said.

Drivers will also have to pay extra for motor insurance as Insurance Premium Tax rises by 1 per cent to 5 per cent from 1 July, adding pounds 6 to an average household insurance bill of pounds 667.

The Opposition seized on the rises in fuel duty. William Hague, the Tory leader, said: "The Government have taken their persecution of the motorist too far and their damage to the haulage industry too far."

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Angel Di Maria is shown the red card
Roger Federer after his win over Tomas Berdych
Life and Style
News in briefs: big pants in 'Bridget Jones's Diary'
fashionBig knickers are back
James Milner is set to sign for Liverpool this week despite rival interest from Arsenal
sportReds baulk at Benteke £32.5m release clause
The controversial Motor Neurone Disease Association poster, featuring sufferer Michael Smith, has drawn a series of angry complaints
newsThis one has been criticised for its 'threatening tone'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral