Brown's electric dream for Britain

Exclusive: PM reveals plans to create first 'green' cities geared towards electric cars in drive to create 400,000 new jobs

Gordon Brown has promised an environmentally friendly Budget later this month to kick start a "green recovery" – including the mass introduction of electric cars on Britain's roads.

In an exclusive interview with The Independent, the Prime Minister trailed measures to make Britain "a world leader" in producing and exporting electric cars, hybrid petrol-electric vehicles and lighter cars using less petrol. Alistair Darling, the Chancellor, will announce in his Budget that trials for electric cars in two or three cities will begin next year. Councils will be invited to bid to become Britain's first "green cities". The Government will open talks with power companies to ensure the vehicles can have their batteries recharged at a national network of power points at the roadside.

Mr Darling will also set a target of creating 400,000 jobs in "green industries" over the next five years.

Other green measures to be outlined by the Government shortly include relaxing planning rules to allow the building of more wind farms to ensure Britain hits its target to generate 15 per cent of its energy from renewable sources by 2020. "Smart meters" will eventually be installed in every home so people can see how much energy they use. Ministers also want to develop a "clean coal" industry by approving an experiment with carbon capture and storage.

In his first newspaper interview since last week's G20 summit, Mr Brown kept open the option of a limited further fiscal stimulus in the Budget. But with public borrowing in the current financial year likely to rise from the forecast £118bn to around £150bn, he hinted that the Chancellor might have to announce more tax rises for the medium term to balance the nation's books.

"It is not just what we do to give real help now, but about setting a path for the future as well. We always take into account what we need and what is best future for the fiscal position," he said.

Pledging a raft of measures to ensure Britain emerges from the recession as a "low carbon" economy, the Prime Minister said the country could increase its output of environmental goods and services by 50 per cent to £1.5bn in the next few years.

"This is a major part of our plan for recovery in the Budget," he said. He added that the Government would provide incentives to help the car industry become a market leader across the world for electric and hybrid cars. Yesterday, the plans received a boost when the European Investment Bank approved a £340m loan to Jaguar Land Rover to develop "green" vehicles, with a further £373m to be split between Nissan's plants in Sunderland and Spain.

Mr Brown said he would consider buying a fleet of electric cars for ministers to set an example. To help Britain's struggling car industry, he said the Government was considering a "scrappage" scheme under which motorists would get up to £2,000 for trading in a polluting older car for a cleaner new vehicle.

"A different type of economy will emerge in the recovery – if we are prepared to invest in the future," he said. "Britain has a very strong and successful future ahead of us. We are leading in a number of key sectors."

The jobs of the future would come from a "green revolution" and an expansion in sectors such as pharmaceuticals, health care, education, the creative industries, information technology, bioscience and advanced manufacturing. Despite fears of a much smaller financial sector, he insisted that London would still be "one of the most attractive places to do business from".

Mr Brown said the push would enjoy widespread public support. "This is a job creator, a quality of life improver and an environment-enhancing measure," he said. "We want to harness a desire among people to be part of this. A better Britain means building a greener Britain."

Mr Brown struck an upbeat note about the United Nations-led talks on a new climate change treaty, to be held in Copenhagen in December. Despite fears that President Obama might not be ready to sign up by then, Mr Brown insisted: "He is determined to move the environmental agenda forward."

He added: "We have been brought down by a global banking crisis. We in Britain are capable and well placed – with our natural strength and our enterprising past and present, to be able to meet all these challenges in the future."