Brown gives green signal for cleaner motoring

The RAC Foundation described the intention to reform Vehicle Excise Duty (VED) as a "green light for cleaner motoring" and stated that motorists will be relieved that any increase in fuel has been deferred as there is still uncertainty about world prices.

Edmund King, executive director of the RAC Foundation, said: " Cars are getting cleaner and greener and whilst motorists will not be pleased with more price increases, longer term incentives to go green are welcome. There will also be relief that the proposed fuel duty increase has been deferred.

"Brown's radical proposal for tax disc reforms gives a green light to cleaner motoring. Drivers and manufacturers need time to change their vehicles. Reduced tax for cleaner vehicles is a great incentive to help motorists choose the most environmentally friendly model suitable for their needs."

The Chancellor's decision to increase VED for cars in the top band, offset against reductions in the cost of VED for cleaner vehicles, sends a signal that motorists should seek to make a greener choice of car. By choosing a cleaner version of a large family car motorists can often save money in terms of VED and fuel consumption. Within the same category of vehicle there are wide differences in the environmental performance between the best and worst in class. The Foundation believes it makes sense to remove the VED tax differential between diesel and petrol cars.

For example, the new proposals will even hit one species of "Mondeo Man" (middle England voters who allegedly brought New Labour to power) but not others.

Mondeo 3.0i V6 Ghia X Band G VED (249 CO2g/km) 27.7 average MPG

Mondeo 2.0 TDCi 115 Zetec Band D VED (154 CO2 g/km) 48.9 average MPG

This shows that the discerning Mondeo man (or woman) can save money on their tax disc, on fuel at the pumps and CO2 - although they will lose 2.9 seconds in the 0 - 60 mph acceleration - a small price to pay for reducing the carbon footprint.

The cost of fuel has risen from around $58 a barrel at the middle of February to $61 a barrel last week. The average price of a litre of unleaded is approx 89.5 p (68.9 % tax) and diesel 92.8 p (67% tax). However, the worry for most motorists is the continuing uncertainty in the global market which could see a rapid increase in fuel prices at the pumps. The RAC Foundation has called on the Chancellor to introduce a fuel duty stabiliser to help regulate pump prices by decreasing fuel tax when global prices go up and increasing fuel tax if global prices fall beyond a certain rate. This would help motorists and businesses to budget for their motoring costs and would ensure that fuel duty was not merely fuelling inflation.

Low income motorists already spend 24 per cent of their household outgoings on motoring, and fuel makes up around half of those costs. The Chancellor increased fuel duty by 1.25p per litre in December 2006 so the deferred increase will be met with relief.

The RAC Foundation welcomed the continued duty incentive for greener fuels.

The RAC Foundation Budget fact file:

Motorists pay £44.6 bn to the Treasury in motoring taxes. Only £7bn of this is re-invested in the road network.

93% of passengers and 89% of UK freight traffic travels by road.

A vehicle moving at 50mph emits just ½ of the carbon dioxide of a vehicle travelling in congestion at 5mph.

The average new car emits 10% less CO2 than its 1997 equivalent. The average 4x4 emits 15% less CO2 than its 1997 equivalent.

Choosing a diesel version of a family car can reduce VED by 1 or 2 bands.

Motorists should be aware of the savings they can make in VED and fuel by choosing a more efficient model of their required vehicle.

3% think green taxes are just an excuse to charge more money for services (YouGov poll) but 91% would welcome the use of technology to combat carbon and climate change.

Buying a fuel efficient car is good for the planet, as its carbon dioxide emissions are lower, and good for the wallet:-

Choosing the most fuel efficient 4x4 saves £430 over a year on fuel alone

Choosing the most fuel efficient MPV saves £330 over a year

Choosing the most fuel efficient small car saves £200 over a year