New diesel cars will face tax hit to fund ‘clean air’

Government faces growing pressure to take action on pollution

A tax increase on new diesel cars was among a series of measures in the Budget aimed at persuading drivers to switch to cleaner vehicles.

Vehicle excise duty (VED) is being raised for new diesel cars failing to meet upcoming emissions standards, while the development of electric vehicles was given a funding boost.

VED is based on a vehicle’s CO2 emissions and the cost for the first 12 months ranges from zero to £2,000. The rate increase being introduced on April 1 will range from £20 for a Ford Fiesta, the UK’s most popular new car, to £500 for a luxury Porsche Cayenne.

To avoid their customers being affected by the policy, manufacturers must ensure their cars meet tougher real world emissions standards being introduced in January 2020.

The existing diesel supplement in company car tax is also going up by one percentage point. The changes to tax rules will pay for a £220million clean air fund enabling local authorities to support projects to improve air quality.

There has been growing pressure on the Government to take action on reducing pollution

Setting out the policies in the Commons, Chancellor Philip Hammond said: “The tax system can play an important role in protecting our environment.

“We owe it to our children that the air they breathe is clean.”

Mike Hawes, chief executive of trade body the Society of Motor Manufacturers and Traders, warned that car builders would not be able to meet the requirements to avoid the VED hike.

He said: “It’s unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology, which takes years to develop, in just four months.

“This Budget will also do nothing to remove the oldest, most polluting vehicles from our roads in the coming years.” The stage was set for the dreariest Budget in years, with the chancellor hamstrung between battling party colleagues simultaneously demanding an economically draining hard Brexit, a bonanza of tax breaks and support for limping public services.

Never mind the purse strings being tight: Hammond’s reputation as dull bureaucrat Spreadsheet Phil meant everything was pointing towards an undramatic speech.

But it seemed a muchvaunted challenge for his job from Aberdeen’s ambitious Michael Gove had injected some pep.

Just before unveiling bitterly disappointing growth forecast cuts, Hammond threw a jibe Mr Gove’s way, explaining this was “the bit with the long economicky words in it” - the very description witnesses gave of Gove’s incursions onto Treasury territory at the Cabinet table.

And, mocking Theresa May’s catastrophic conference speech which she was nearly forced to abandon, Hammond told the Commons he had taken the precaution of bringing some cough sweets - which the PM duly handed over. What a stunt.

He even cracked a gag about Scottish Labour’s former leader going on I’m a Celebrity: “There’ll be plenty of others joining Kezia Dugdale in saying ‘I’m Labour, get me out of here’.”

Party Phil had arrived and he was here to spread some cheer.