In its election manifesto the Labour Party pledged to review the current £145 a vehicle excise duty regime to promote low emission vehicles. With deputy Prime Minister John Prescott now in charge of a new super ministry combining both transport and environment departments, Dunn said a graded system of vehicle taxes designed to penalise larger, less efficient vehicles 'did make sense'.

Meanwhile, Dunn took the new Government to task over possible congestion taxes incorporating urban road pricing - it has ruled out motorway tolls - and car parking taxes. Calling such a move 'sheer lunacy' Dunn said: 'Businesses are already taxed heavily with business rates, as well as corporation tax, and to enforce further rate increases would be extremely damaging to UK businesses.' He added: 'A local road tax in which councils could introduce direct charges for drivers using roads in their areas is equally unrealistic..'