CHANCELLOR of the Exchequer Gordon Brown has announced a raft of new initiatives designed to encourage fleets into greener, cleaner vehicles in his pre-Budget report.

During a 45-minute speech yesterday, he announced a plan to introduce a raft of new tax incentives for low carbon-dioxide emission vehicles, in addition to the new company car tax system being launched from April 2002.

He has confirmed that, subject to EU approval, any trials of vehicles powered by hydrogen, landfill gases or methanol will be exempt from fuel duty.

This builds on announcements in the 2001 Budget which revealed tax on bio-diesel would be at least 20 pence per litre below the equivalent duty on ultra-low sulphur diesel.

Other announcements include:

• A draft strategy document called Powering Future Vehicles is due to be published shortly. On the basis of this strategy, the Government will consider further tax incentives to encourage low-carbon technology in Budget 2002.
• A consultation will be launched to modernise Vehicle Excise Duty on motorcycles.
• There could also be an overhaul of van taxation, including Vehicle Excise Duty, to encourage drivers into cleaner newer vehicles.
• The Government is reconsidering restructuring the fuel scale charges – the tax on free fuel provided for private mileage – to relate it to carbon dioxide emissions from 2003. Currently, the charge is based on engine size and has increased by 20 per cent above inflation for the past four years, in a bid to kill off the perk.

Brown said: 'Today's announcements are an important step in delivering our objectives. They demonstrate a strategic approach. We are taking forward new policies to encourage the early development and take-up of products that offer real environmental benefits – such as the Green Fuel and Green Technology Challenges.'