The cross-party Parliamentary Environmental Audit Committee has condemned the Government for backtracking on plans to introduce environmental taxes such linking vehicle excise duty to a vehicle’s CO2 emissions.

“The Government must continue with a programme of environmental regulations, taxes, and investments, in order to show businesses and individuals that its environmental objectives will not be blown off course by the recession,” it said in its latest report.

The “backtracking” on reforms to Vehicle Excise Duty were moves in the wrong direction.

They suggest that the Government might respond to the recession by unpicking other elements of its environmental tax and regulation programme.

“This could increase uncertainty for business, leading to higher risk premiums for taking action, and a resulting lack of investment in the technologies that contribute to the transition to a low carbon economy.

"If the Treasury shows such weakness, then businesses and individuals will be much less inclined to play their part.”