Budget 2017: Philip Hammond to spend hundreds of millions to make cars drive themselves

‘Some may choose to reject the future, we choose to embrace it’

The Government is to spend hundreds of millions of pounds encouraging people to make electric cars that drive themselves.

It will spend huge amounts of money to try and incentivise electric vehicles. Then eventually those cars will start driving themselves around the country – with Chancellor Philip Hammond backing a plan to have them making their own way by 2021.

Jeremy Corbyn used the news about driverless vehicles to joke about having tested “backseat driving” in the Government, which has been bitterly divided before the Budget.

Mr Hammond said the technology was being introduced because the Government saw it as the future. “Some may choose to reject the future, we choose to embrace it,” he said.

The Government will spend £400m on a new charging-infrastructure fund, an extra £100m on the plug-in vehicle grant, and £40m for research into charging.

“I know Jeremy Clarkson doesn’t like them, but there are many other good reasons to pursue this technology so today we step up our support for it,” Mr Hammond joked as he unveiled the new Budget. “Sorry Jeremy, not the first time you’ve been snubbed by Hammond and May.”

The technology-and-automotive companies that are looking to bring driverless vehicles to the roads backed the plan, arguing that it is about to completely change the way that vehicles make their way around the streets.

“The Chancellor’s announcement to back autonomous driving by bringing it to UK roads by 2021, marks the beginning of the global driving revolution,” said Intel. “Our research estimates the economy created by autonomous driving will grow from $800bn (£602.6bn) to $7 trillion globally, as fully autonomous vehicles become mainstream.”

“By committing to adapt driving regulations, the UK economy will begin to witness this change and the benefits of this autonomous movement in as few as four years.”

Intel claims that autonomous cars will cost the public less, save money from a decrease in road traffic accidents and free up extra time as people won’t have to sit in traffic as they commute.

“The autonomous industry will be delighted by this pledge of support for developing technologies,” it said. “The next challenge is trust and adoption, and we are committed to bringing safe, autonomous cars to the mainstream. In turn, we will see the UK’s ambitions realised as a global hub of innovation in the future.”

The Chancellor also announced a range of taxes designed at encouraging people to buy more environmentally friendly vehicles. But he wouldn’t apply those rules to vans, he said, in an unexplained exception.

New diesel cars failing to meet the latest emissions standards will face a tax increase in April.

The Chancellor said such vehicles will be subjected to a one-band increase in the first-year vehicle excise duty (VED) rate.

VED is based on a vehicle’s CO2 emissions and the cost for the first 12 months ranges from zero to £2,000.

Mr Hammond also revealed that the existing diesel supplement in company-car tax is also going up by one percentage point.

He said: “Drivers buying a new car will be able to avoid this charge as soon as manufacturers bring forward the next-generation cleaner diesels that we all want to see.

“And we only apply the measures to cars.

“So before the headline writers start limbering up let me be quite clear: no white-van man or woman will be hit by these measures.”

The levy on diesels will fund a new £220m clean-air fund to support the implementation of local air-quality plans.

Additional reporting by agencies