Angry motorists could force Darling U-turn

Amid fears of a fresh revolt by Labour MPs, the Business Secretary said the Government should not be "hammering people" with increases in their motoring costs.

Chancellor Alistair Darling will be holding crisis meetings with backbenchers to discuss the Budget plan to raise vehicle excise duty for the most polluting cars.

With some Labour insiders fearing the row could cause as much damage as the 10p tax issue, the Standard has learned that Mr Darling will hold two separate sessions next month to discuss MPs' concerns.

Under the Budget plans, many family cars - including those bought between 2001 and 2006 - will see their VED increase from £210 this year to £310 by 2010. Although many MPs accept that higher road taxes should be imposed on new cars, Mr Darling will come under strong pressure to remove the retrospective element.

Critics point out that applying the increases to cars purchased before the Budget announcement is bound to be seen as unfair. Millions of people could be hit, without any environmental benefits, because few motorists will buy a less-polluting car as a direct result of the changes. The new taxes will also undermine vehicle re-sale values.

Sources close to the Chancellor said he was "very aware" of the backbenchers' concerns that increases in road up to £200 would further hit Labour's popularity. Mr Hutton is not a Treasury minister, but he suggested that there was hope for those worried about the car tax plans.

He told BBC Radio 4's Today programme: "The Chancellor is listening to what people are saying about vehicle excise duty, as he has done on a number of occasions recently about tax rises. And people are concerned about it and it is right that we listen to people's concerns."

He added: "We are trying to get this balance right between encouraging choices to go green but not hammering people."

It is understood that Mr Hutton's remarks were not scripted and were not authorised by the Treasury.

Some ministers are frustrated by the row because they claim that only the top-of-the-range, big-engined cars in each class of vehicles will be hit. They point out that most people will face increases of around £40.

But with many skilled and semiskilled workers having invested in expensive people carriers and estates, any tax rises could affect them disproportionately.

Some 42 MPs - 35 of them Labour - have signed a Commons motion warning ministers to reconsider the road tax plan.

Labour MP Rob Marris, a junior member of the Government, joined the rebellion as he said there was a "significant risk" that the subject would get worse than the 10p tax fiasco.

Mr Marris, Parliamentary Private Secretary to Cabinet minister Shaun Woodward, said: "Millions of people will be affected. It is retrospective taxation and that is undesirable. Medium-sized family cars, depending on what sort of engine they have got and what CO2 emissions they have got, could be hit very hard."

Sources close to Mr Darling told the Standard that he was very happy to meet MPs to discuss their worries. But any U-turn, if there was one, was unlikely to take place before the pre-Budget report in autumn.

Labour MP Ronnie Campbell, who tabled the motion, said the road tax rise added insult to injury for motorists coping-with record petrol and diesel prices. "People at this moment can't afford it. They really are feeling the pinch."

Hugh Bladon, of the Association of British Drivers, said that it was " cobblers" that drivers were being persuaded to go Green. "We are talking about people who bought cars seven years ago. How on earth were they supposed to know this was coming? To make this worse, this will affect people with older vehicles who will probably be less well off and who the Government claims to represent."