Darling set to back down over road tax rises

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A senior minister made clear that the Chancellor would face defeat in the Commons if he presses ahead with his plans for big rises in vehicle excise duty.

More than 60 Labour MPs have threatened to scupper the increases of up to £245 in annual road tax and the Government believes that, without changes to the new graduated VED system, it could not win over enough of these backbenchers to avoid it being blocked.

The Chancellor is now expected to offer concessions in his pre-Budget report later this autumn to lessen the impact of the road tax increases, particularly for people with cars up to seven years old.

The senior minister signalled that the Government now recognises the strength of opposition from Labour MPs and will therefore act to address these concerns.

The backbenchers' main complaint is the retrospective nature of the tax rises, applying to cars bought from March 2001. They have been arguing for only new cars to be affected. The Treasury today insisted that there are no current plans to change the road levy proposals but, significantly, did not rule out amendments.

A Treasury spokesman said: "Obviously all tax policies are kept under review as a matter of course. We listen to concerns that are raised."