PM seeks 'green' products VAT cut

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Mr Brown will begin initial discussions with the other 26 heads of Government at an EU summit in Brussels.

He has already won the backing of French President Nicolas Sarkozy for the initiative, although diplomats accept many details still need to be thrashed out. VAT is harmonised across the EU and countries cannot cut rates unilaterally.

Mr Brown said: "I'm suggesting to the European Union we reduce VAT on environmentally-sensitive products, ones that can really make a difference, and I think that could be a powerful lever for change.

"I think if Europe is serious about the environment we have to look at all means where we can reduce carbon emissions."

Mr Brown said the UK was about to introduce new consumer labelling to show shoppers how environmentally friendly goods such as fridges, dishwashers, washing machines or cleaning products were.

Britain would also seek to encourage firms to use less and more eco-friendly packaging and urge retailers to stock the "greenest".

Mr Brown said: "It's clear that in areas like fridges and dishwashers and electrical goods we can do the lot and in services you can also do a lot.

"So it's in these areas I'm hoping to persuade our European colleagues it's possible to incentivise people with lower taxes and lower tax can make a big difference to whether people buy environmentally-friendly goods."

The Prime Minister added he was "hopeful" he would eventually secure agreement, saying if Europe was to meet its carbon emission targets "we have got to use everything at our disposal".