In the 1998 Budget, the UK Chancellor of the Exchequer, Gordon Brown, promised to introduce a system of graduated VED for cars.

The reduced rate will affect 1.8 million cars in the UK and is intended to encourage people to use environmentally-friendly cars.

The cut is the first step in the Labour Government’s reform of the VED system.

From autumn 2000, a graduated VED system will be introduced for new cars, with owners paying according to their car’s rate of carbon dioxide emissions.

“The UK Government is sending a clear and strong environmental signal to motor manufacturers and owners alike that measures will be taken to protect the environment,” said Economic Secretary Patricia Hewitt.

The models of cars that will qualify for the reduced rate include: – the lowest engined-sized models of the Vauxhall Corsa, Volkswagen Polo, Volkswagen Lupo, Nissan Micra, Fiat Seicento, Toyota Yaris, Suzuki Alto, Suzuki Swift, Suzuki Wagon R, Daihatsu Cuore, Daihatsu Move, Daihatsu Sirion, Hyundai Atoz, Daewoo Matiz, Seat Arose, Perodua Nippa and Citroen Saxo.

There will also be a number of older models of Minis, Ford Fiesta Populars, Metros, Fiat Pandas, Fiat Unos, Citroen AX and Peugeot 106 that will qualify.

Around 8 per cent of all the cars in the Private and Light Goods vehicle class have engines up to 1100cc – around 1.8 million cars will therefore be eligible for the £55 reduction.

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