Air passengers will pay an extra £1 billion a year in tax to help to pay for the environmental cost of their journeys, the Chancellor announced yesterday.

Air passenger duty will double on bookings made from February 1, ending a five-year freeze. The rates for flights within Europe will rise from £5 to £10 for economy class and £10 to £20 for business class. On long-haul flights to destinations outside Europe, the tax will rise from £20 to £40 in economy and £40 to £80 in business and first class.

Mr Brown said that the increase would reduce carbon dioxide emissions from aviation by 1.1 million tonnes a year. Motorists will pay the first increase in fuel duty for three years, up in line with inflation by 1.25p a litre from today, pushing the average price of petrol up to 88p a litre.

Mr Brown said that both tax increases were designed to reduce harmful emissions from transport, but the Treasury refused to give details of how they would affect demand for travel. Airlines and motoring groups said that the extra taxes were revenue-raising measures that would do little to reduce demand and have minimal impact on the environment.

The Greenskies Alliance, a coalition of environmental groups, said that the projected fall in CO2 was the equivalent of less than one year’s growth in emissions from flights.

Patrick King, of the accountant MacIntyre Hudson, said: “Neither an extra £5 on an easyJet fare, nor £40 more on a first-class transatlantic flight, will stop those who wish to fly. Without any tax reductions to offset the increase, this is instead a calculated move by the Chancellor to raise revenue, rather than to reduce carbon emissions, however much he dresses it up in green rhetoric.”

A British Airways spokesman said: “Unlike other transport sectors, UK aviation pays for all its own infrastructure and security. This hike in tax is revenue-raising, pure and simple, with aviation being treated as a cash cow.”

Mr Brown also announced a series of measures to increase the use of biofuels in road vehicles and trains. The duty rate for biodiesel for trains will be cut to 8p a litre to encourage operators to conduct trials next year. The Association of Train Operating Companies said that the move could eventually help it to reduce its consumption of diesel by up to half, or more than 200 million litres a year.

Mr Brown gave a series of incentives to biofuel producers, including extending the 20p a litre discount to include advanced forms of biodiesel. He also proposed a new discount scheme to encourage company car users to choose cars such as the flexi-fuel Ford Focus, which can use a blend of 15 per cent petrol and 85 per cent ethanol, made from crops such as sugar beet and wheat. The duty discount for liquefied petroleum gas, an alternative road fuel, was reduced by 1p a litre to reflect the Treasury view that it has little environmental benefit.

Regulations intended to accelerate the introduction of sulphur-free fuel, which improves air quality, will be announced early next year and come into force by next December.

Mr Brown said that a ten-year plan for investment in transport would be published next year as part of the Comprehensive Spending Review. He rejected proposals from a freight industry task force for measures to stem the increase in foreign lorries on British roads. However, he said that the Government was considering a time-based charge to make foreign hauliers pay for some of the damage they cause to British roads.

The Freight Transport Association reacted angrily to Mr Brown’s announcement of an end to the freeze on fuel duty. Some hauliers said that the move could increase the appetite in the industry for fuel protests similar to those seen in September 2000.

Times Recommends

• Postman Pat moved to a high-tech sorting office
• Saatchi’s old favourites - made in China
• New teaching style gives pupils wake-up call