The car industry must pay millions of pounds towards solving the UK’s toxic air crisis under the “polluter pays” principle, according to an unprecedented joint inquiry by four committees of MPs.

The MPs call the poisonous air that causes 40,000 early deaths a year a “national health emergency” and are scathing about the government’s clean air plans. These judged illegal three times in the high court, with the latest plan condemned as “woefully inadequate” by city leaders and “inexcusable” by doctors.

The government must bring forward the 2040 date by which sales of conventional diesel and petrol cars are to be banned, to match the ambition of other nations which have set dates around 2030, the 49 cross-party MPs concluded. They also accused ministers of avoiding tough action for “political convenience”.

“The government’s latest plan does not present an effective response to the scale of the air quality catastrophe in the UK,” said Neil Parish MP, chair of the environment food and rural affairs committee, which joined with the health, transport and environmental audit committees in undertaking the inquiry. “Real change will require bold, meaningful action.”

Andrew Selous MP, acting chair of the health committee, said: “It is [very] concerning that children, the elderly, and those with pre-existing health conditions are most at risk. Action must be taken to combat this national health emergency.”

The report concludes: “The government cannot continue to put public health at risk. It needs to require the automobile industry to contribute to a new clean air fund, following the ‘polluter pays’ principle, on a scale that adequately compensates for the health costs of diesel pollution.” The report found the overall cost of air pollution to the UK is £20bn per year.

After the dieselgate scandal in 2015, when Volkswagen was exposed as having cheated emissions tests in the US, the company agreed to pay out $15bn. Subsequently, it emerged that almost all diesel cars were emitting far more toxic nitrogen dioxide on the road than in lab-based regulatory tests. In Germany, VW, BMW and Daimler are now contributing €180m to a €1bn clean air fund.

In contrast, VW in the UK has paid nothing in compensation, despite transport minister Jesse Norman stating in December: “We strongly believe [VW] vehicle owners should be compensated.” Neither have carmakers pledged money for a clean air fund, despite Norman stating: “An active role in this transition [to a low-emission future] by manufacturers is essential to restore trust in the industry.”

“There are 6.5m dirty diesel cars and vans on the UK’s roads that spew toxic fumes with no effective controls,” said Greg Archer, clean vehicles director at campaign group Transport & Environment. “It is time the car industry either cleans up the emissions or pays up for others to do so. It is shameful that in the UK the industry is allowed to do nothing.”

Rosie Rogers, at Greenpeace, said: “So far the car industry has managed to shake off its responsibility for the pollution crisis. The public was mis-sold highly polluting diesel cars [and] it’s high time manufacturers felt the heat. Contributing to a clean air fund is a good start.”

Environmental lawyers ClientEarth inflicted the three legal defeats on ministers, and head of UK public affairs, Simon Alcock, said the MPs’ report was a landmark: “It highlights the lack of national leadership by successive governments to tackle this public health crisis – it was supposed to be resolved over eight years ago.”

Mike Hawes, chief executive of motor industry trade body SMMT, said: “The UK automotive industry is investing billions in technology and other measures to help address the challenge. A clean air fund worth £220m has already been set up by government [and] in addition, vehicle manufacturers are funding scrappage schemes themselves to get the older vehicles off the road.”

A Greenpeace air pollution campaign poster is seen on an Aldi billboard. The artworks have been placed on billboards by Greenpeace activists depicting children, the elderly and others holding signs saying ‘Diesel is breaking the limit’. Photograph: Chris J Ratcliffe/Getty Images

The UK government has set 2040 as the date for the end of diesel and petrol car sales, but the devolved government in Scotland has pledged to do so by 2032. The Netherlands will prohibit internal combustion engine cars by 2030 and India is considering the same date. “People who live in the UK deserve clean air just as much,” said Rogers.

A government spokesman said: “Air pollution has improved significantly since 2010, but we recognise there is more to do and will set out further actions through a comprehensive clean air strategy later this year.”

Other recommendations in the MPs report include a new legislation to enshrine the right to clean air in UK law after Brexit and a national health campaign to highlight the dangers of air pollution. The report said: “The debate on air quality is too often cast as a war against motorists, when in fact regular car users are among the worst affected. Pollution levels are often higher inside cars than on the street.”