The chancellor has warned that a million British workers will need to retrain with the driverless cars set to revolutionise the workplace and people’s lives.

Philip Hammond reaffirmed a budget pledge to ensure “genuine driverless vehicles” on Britain’s roads by 2021 – and said people should be prepared for it to be “very challenging”.

While manufacturers have launched increasingly autonomous vehicles, and advanced trials of driverless technology have started this month, industry experts query how and when such a transition will take place. Hammond told the BBC Today programme: “It will happen, I can promise you. It is happening already ... It is going to revolutionise our lives, it is going to revolutionise the way we work. And for some people this will be very challenging.”

He added: “The challenge for us is making sure that the million-odd people in the UK who drive for a living, over the next 10, 20 years or so, as driverless vehicles come in, are able to retrain and re-skill so they can take up the many, many new jobs that this economy will be throwing up.”

Hammond has spent much of the week discussing autonomous vehicles, although a planned ride in a driverless car was ruled out by aides as a potentially unfortunate photo opportunity. However, the budget did little to underpin his words, bar a commitment to legislate for autonomous driving without a human at the wheel – a reform already progressing through parliament in the automated and electric vehicles bill – fuelling some scepticism.

The transport commentator Christian Wolmar, author of Driverless Cars: On A Road To Nowhere, suggested it was a “dead-cat issue” to distract from bigger questions about the budget. “It’s a complete fantasy that we will have any driverless car by 2021 - and moreover why would we want them? What issue is this solving?”

But others working on development say rapid progress will be made in bringing such cars to Britain’s streets. Prof Nick Reed, head of mobility R&D at Bosch, said: “We should be well advanced into testing of automated vehicles by that time - there are further regulatory hurdles, but I believe that is what [Hammond is] committed to address. We’ve seen the move by Waymo in Phoenix to move to trials without a driver in the seat, and so the race is on - that’s the challenge.”

Waymo, a company that started as part of Google, launched tests of fully driverless taxis on the streets of Phoenix, Arizona, this month, and residents are expected to be able to hail them via an app in coming months. Two weeks ago Navya, a French manufacturer, unveiled a new city taxi ready for production with no driving seat, steering wheel or brakes that a human driver could use. Meanwhile, Jaguar Land Rover revealed it was testing self-driving vehicles on public roads in Coventry, albeit with a driver in the front seat – the first traditional UK-built car to run autonomously.

Reed added: “There will be vehicles with automated capabilities for sale in that time frame, no question: Ford are saying vehicles without steering will be available by 2021. It’s just a question of what geographical constraints they can operate in an automated mode.”

Waymo has run tests of fully driverless taxis on the streets of Phoenix, Arizona. Photograph: Waymo

Wolmar argues that questions over how driverless cars will interact with pedestrians and other road users are largely insoluble. “There might be some limited uses in controlled areas like an airport shuttle but the notion that there will ever be a dominance of driverless cars in the centre of London is a fantasy that goes with jetpacks and rockets to Sydney. Politicians are in great danger of swallowing this idea. It’s not going to happen.”

A widespread motor industry view is that car technology is ahead of both the wider infrastructure and both the legal and insurance frameworks surrounding it. The National Infrastructure Commission launched an innovation prize alongside the budget to consider how roads should be built and developed now to prepare for autonomous cars.

Charlie Henderson, roads expert at PA Consulting Group, believes that such vehicles will not be a common sight for 10 years or more, and that time could be needed to address infrastructure. “Manufacturers are designing AVs on the assumption that roads are in good condition – with clear lane markings, unobscured signs and signals, and good quality surfaces. But we all know that’s not the reality.”

Matthew Channon, a law lecturer at Exeter University specialising in driverless cars, said the impending legislation still had gaps and said a lot of clarification was needed. “What are they doing in terms of liability about hacking? How do they regulate and compensate? But the biggest issue is public perception of what vehicles can do.” Channon believes driverless vehicles will be on the roads by 2021, but not in regular public use.

Reed concurs that issues remain: “We still need to learn a huge amount about how the vehicles respond to complex situations. Where roads are predictable, evidence shows vehicles can handle that task. Roundabouts and busy urban environments are still challenging. But the programmes and trials are helping us achieve that.”

Artificial intelligence is being developed to help cars understand human gestures and intentions. Trials and research conducted by Reed and others at Greenwich have included driverless vehicles in action – pods carrying passengers on fixed routes, and delivery robots on the streets – but also Land Rovers driven by humans with a computer shadowing their movements, to detect and emulate the interactions in normal traffic.

Reed said: “I think we will be able to overcome the challenges. We’re not just replacing cars with driverless cars in the future – it’s about creating new mobility systems to get around our cities and country in the future.”