Driverless cars will be on Britain’s roads by 2021 as a result of sweeping regulatory reforms that will put the UK in the forefront of a post-Brexit technological revolution, Chancellor Philip Hammond will say this week. In his budget on Wednesday Hammond will allow driverless cars to be tested without any human operator inside or outside the car, and without the legal constraints and rules that apply in many other EU nations, and much of the US.

The move – welcomed by the UK motor industry – is part of an attempt by Hammond and the Treasury to project a more upbeat message about the prospects for the UK economy after Brexit, and focus on opportunities as well as the risks. Carmakers have warned that they may have to move at least some production abroad if there is no deal to keep Britain inside the EU single market and customs union, at least for a two-year transition period.

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But Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said it was good news that the government was taking a lead by making the UK attractive to those seeking to develop, test and build an entirely new generation of cars.

He said: “We support government’s measures to make the UK one of the best places in the world to develop, test and sell connected and autonomous vehicles. These vehicles will transform our roads and society, dramatically reducing accidents and saving thousands of lives every year, while adding billions of pounds to the economy. We look forward to continuing industry’s collaboration with government to ensure the UK can be among the first to grasp the benefits of this exciting new technology.”

Lucy Yu, director of public policy at FiveAI, a UK-based leader in self-driving car technology, said: “This news secures the UK’s position as the global leader for self-driving car development and innovation. The government’s commitment to creating a supportive regulatory framework for self-driving vehicles will further our position as a European leader by enabling the development of our technology, and encouraging further investment into the industry as a whole.”



Hammond will say that he is removing the last remaining barrier to the most advanced on-road testing of driverless vehicles. At the same time the Law Commission will set out a new regulatory framework, focusing on liability, so that businesses have the certainty they need for investment.

Facebook Twitter Pinterest Torsten Bell: ‘It’s time for Hammond to be bold, not defensive.’ Photograph: resolutionfoundation.org

Hammond, who is under pressure from business, Labour and many MPs in his own party to provide a clearer vision for the economy as the UK prepares to leave the EU in 2019, will say that he wants to “build a country fit for the future and make the UK a leader in the technological revolution”. He will provide £1bn of new spending for hi-tech projects, including £75m for research on artificial intelligence, £400m for electric car charging points and £100m to boost clean car sales.

Following criticism from many pro-Brexit Tory MPs, who say he has been too gloomy about the country’s prospects, the focus on technological change will mark a major shift in emphasis and tone. Hammond is also expected to make housebuilding a central theme, and to announce at least a partial lifting of the 1% cap on pay rises for public sector workers, including nurses and teachers.

Many Tory MPs also want him to set aside extra money to prepare for the possibility of a “no-deal” Brexit. David Jones, former Brexit minister, said he believed at least £1bn should be set aside. “We will need customs infrastructure right across the country, in the major ports. We will also need extra resources in the shape of customs officers and border officials and we will also need extensive IT.

“We should be doing it anyway for two reasons. It gives certainty to business that we are ready if necessary for a no-deal scenario. Secondly, it will give a strong signal to the European Union that we are making preparations – so they shouldn’t try stringing us along in the hope that we will panic. Philip Hammond really has got to show Britain means business.”

With Hammond also under pressure to pump more into the NHS, and to ease upfront costs for businesses, the Office for Budget Responsibility (OBR) is expected to limit his room for manoeuvre by downgrading the UK’s growth prospects over the next five years. Analysts expect the OBR to follow the Bank of England’s predictions for GDP growth, which were recently revised down to 1.5% for 2017 and 1.7% for the three subsequent years.

Adam Marshall, director general of the British Chambers of Commerce, said the chancellor should abandon rises in business rates planned for next April and pay for this by delaying plans to reduce corporation tax.

Torsten Bell, director of the Resolution Foundation, said it was time for Hammond to be bold, not defensive. “He can start ushering in a new era of housebuilding. By exempting housing investment from his fiscal rules he can avoid the risk of a do-nothing budget with funding for new building, including more affordable housing.”

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