A HALF a billion pound down payment on electric and driverless cars has been announced as part of the Budget.

Chancellor Philip Hammond insisted “our future vehicles will be driverless, but they will be electric first” as he laid out his spending plans.

Meanwhile, a tax increase on new diesel cars was among a series of measures aimed at persuading drivers to switch to cleaner vehicles.

Mr Hammond told MPs: “There is perhaps no technology as symbolic of the revolution gathering pace around us as driverless vehicles.”

He revealed plans for a new £400 million fund devoted to the roll-out of charging points.

Sketch: How Fun-time Phil sugared the pill in a taxing budget

And he pledged an extra £100 million in plug-in car grants, which reduce the cost of buying electric vehicles by up to £4,500, as well as £40 million in related research and development.

He added: “I can confirm today that we will clarify the law so that people who charge their electric vehicles at work will not face a benefit-in-kind charge from next year.

“The tax system can play an important role in protecting our environment. We owe it to our children that the air they breathe is clean.”

Mr Hammond previously said "fully driverless cars" could be on UK roads within four years.

Delivering the Budget, he said vehicle excise duty (VED) would be hiked for new diesel cars failing to meet upcoming emissions standards.

VED is based on a vehicle's CO2 emissions and the cost for the first 12 months ranges from zero to £2,000.

The rate increase being introduced on April 1 will range from £20 for a Ford Fiesta, the UK's most popular new car, to £500 for a luxury Porsche Cayenne.

Sketch: How Fun-time Phil sugared the pill in a taxing budget

To avoid their customers being affected by the policy, manufacturers must ensure their cars meet tougher real world emissions standards which are being introduced in January 2020.

The existing diesel supplement in company car tax is also going up by one percentage point.

The changes to tax rules will pay for a £220 million clean air fund enabling local authorities to support projects to improve air quality.

Matthew Channon, an expert in motor insurance and driverless cars at the University of Exeter Law School, said it was “welcome news” that driverless cars would soon be on the roads.

He added: “Most car accidents are due to human error. But the software has to be fit for purpose and so cannot be rushed, so it is reliable and to prevent mass-hacking.

“Manufacturers now need to work together and share best practice, with particular detail paid to technology linking these vehicles.

“There is a danger that if one car is hacked, many could be affected if they are linked.

“The insurance regime needs to address all eventualities, including the danger of hacking.”

Sketch: How Fun-time Phil sugared the pill in a taxing budget

But Patrick Harvie, co-convener of the Scottish Greens, insisted “support for self-driving cars is likely to benefit the wealthiest people while public transport fares keep rising”.

Meanwhile, Mike Hawes, chief executive of trade body the Society of Motor Manufacturers and Traders, warned that car builders would not be able to meet the requirements to avoid the VED hike.

He said: "It's unrealistic to think that we can fast-track the introduction of the next generation of clean diesel technology, which takes years to develop, in just four months.

"This Budget will also do nothing to remove the oldest, most polluting vehicles from our roads in the coming years."

Mr Hammond decided against increasing fuel duty, which has been held at existing levels since March 2011.

The total cost of diesel reached its highest level in almost three years this week, with average forecourt prices across the UK hitting £1.23 per litre.

AA president Edmund King said any increase in fuel duty would have "hampered small and medium businesses as well as ordinary drivers".

The Government said it will make "world leading changes to the regulatory framework" such as setting out how such vehicles can be tested without a human safety operator.

The National Infrastructure Commission will also launch a new innovation prize to determine how future road building should adapt to support self-driving cars.

Sketch: How Fun-time Phil sugared the pill in a taxing budget

RAC head of external affairs Peter Williams said: "Driverless cars are coming but more than a third of drivers we spoke to told us that they would rather see the Government invest in improving the UK's existing road network."

Paul Morozzo, clean air campaigner at Greenpeace, said investment in electric vehicles was “welcome” but more needed to be done.

He added: “Investing more now means the UK could secure a leading share in the burgeoning electric vehicle technology market, bringing the UK revenue and skilled jobs.

“But if the government wants its piece of the cake, it will need to work harder. That means more investment in electric and a much shorter timeframe on phasing out diesel vehicle sales.”