England will have a dedicated Roads Fund using ring-fenced money coming directly from vehicle excise duty (VED) to protect the nation's crumbling highways network, chancellor George Osborne announced today.

Mr Osborne said the money would help fund a ‘long-term solution' to fixing Britain's poor roads, which have at least a £12bn repair backlog in the local sector in England and Wales.

He said: ‘From the end of this decade, every single penny raised in VED in England will go into that [roads] fund to pay for the sustained investment our roads so badly need.

‘Tax paid on people's cars will be used to improve the roads they drive on. 

‘It is a major reform to improve the infrastructure and productivity of our economy – and deliver a fairer tax system for the motorist.'

From 2017 a new VED banding system will also be introduced to address the issue of falling receipts from fuel-efficient cars.

Transport for the North will be put on a statutory footing, with £30m handed to the new body to help support its work in bringing integrated Oyster-style ticketing to the region.

The Government will also consult on extending the deadline for new cars and motorbikes to have their first MoT test from three to four years, which, he claimed, would save motorists more than £100m a year.