“Incentives are the answer, not taxes,” says Charlie Mullins

Charlie Mullins, founder and MD of Pimlico Plumbers, has more than 100 vehicles running across London. He is delighted about the u-turn.

“Boris’ decision this week is an extremely positive move," he says. "Even though we have a pretty up-to-date fleet, we were facing upgrading a third of our vehicles, which would have cost us over a million pounds!

“In any climate that’s a major cost to business, but during a recession it would have been a terrible hit to take.”

The proposed legislation, due to come into force in October 2010, slapped a £100 charge on all vans and vehicles doing business in the capital in a bid to reduce air pollution.

Sue Terpilowski, Chairman of the FSB’s London policy unit believes that the vehicles that would have been taxed "are not significant contributors to the overall level of air quality in London."

Mullins has a more balanced view: “Obviously cars and vans do put out a lot of pollution," he says. "But in these difficult economic times taxing people off the road is not the answer. It makes no sense to squeeze businesses so hard that some of them will inevitably be forced to go under. And what makes that so stupid is that in a few years they would have upgraded their vehicles anyway.”

So, how can the government encourage SMEs to cut emissions without introducing crippling taxes?

“In France the Government is offering people cash incentives to scrap their old vehicles when they replace them with new ones," says Mullins. "This not only cuts pollution by getting the old bangers off the road, but also boosts the struggling motor industry. Taxes are no good for business – if you want to convince people to act in a certain way incentives are the answer, not taxes.”

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