Chancellor announces driverless cars will be allowed on Britain's roads next year

Driverless cars will be tested out on Britain's roads in 2016 Credit: Rui Vieira / PA

The Chancellor has announced driverless cars will be allowed on Britain's motorways next year.

George Osborne said the vehicles could lead to the most "fundamental" change to transport since the invention of the petrol engine.

In a trial run, test drives will begin on a small number of local roads within months before pilots on motorways to assess safety are carried out in 2016.

The move will be set out in next week's Budget, and the Chancellor argues it could boost the economy and put the country at the forefront of the new technology.

George Osborne says driverless cars could boost UK jobs and productivity Credit: PA

Proposals removing regulations that prevent autonomous driving are expected to be brought forward this summer that would allow driverless cars to take to the roads by 2020.

Engineers suggest that driverless cars, which can alert drivers to accidents and traffic jams, could eventually prevent 95% of crashes, according to the Treasury.

Trials on local roads are expected to be carried out in Bristol, Coventry and Milton Keynes, and Greenwich.

Tests will also be carried out of "truck platooning" on motorways, which would see lorries travel in a tightly-packed convoy that improves fuel consumption by reducing drag.