The RAC Foundation has welcomed Chancellor Gordon Brown’s budget increase for transport from £10.4bn this year to £12.8bn in 2008 - but warns that much more is needed to deliver an effective transport system.

The major proportion of this increase should be spent on roads as since they carry 92% of passengers and 64% of freight.

Commenting on the spending review, David Holmes, chairman of the RAC Foundation, says: "The funding for roads needs to be increased so that the Chancellor can stick to his promise of not returning to the old stop-go in spending which left hundreds of road schemes never completed and many towns and villages without bypasses. We look forward to the Transport Secretary’s review of the 10-year plan which should outline plans for improving the road network.

"If the UK is the fourth largest economy in the world surely we can afford to invest in an efficient road system to provide for the 92% of passengers travel and 64% of freight that travels by road. “Even if road pricing is introduced on a wider scale in the future this would in no sense be an alternative to creating the extra road capacity that is necessary to meet rising demand.

"Roads can be designed and built in ways which avoid damaging the environment, for example, using tunnels. This costs more but would be money well spent.

"The review of the 10 year plan will only produce positive results if it is backed up by real increases in expenditure. "

Brown made the announcement on transport spending on Monday in the House of Commons.

The RAC Foundation is concerned money might be taken from the roads budget to continue to pay for the soaring costs of running the railways. The Government has already committed to increase investment in rail by 48% over five years.