Speed limits should be cut to 20 miles an hour in more "sensitive built up areas" in an attempt to cut the number of road accidents and deaths, the transport minister, Kim Howells, said yesterday.

Town halls should show more courage in imposing restrictions, which often bring fury from motorists, he said.

He also indicated that fuel taxes should go no lower. The best way of getting drivers to switch to public transport "probably is to try to tax people out of their cars in the same way as the authorities have tried to tax people off cigarettes", he said, adding: "I think the price of motoring has come down a great deal ... I don't think fuel is particularly expensive in Britain."

But he said higher motoring taxes would create serious problems for people without good transport links "who can't then access hospitals or schools or jobs".

He told the Financial Times that local authorities had the powers to slash speeds "but some of them need to have a bit more courage in applying them where there is a clear road safety benefit".

Mr Howells also indicated that the rail review - due to report in July - would promise a radical overhaul of the railways which could see the rail regulator, Tom Winsor's powers curbed. He said his control over government spending "can't go on".

"We have got to have independent regulation but that independent regulation has got to work within an overall framework where the secretary of state says this year or next year and the year after we can spend x billions on the railway," he said.

Mr Howells has been critical of the arrangement under which Mr Winsor could announce last December that Network Rail would receive £22.2bn over the next five years - a move that forced ministers £7.5bn over budget.