I think a lot of the blame can be laid a the foot of the car industry and consumer. The former will cater to the latter, and wouldn't change it's policies unless encouraged to do so.
Taxation is a blunt instrument, but if you ask people nicely to change their habits, they tend to respond by completely ignoring you. It was only on the insistance of fitting catalytic convertors 17 years ago, that necessitated the improvement of fueling systems in our vehicles, and it is only with pressure that the car industry is now seriously looking into building small, lightweight cars that can run on little fuel. Volkswagen has recently relaunched it's 1L (litre) project, a 21st century bubble car that can do over 200mpg. BMW is seriously looking into making a 21st century Isetta.
IMO, there shouldn't be a new car on the forecourts that can do less than 50mpg.
On the flip side, I think the government should give a decent tax break to new cars that are very efficient e.g. remove the VAT on these vehicles. This would encourage consumers to purchase these types of vehicles, and manufacturers to build them.
Andy