CBI calls for scrappage scheme to help car industry as controversy continues to rage
Mon 23 March 2009
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The CBI has called on the Government to introduce a scrappage incentive scheme to support the motor industry in the Budget on 22 April. Meanwhile, the House of Commons Business and Enterprise Committee will examine the Government’s Automotive Assistance Programme (AAP) including the proposed scrappage scheme.
The proposals, however, have been criticised by environmental groups and academics.
Professor Garel Rhys (reported in The Times) said that a scrappage scheme would encourage the purchase of vehicles from elsewhere in Europe but would do little to protect British jobs. He said that only 4 per cent of cars bought under a scrappage scheme would be made in Britain. He said that 78 per cent of cars made in the UK are exported and 86 per cent of cars bought here are imported.
Professor Rhys was also reported as saying that the potential benefit of a scrappage scheme to the British car industry was further eroded by the absence of small, cheap models made in this country.
In a scathing attack on the scrappage proposals, the environmentalist George Monbiot wrote that the scheme would not be a cost-effective way to cut carbon emissions. He wrote: “Scrappage schemes are nothing but handouts for car firms, resprayed green to fool the incautious buyer.”
In a response to Monbiot, Paul Everitt, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT) said that "the British motor industry has been transformed over the last decade, with cleaner technology at its heart". He pointed to the record decline in new car CO2 emissions over the last year. (See related story)
The Brussels-based environmental transport group T&E said (reported by ENDS) that the expected endorsement of financial incentives to scrap old cars would "do little for the environment" and could "even be harmful".
The CBI’s letter to the Treaury said a broad scrappage scheme: “would encourage the replacement of old inefficient vehicles and domestic appliances with the latest efficient models, bringing forward consumer and business spending and helping to reduce carbon emissions”.
According to The Times, the Treasury doubts the benefits of BERR’s proposals on scrappage but is under pressure to approve them because the Government thinks it would be popular with motorists.
Meanwhile, Germany is set to renew its own scrappage scheme which has been credited with stimulating vehicle sales in the country. The Guardian says that the news puts added pressure on the UK Government to adopt a similar scheme
At the European level, industry ministers meeting in Brussels backed draft recommendations to improve the financial situation of beleaguered carmakers but rejected a call for a pause in new legislative proposals for vehicles.
The ministers also endorsed the Commission's proposals for a coordinated framework for car scrappage schemes.
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