Government introduces scrappage scheme to boost car industry
Thu 23 April 2009
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Motorists are to be offered £2,000 towards a new car or van if they own a vehicle over 10 years old and trade it in for scrap. The plans, unveiled in the Budget and detailed in a later announcement by BERR, involve a Government subsidy of £1,000 towards the scrappage of older vehicles with £1,000 matched funding from industry. The Government has set aside £300m for the scheme.
BERR's press release said: "The decision to implement a scrappage scheme has been taken after careful consideration of car industry proposals, lessons learnt from European schemes as well as concerns raised about the impact of such a scheme on other sectors of the economy".
The Government says that the scheme will operate from mid-May until March 2010 or until the Government funding has been used up. As well as cars that are 10 years old or older, the scheme applies to commercial vans (up to 3.5 tonnes).
While the Government says it hopes that the scrappage scheme will boost sales of low carbon cars, there were no 'green strings' attached to the measure. The Government acknowledged that the move was motivated primarily by the need to support the motor industry through a difficult period.
The Society of Motor Manufacturers and Traders which had been actively campaigning for the introduction of the scrappage scheme welcomed the Chancellor's announcement. The SMMT chief executive Paul Everitt said, “This is good news for consumers and will get people back into showrooms, kick-starting demand in the market. The scheme recognises the economic value of the motor industry and we are determined to make it a success.”
The Brussels-based environment group T&E are, however, scathing about the scrappage schemes which have been introduced in at least twelve countries in Europe. In a letter to the Financial Times, T&E Director Jos Dings wrote: "The wildly popular German subsidy scheme doesn't even differentiate (between high and low carbon vehicles). That means a motorist who scraps a 1999 Volkswagen Lupo TDi 3L, the most fuel-efficient car ever mass-produced in Europe (81g CO 2 per km) and buys a 2009 Porsche Cayenne Turbo (358g/km) would still receive the full taxpayer-funded payment."
"Even if the hand-outs were designed to encourage owners of old gas guzzlers to trade in for a fuel sipper, that just rewards those who were irresponsible in the past."
A straw poll currently running on the LowCVP website home page since March asked the question: "Should any car scrappage scheme include the requirement to purchase a 'greener' car?". About 95% of respondents to the poll have so far answered 'yes' (at 29 April).
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