Lobby group says scheme would cost Exchequer £500m
23 March 2009

The UK's largest business organisation, the Confederation of British Industry (CBI), has joined calls to introduce a scrappage scheme for older cars to help kick start the economy, saying that the cost to the government would be outweighed by the benefits.

The proposed scheme could involve drivers of cars over nine years old being offered a £2000 incentive towards a new or nearly new car when they scrap their old one.

There has been growing support for the scheme recently, with both Ford and the SMMT calling for its implementation.

Read more on the growing support for the scrappage scheme

The CBI said today that a scrappage plan would cost the Exchequer around £500m, although it believes this is good value for the potential benefits.

However, in the same Budget submission the lobby group said the government should avoid any further costly fiscal stimuli.

In a statement the CBI said: “The short-term effectiveness of any plausibly affordable fiscal package must be doubtful, while the long term costs would be very real.”

A spokesman said the danger was in multi-billion pound fiscal stimulus projects, but that a scrappage scheme would be a “scaled-down, targeted activity that is beneficial for keeping people in their jobs”.

He added that the financial benefits would far outweigh the initial spending to set up the scheme.

Supporters of scrappage schemes say that similar systems have been successful in other parts of Europe.

Germany says it has reduced the decline of new car sales to half that of the UK by offering drivers £2200 to trade in their old cars.

Last week the SMMT revealed that UK car production fell 59% year-on-year in February.

Read more on the UK's car production figures

John Cridland, CBI deputy director general, said: "Scrappage schemes, at a relatively modest exchequer cost, would encourage consumers and businesses to replace old inefficient cars and vans, fridges and washing machines with the latest efficient models.

"Not only would this bring forward consumer and business spending, it would also help reduce carbon emissions."

Ollie Stallwood

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week

  • Jaguar E-Pace 2018 review hero front
    Car review
    20 April 2018
    Can Jaguar’s compact SUV bring flair and dynamic polish to a fast-growing class?
  • Audi TT RS Coupé
    First Drive
    20 April 2018
    The Audi TT RS has the looks, a vociferous engine and the supercar-baiting performance, but is it too uncompromising to use as a daily driver?
  • Lamborghini Urus review 2018 hero front
    First Drive
    19 April 2018
    The supercar maker's new 4x4 is massively capable wherever it goes, while being extremely conspicuous and costly while it does it
  • Skoda Kodiaq
    First Drive
    19 April 2018
    High-spec seven-seater Kodiaq begins its family life with a lot to prove — for Skoda and SUVs
  • Ford Focus RS Race Red Edition front
    First Drive
    18 April 2018
    Ford drafts in some tasty extras for this limited-run Focus RS swansong edition