After a weekend of contradictory reports in the press, it seems that a ‘scrappage’ scheme will find its way into the budget, on the 22 April.
The best indication at the time of writing is that the Government will hand over £2000 in vouchers towards replacing a car over nine years old.
A similar scheme has put a rocket under the ailing German new car market. But there have been reports in the last few days that the Treasury was putting a roadblock in the way of the idea.
The chancellor has a pretty onerous task in the budget. The significant collapse in tax revenue (some bright spark seemed to be betting that the record tax take of the middle of decade take would never end) has put the government under pressure to start saving serious money.
It’s estimated that the scheme could cost £160m, if 250,000 drivers decide to upgrade their cars. So it may be that the government (aka, the taxpayer) will not shoulder the whole bill. The car industry might also have to make a contribution.
The main argument against the scrappage scheme is that most of cars bought would be imported. True, but then the whole of the retail chain would benefit, from dealers in spares through to car transporters, as well as UK-based component suppliers. We’d also see some of most polluting (that’s pollution, not Co2) cars run off the road.
My guess is that the plan will go ahead and that the demand will overwhelm whoever administers the UK’s first scrappage scheme.
In Germany, it was thought that up to 600,000 cars would be traded in that country’s scrappage scheme. In fact, new car sales are now at their highest level for 10 years and the scheme is being extended to fund the purchase of up to 2 million new cars.
My fear is that Britain’s legendary administrative ineptness (collecting and storing the old cars, for one) will be the scrappage scheme’s biggest problem.