Should The UK’s car Scrappage Scheme be Reintroduced?
Introduced in 2009 as part of Alistar Darling’s April budget, the original car scrappage scheme facilitated the sale of a whopping 330,000 new cars. Despite its undeniable success the scheme came to a close in March 2010, following a short extension. However, there was serious talk of its reintroduction in December 2012 and now in 2016 MPs and campaigners have joined forces to call for the formation of a whole new scrappage scheme, albeit it in diesel only form.
The reignited scrappage debate is fueled by the fear that Ministers are contemplating a hike in taxes for drivers of diesel cars in a bid to reduce emissions. It’s something that the RAC and Fair Fuel UK claim would be unfair given the fact that previous UK Governments had publicly encouraged private individuals and businesses to to trade in their petrol vehicles, which subsequently led to many buying diesel alternatives. Because of this, it’s argued that the formation of a new scrappage scheme would be a much fairer way to cut emissions.
Howard Cox from Fair Fuel UK, accused the Treasury of attempting to “fleece” hardworking people.
Meanwhile, Dale Gillespie from www.jenningsmotorgroup.co.uk said: “I think there’s a particularly strong argument for the introduction of a new scrappage scheme. However, in order to tackle emissions across the board, I’m not convinced it should be diesel only”.
However, tax hikes and emissions aside, there are countless other reasons why the Government should consider the reintroduction of a scrappage scheme:
Increased revenues from VAT
The scrappage scheme of 2009 came to an end a whopping 330,000 cars had be bought through it and with the average new car priced of £9,000 and a VAT rate of 15%, this meant that even after forking out £1,000 a time, the Government waled away with a profit of £350 per car. The present day rate is 20%, which in theory means even more profit should a new scrappage scheme be introduced.
Additional support for the UK’s booming automotive sector
According to the SMMT, UK personal new car registrations are continuing to rise, but at a slower pace. With this in mind, a new scrappage scheme could ensure the longevity of this upward trend for new car registrations.
After all, the industry employs tens of thousands of people and many of who’m are reliant on the continuation of this upward trend. As further slowing or even a drop in demand could have massive implications for the industry.
Old and potentially dangerous cars taken off the road
The original car scrappage scheme was only open to people who scrapped a car that was ten or more years old and the reality is that this helped bring some fairly old and potentially dangerous cars of the road.
At this stage it’s not clear what the rules around car age might be if a new diesel only scrappage scheme is introduced, but if a similar rule applies, it could once again help to bring some of those older cars off the road.
The hybrid/electric question?
In order to draw the maximum possible environmental benefits from the scheme some have suggested that it only be made available to those who trade in their diesel car for an all-electric or hybrid replacement.
However, there are already grants in place for alternative fueled cars so this would have to be closely looked at. Also, there’s the question of whether such a restriction would put many people off taking part in a new scrappage scheme.