Shall We Scrap the Banger Today, Darling?

However, questions have been raised about the value of investing tax-payers’ money in such a scheme, since many of the additional new cars sold through it will have been imported, while the vehicles to be scrapped must prove their roadworthiness to qualify; only those in possession of an MOT certificate will be able to claim money off a new purchase. Of course, without this latter measure, it is easy to see a loophole developing, through which opportunists may profit by buying an old car with the sole intention of using it to claim money off a new purchase. While these concerns are worth addressing, it would take a hardened cynic to foresee no boost at all for new car sales in the UK as a result of these plans.

Among critics of the scheme is The Automobile Association, which has been quick to point out the links between the “bangers for cash” scheme’s cost to the government of £300 million and the rise in fuel duty of two pence per litre in September 2009, along with yearly incremental rises of 1p over inflation until 2013. They believe it is a case of giving with one hand and taking with the other, suggests president Edmund King: “motorists will be furious that Mr Darling has landed a fuel duty bombshell to pay for it. In petrol alone, the UK consumes 64.5 million litres a day. A 2p rise in prices produces £1.3 million extra tax per day or nearly £475 million over a year. So petrol sales alone will more than pay for scrappage.”

Environmental groups are also unhappy that the scheme will not force motorists taking up the offer to purchase more ecologically-friendly, less polluting cars, with the money instead available on all new cars. This is perhaps the most compelling evidence that the scheme is less environmentally focused, and more concerned with the provision of business stimulus for the ailing motor trade. Business secretary Peter Mandelson has called the scheme, “targeted action with a capped budget and for a limited time, designed to boost the whole motor trade.” He suggested that the plan has been designed to balance other areas of the auto business, such as repairs and the second hand market: “The car sector is under huge pressure at the moment and the government is determined it remains a very important part of our manufacturing base. It invests heavily in research and development, supports highly skilled workers and a wider supply chain. These are vital to our future manufacturing and retail success.” More reaction to follow…