Budget row over 2K payout to scrap a car

bo_drinker

Budget row over £2,000 payout to scrap a car



Suzy Jagger, Politics and Business Correspondent, and Francis Elliott, Deputy Political Editor


div#related-article-links p a, div#related-article-links p a:visited {color:#06c;}The Treasury is blocking plans to give motorists £2,000 towards the cost of a new car, The Times has learnt.
The decision is a huge blow to Lord Mandelson, the Business Secretary, who has staked his reputation on rescuing the beleaguered car industry. It has caused a deep rift between Lord Mandelson and Alistair Darling, damaging relations between two government departments at the centre of efforts to lift Britain out of recession.
Lord Mandelson wants the Chancellor to make his scrappage scheme the centrepiece of the Budget on April 22. However, Mr Darling and some Treasury officials have expressed deep anxieties about the cost and terms of the programme, which would encourage drivers to scrap old vehicles for new, cleaner cars. It would also give the motor industry a sales boost.
Under Lord Mandelson’s plan, motorists who owned cars more than nine years old would scrap their vehicle and obtain a certificate. This could be presented at any car dealership in Britain to claim a £2,000 discount on the price of a new car or one less than a year old. The scheme is based on one in Germany that has been hailed as a huge success.
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The deadlock is a sign of growing differences between the Treasury and Lord Mandelson’s Department for Business, Enterprise and Regulatory Reform and is likely to reinforce the perception that Lord Mandelson is a potentially divisive force within the Labour Party.
He has already expressed publicly his frustration at the speed with which the Treasury is addressing the crisis facing the car industry. In private, he has also let his increasing irritation with Mr Darling and the Treasury be known. According to officials, the Business Secretary has been heard to openly ask: “When was the last time we had a successful Budget?”
The Society of Motor Manufacturers and Traders (SMMT), which represents the motor industry, handed its scrappage proposal to Lord Mandelson in February. There has been no formal response from the Treasury, which must sign off the programme. Officials are understood to be concerned that the scheme will prove expensive to implement and that drivers will spend most of the money on imported vehicles.
The SMMT has blamed part of last month’s 30 per cent fall in new car sales on uncertainty about scrappage. A spokesman said: “Motorists have held off from buying a new car until they know whether the scheme is going to happen. You wouldn’t buy a car today if you thought you could get £2,000 off in a few weeks.”
March and September, when new car registrations are released, are traditionally the busiest months for new car sales. It is estimated that the British car industry supports about 800,000 jobs, including car factory workers, mechanics and salesmen.

sabretoothtigger

9 years old covers alot of good working cars, it should probably be weighted towards larger engine cars or people will be scrapping 50mpg low polluting cars and it'll officially make very little sense

I saw an offer for 5 year 0% apr interest the other day

jamespmg44

The scrappage scheme will just be like the VAT cut - utterly pointless. Will they tie in terms that you only get the discount on a UK built car?!?

Anyone I know who has a decent working car is not in any mood to take on a large amount of debt to swap it for a shiney new one.

1984ReturnsForReal_2

jamespmg44 wrote: »

The scrappage scheme will just be like the VAT cut - utterly pointless. Will they tie in terms that you only get the discount on a UK built car?!?

Anyone I know who has a decent working car is not in any mood to take on a large amount of debt to swap it for a shiney new one.

It cuts out business bought cars.

A VAT cut would be much more sensible or a rebate on all cars bought.

But either way its still subsidising inflated autoworkers wages...

mrstinchcombe

This was a stupid idea and always a non starter.

The kind of cars you scrap are old cars that have run the course of their life, the kind of people that have these cars wont go from owning a "shed" to a brand new car. If they could afford a new car less £2k then they wouldn't have a car fit for the scrap heap in the first place.

People that buy brand new cars probably buy new or nearly new every few years, they dont keep cars to the end of their lifetime

Cat695

I just hope that Labour finally see the light and not give this the go ahead.....it could be the last (well only) thing they do right by scraping the idea.

I bet that IF this comes in the dealers will raise their prices......

dealsearcher

Stupid idea. People aren't buying cars at he moment.

Maybe it will encourage them? Some may ask.

Well how does that work? I have a crap old car because I can't afford a new one. I'm offered £2,000 to scrap it to buy a new car that I still can't afford.

... and as has already been pointed out the dealers will put up their prices anyway. They already are because of the strength of the euro.

Andrew64

Several commentators that I've read have pointed out that it won't have much impact in Britain, because the cars people would buy are not made here or if they are, are not owned by British companies! In Germany, most cars bought under their scheme are actually made in Germany (VW etc) or at least made by a German-owned company abroad (Skoda).

However, I think that the people who take advantage of schemes like this are planning to buy a new car in the near future anyway. I wouldn't be surprised if sales in Germany totally collapse next year because everyone who's going to buy a car has done so. Although, don't be surprised if it is discontinued right after their general election in September!!

I've just found an article on this very issue from a few weeks back:

http://www.timesonline.co.uk/tol/news/politics/article5927095.ece

Graham_Devon

The main problem with this is basically people who run these older cars, are less likely to have the cash in the bank, or the affordability to take on a loan for a few grand. It's like telling a first time buyer with no deposit on a house, they will pay 20% of their mortgage if they go buy a house. Thats fine, but they wouldnt be able to get the mortgage in the first place! This is no different.

Out of all the people I know, I think there is one person who runs around in an M reg BMW, simply because he lways runs his cars into the ground, and he hasn't had that many. He's a GP and really is extremely tight in every single way possible, apart from going on holiday where he does spend a lot of money to enjoy the time.

The rest of the people I can see and know run the car they can afford to run, or, on the other hand, are indebted up to the eyeballs with car payments. I really don't know anyone else apart from that one GP who runs an old car around when they can afford something better, and more importantly, someone who runs an old car around, who wants a new car, can afford this new car, but simply hasn't bought this new car!

My best mate runnnig a V reg car would qualify for this. The reason he runs a V reg car is because he doesnt have the money or the means to get a loan to get something better. So he would qualify, thats great, but doesnt have the means to get another 5k on top to buy a new car.

Add to that the fact that he ejoys a bigger car and he wouldn't buy a super mini anyway, it's just not suitable, so he would need to find say 9k to get an 11k saloon, which is at the bottom of the saloon market.

The only people this will actually suit is people like the GP above, people who have cash in the bank but run their cars for a lot longer and has no interest at all in cars. Therefore, their lack of interest means they aint bothered really as to what they drive, which means they are highly unlikely to go buy a new one and spend a load of cash to "save" 2k.

Personally, I hope it goes through. Only so that it's another stupid labour policy shown as just that.

I find it seriously amusing however that in March 2008 people were flocking to get rid of their cars because the government were pricing us out through road tax and forecourt tax. Now, they are trying to give us money to buy new cars.

Rochdale_Pioneers

They are targeting the wrong end of the market - if you have a 9 year old car you're unlikely to be in the market for a new one.

Two problems with the car market at the moment - unemployment and fear thereof, and lack of credit. Offer to guarantee manufacturer finance deals at 0% and things might get moving.

Graham_Devon

I have just seen something I didn't know. You will get a certficate, which you can give to any main dealer and buy a new car or one under one year old.

What could work, is using this certificate to buy any car under 3 years old. You could then go to car supermarkets in this country and use your 2k there. Thousands more could then use the scheme, and the money would be kept in the UK, instead of going to france, germany, russia etc.

Theres probably a thousand problems associated with that though that I haven't thought of!

Personally though, I think using it for cars up to 3 years old, would do wonders for getting this money circulating around the UK. Not sure if it would actually be needed though, I'm just thinking of the best use of the money should it go ahead.