UK Car Scrappage scheme gets green light?

Mandy said NO to scrappage, but it looks like Alistair Darling will introduce a scheme in the next budget

After much to-ing and fro-ing, it has been claimed by most of the UK national press over the weekend that a UK version of the Car Scrappage Scheme will be introduced in the budget by Alistair Darling.

The scheme aims to offer new car buyers a guaranteed trade-in against a new, cleaner car of £2,000. But it is being suggested that the Government will insist that car manufacturers chip in half this money, with the tax payer paying the other half. Can’t see any car maker objecting to that – after all, they’re all throwing at least a £1,000 at a new car deal at the moment.

But will it work? Well, I suppose in the purest sense it might, in that it might encourage owners of old cars to trade in for a new one. But I foresee a number of problems. Firstly, how many drivers of almost decade old cars would actually go out and buy a new car? If you’re driving a car that old, you’re not exactly the normal profile of a new car buyer.

And what about the credit issue? The only people getting credit at the moment are the squeaky clean with a good credit record. If you’re already driving an old car, what are the chances you’ll either have that squeaky clean credit rating or even any credit history? Not high, I would imagine.

But what of used cars that don’t quite fit in to the ‘Over 9 years old’ are whatever arbitrary age our rulers decide? What will happen to the price of used cars that are 6, 7 or 8 years old? I’d suggest they’d be worth nothing at all. And there will suddenly be a big market for used cars that qualify. Which will distort the market completely. If this scheme comes in I can see owners of 9 year old cars sticking them up for sale at £1500 to be bought by people intending to buy a new car anyway. Having got way over the odds for their old banger they’ll then go out and buy a 6 year old car for £500, trousering £1,000 on the way. And still be driving an old car!

Governments and business don’t mix. Spend money on revitalising the availability of credit facilities for all, instead of distorting the market with unworkable incentives