Scrappage Scheme – the Government makes a profit!

The Government makes a profit of £300 for every car sold under the UK Scrappage Scheme

Two Scrappage scheme stories in the same day – and there’s us trying our best to avoid thinking about this shoddy little sop to the car industry’s problems. Never mind, it’s our job!

We shouldn’t be surprised, considering one of the main politicians involved with the scheme was that ‘National Treasure’ Lord ‘Mandy’ Mandelson, but it seems that our complaint that the Government was giving nothing to the industry by making car makers stump-up half the cost of the Scrappage allowance is even more galling than we thought. The Government is actually making money from the scheme.

Which Car? have been crunching some numbers and have concluded, very fairly, that when you add up the tax on a car the Government comes out on top. If you take the average price of a car at £10k, that yields £1300 of VAT. The Government has stumped up £300 million of our money as its contribution to the scheme, which equates to subsidies on 300,000 cars. If you multiply the £1300 VAT by 300,000 you get £390 million. Ergo the Government makes £90 million out of Scrappage. Which equates to £300 for every car sold under the scheme.

Now I suppose we shouldn’t complain at the Government making money on anything. After all, they seem capable normally of only losing vast chunks of our money (through M.P.s expenses, bank bailouts, NHS funding black holes etc., etc. , etc.), not coming out on top. But when it really matters; when an industry is in crisis in a big part due to the ineptness of the Government, it seems pretty shoddy to profit from a scheme that purports to help the industry.

Still, what do we expect?