Lord Mandelson looks set to announce an extension of the Scrappage Scheme
Lord Mandelson looks set to announce an extension to the Scrappage Scheme later today.
- Update: It’s now been confirmed that the Scrappage Scheme has been extended.
The Scrappage Scheme has run out of money and is due to end well short of the original estimated end date in February. But it’s being reported that Lord Mandy will announce later today that the Scrappage Scheme will be extended through to its original end date of February.
All of which sounds like the Government is bending over backwards to help the Motor Industry. But are they?
We ran a report when the Scheme started where we reckoned the Government would make a profit on the Scrappage Scheme. How, you may well ask? On the VAT is the answer. For every car sold under the scheme the Government gets its 15% VAT. And with the average price of a car sold under the scheme it’s clear that the Government has made big profits on the scheme, even when you deduct the £1,000 scrappage allowance (remember, the dealer has to chip in £1,000 as well to make up the £2,000 allowance).
The Scrappage Scheme is nothing but a palliative for the bigger economic issues surrounding car sales. The Government would be better off addressing those, but at least an extension of the scheme will give car dealers and manufacturers breathing space in to 2010. But there is still work to be done on getting lending criteria to a sensible level so people can easily go out and get cars. That would be a big plus, as dealers we’ve spoken to reckon the decline rate on finance proposals is around 50% higher than it was before the crunch hit.
Better than nothing. But not enough.
Michael Cain says
Here on the Isle of Man, we have a small nation that could try out electric cars and our Government is not interested.
We have the highest amount of people per head per population compared to the UK driving very large and high poluting vehicles, yet we are a small nation.
No one here will address it and it has got much worse in the last 10 months
We have 1 in 5 people driving 4×4 type vehicles and that does not include other high polluting luxury cars
The Scrappage allowance should be invested in the UK to create new technolgy cars and to create new jobs.
I heard an Electric car manufacturer in the UK was crying out for funding and not receiving a penny from the UK Government, instead this money is wasted in proping up the Motor Industry in other EU Countries to produce yet more diesel and petrol driven cars.
d says
When I said ‘hundreds of thousands of large and small British businesses’ I meant to say: ‘hundreds of thousands of people working for large and small British businesses’
d says
Why are the government helping the (mainly foreign) car manufacturers to make more money and at the same time scrapping thousands of perfectly good roadworthy (they must have an mot) cars which takes money away from the rest of the motor industry (ie: the hundreds of thousands of large and small British businesses that are involved in maintaining cars and suppling parts for them. Many many times more people are employed in this side of the motor industry than are employed in manufacturing and selling new cars. This just encorages the car manufacturers to continue making cars that are designed to be beyond economical repair for the smallest electronic fault after just a few years. It is an accepted fact that in green terms it is far worse to build a new car and scrap a perfectly usable one than it is to keep an old one on the road. Despite being environmentaly bad, disposable items like razors, pens, nappies etc are accepted because they are small, cheap and convenient. Then we had electrical appliances that nobody excepts to last more than 3 years and millions of non-digital radios and TVs that will be useless in 2012. Now the government are encoraging disposable cars.