Tuesday, April 07, 2009

 

Betting must be on a British 'Scrappage' System in the Budget

After the news today that new car sales have fallen by nearly a third year on year, I'd say the chances are the budget will announce a 'scrappage' scheme for the UK. Scrappage? It's a system whereby the government subsidises consumers by a grand or more to encourage them to buy a new car; it's a bit like sweetening part-exchange deals. The aim of the scheme is to stimulate the ailing car industry which employs so many thousands both directly and indirectly.

Will it work? Well, it's been adopted by Germany, France, Spain, Italy, Austria, Portugal, Greece and Romania where upwards of a 1000 euros have been given to each 'new for old' consumer. In the first four countries mentioned car sales have risen with varying degrees of sharpness this spring; in Germany the increase has been over 25% year on year. So it works, everyone else seems to be doing it; I reckon Alistair is just bound to find it in his bare cupboard when he announces his budget in a couple of weeks time.

Given that the government claws back VAT from such sales, the overall cost is not prohibitive when the potential welfare costs of unemployment are also weighed in the balance. 80% of German consumers have ended up buying small cars so the green objections might not be so influential. But the whole nature of the scheme prompts the question: 'why did give so many billions to the undeserving banks when some people-notably Simon Jenkins- were calling for time limited cash vouchers to be given directly to low income consumers, thus ensuring an instant stimulus?'

Comments:
How will those people who purport to be in favour of green issues and conservation reconcile themselves to this horrendously wasteful proposition?

Why on earth scrap motor cars which are still perfectly serviceable, merely to promote the sale of newer versions?

This is surely consumerism gone mad?

And if it's a good idea, why not encourage MORE waste?

Why not take all that insulation out of the attic and keep the central heating on all night long?

Why not DOUBLE wrap cucumbers in cellophane, so as to keep the plastics industry in business?
 
Mantex
Glad you are worrying about these issues. If you took the green approach you would be delighted with the recession as it reduces use of finite resources and hugely reduces CO2 emissions. But capitalism is based on people producing to get money and spending it to keep others in work. If we all did nothing there would be perfect 'green' conditions but how would we eat, get shelter and look after our kids? If we accept the need for a capitalist economy- for all I know you might even be a Marxist?- then we need to have some sort of economic activity. Scrappage stimulates the becalmed economy so seems desirable. It is also 'green' in that new cars are more efficient but even 'grerener' would be no cars at all. I suspect all those people who own posh cars-BMWs, Mercs- would not like this too much.
 
Hi Skipper,
If this is implemented it would help the sales of Audis, VW's & Mercs or maybe Citroens, Renaults or Peugeots, perhaps Fiats or Skodas ... then again people could buy great British cars, Hondas, Toyotas or Nissans, perhaps Jags & Range Rovers that, I'm sure, will make the green lobby orgasmic!!!
No - put money into public transport, enhance the income of the low paid, purchase & refurbish empty housing stock.
The countries that have benefitted from this initiative also have populations that are largely patriotic in terms of their choice of cars so the money will help out their car industries. If there is a scrappage plan then it should only apply to 'made in the UK' products - this I'm sure would be illegal!!
 
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