Budget 2009: How it will affect the motor industry
Motorists are to be offered a £2,000 incentive to scrap an old car and replace it with a new one, under plans unveiled today by Chancellor Alistair Darling as part of his Budget for 2009.
The car scrappage scheme incentive worth £2,000 will apply for cars for aged 10-years or older, made up of £1,000 from the government and £1,000 from the relevant car manufacturers. The scheme is dependent on the voluntary participation of car manufacturers, Citroen is believed to be the first to confirm that they will be taking part.
The total fund for the scheme comes to £300million from the government, with the scheme expected to be introduced in mid-May. The scheme will then run until the start of March 2010, or until all of the government funding has been used.
The discount will be offered to consumers buying a new vehicle to replace a vehicle which they have owned for at least twelve months, they must also be the registered keeper with a UK address. Eligible vehicles must have been first registered in the UK on or before 31 July 1999 and have a current MOT test certificate.
Controversially, the scrappage scheme will not include a cap on the CO2 emissions of the new vehicles eligible, infuriating green groups. The Environmental Transport Association (ETA) spoke out against the scheme;
“To describe this scrappage scheme as environmentally friendly is not just greenwash, it is hogwash. Many 10-year-old-cars have plenty of life left in them, so from a climate perspective, to scrap them is money poured down the drain” said Director of ETA, Andrew Davis said.
The scheme will also apply to commercial vans (up to 3.5 tonnes). Additionally scrappage trade-ins can only be made against new cars despite calls from industry bodies to support green nearly new cars as well. But some trade bodies supported the move, the Society of Motor Manufacturers and Traders’ (SMMT) chief executive Paul Everitt said: “This is good news for consumers and will get people back into showrooms, kick-starting demand in the market. The scheme recognises the economic value of the motor industry and we are determined to make it a success. There is clearly a great deal to do and we look forward to discussing the finer detail of the proposal with government in the coming days.”
In other news the first year capital allowance will be doubled to 40 per cent, encouraging businesses to make capital investments. Meanwhile £375 million is to invested to support energy and resource efficiency in businesses, public buildings and households over the next two years, and £70 million for decentralised small-scale and community low-carbon energy. The investment into energy efficiency is part of the government’s first carbon budgets, a legally binding level of 34 per cent reduction in emissions by 2020, this includes a target of 15 per cent of electricity production from renewable sources.
Additionally the Chancellor confirmed a 2 pence per litre rise in fuel duty from September and the reintroduction of the fuel duty escalator in 2010.
Today’s decision to increase fuel could be the death knell for parts of the logistics sector, Freight Transport Association (FTA) warned.
James Hookham, Policy Director for FTA, said: “The logistics sector is the lifeblood of the UK economy, and rather than the transfusion we need, Alistair Darling has turned Dracula. Insolvency in the logistics sector has doubled in the last year and the number of HGV drivers looking for work has almost quadrupled. What more evidence does the Government need that parts of the sector are on their knees?”
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