Vehicle scrappage scheme

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The UK Vehicle scrappage scheme (also Vehicle discount scheme and Car Scrappage Scheme) is a vehicle scrappage scheme that was introduced in the 2009 United Kingdom Budget to encourage UK citizens to purchase a new car or van and scrap an old one that they have owned for more than 12 months. The scheme was extended in September 2009 and again in February 2010 and it finished at the end of March 2010. In February 2010 a separate Plug-in Car Grant to provide £5,000 towards the cost of electric vehicles was announced and it began in January 2011.[1]

Overview[edit]

The initial scheme, costing the government £300m was introduced in 2009 to support the replacement of 300,000 cars purchased.[2]

The government agreed to provide a £1,000 payment towards the purchase of a new car ordered from participating manufacturers after 23 April 2009 and first registered on or after 16 May 2009.[3] to UK citizens[dubious ] who also scrap a car that they have owned for more than 12 months and which was older than 10 years. and manufactures agreed to also provide £1,000 off the list price.[4]

Environmental groups were 'angered' that the scheme was not limited to economical cars. The RAC Foundation said that many scrapped cars would be in good condition and an estimated 90% of cars purchased under the scheme would be imported. Many cars are already discounted from list price so the saving to purchasers is in reality less than £2,000.[4]

The Institute for Fiscal Studies criticised the scheme saying that:-[5]

  • A reduction of emissions per mile from newer cars would be offset by new vehicles being driven more
  • That there would be significant environmental costs associated with the production of vehicles
  • As fiscal stimulus it will only benefit one industry.
  • Many new cars are not produced in Britain though some foreign made vehicles will contain British components.
  • A larger part of the subsidy to go to replacements that would have occurred anyway.
  • It will mean that fewer sales will occur after the economy has picked up.

Cars sales increased during the scheme and figures for February 2010 were 26% higher than the previous year. There were concerns that sales would reduce after the end of the scheme and the end of the reduced vat rate of 15%.[6]

The average emissions of new cars sold during the scheme dropped 5.4% from year before .[7]

In March 2010 What Car magazine claimed that the scheme had been a 'smoke-screen' behind which manufactures increased prices and that "some of the price rises [will] take your breath away".[8]

In February 2010 the government announced a £230m 'Plug-in car Grant' scheme to provide a £5,000 grant towards the purchase of plug-in electric cars - the scheme will start in January 2011 and a separate scheme, 'Plugged-In Places' will provide some 11,000 charging points in selected cities over the next thee years.[9] There was also talk of a scrappage scheme for old radios ahead of the planned Analogue switch-off.[10]

History[edit]

A car scappage scheme was introduced in Germany on the 13 February,1999 and then in France and Italy. Following a record fall in car sales in the UK and associated redundancies[11] accompanied by lobbying by the Society of Motor Manufacturers and Traders on behalf of UK car manufacturers with support from [12] the UK scheme was introduced in the 2009 United Kingdom Budget on the 22 April 2009 by the Chancellor of the Exchequer, Alistair Darling. The scheme was supported from Lord Mandelson, the Secretary of State for Business, Innovation and Skills, and Geoff Hoon, the Secretary of State for Transport.[13]

In September 2009 a further £100m was made available to the scheme which was extended until the end of February 2010.[14] The scheme had been due to run out of money during October and varies bodies including Engineering Employers' Federation, Unite and the Society of Motor Manufacturers and Traders had lobbied for an extension which was announced by Lord Mandelson at the Labour party conference.[15]

On 5 February 2010 the scheme was extended by a month to run until the end of March 2010 or until the funds were exhausted.[16] In the same month the government announced a £230m 'Plug-in car Grant' scheme to provide a £5,000 grant towards the purchase of plug-in electric cars - the scheme will start in January 2011. A separate scheme, 'Plugged-In Places' will provide some 11,000 charging points in selected cities over the next thee years.[9]

References[edit]

  1. ^ https://www.gov.uk/government/publications/plug-in-car-grant
  2. ^ Reed, John (2009-04-23). "Mixed response greets car-scrapping bonus". Financial Times Online. Retrieved 2009-07-16. 
  3. ^ "What’s It All About?". CarScrappage. 
  4. ^ a b Webster, Ben (2009-04-23). "Car-scrap scheme payout is a cheat at half the price". The Times (London). Retrieved 2010-04-09. 
  5. ^ "Some initial reactions to Budget 2009". Institute for Fiscal Studies. Retrieved 2010-03-10. 
  6. ^ Kumar, Nikhil (2010-03-05). "Car sales rise again as end of scrappage looms". The Independent (London). Retrieved 2010-04-09. 
  7. ^ "Vehicle scrappage scheme drives down emissions of new cars". The Guardian (London). 2010-03-09. Retrieved 2010-03-10. 
  8. ^ "Car scrappage scheme used to drive up prices". Theismoney. Retrieved 2010-03-10. 
  9. ^ a b Hudson, Paul (2010-02-28). "£5,000 grant to buy plug-in electric cars". The Telegraph (London). Retrieved 2010-03-10. 
  10. ^ Moore, Matthew (2010-02-02). "Radio 'scrappage' scheme to boost sales of digital sets". The Daily Telegraph (London). Retrieved 2010-03-10. 
  11. ^ "UK moves towards car scrap scheme". BBC News. 2009-04-12. Retrieved 2010-03-10. 
  12. ^ "Car scrappage scheme considered for ailing UK motor industry". The Independent (London). 2009-02-16. Retrieved 2010-04-09. 
  13. ^ Winnett, Robert (2009-04-21). "Owners of older cars to be offered cash to trade in vehicles". The Telegraph (London). Retrieved 2010-03-10. 
  14. ^ "Q&A: The new car scrappage scheme". BBC News. 2009-09-28. Retrieved 2010-04-09. 
  15. ^ Wintour, Patrick (2009-09-28). "Mandelson announces extension of car scrappage scheme". The Guardian (London). Retrieved 2010-04-09. 
  16. ^ "Car Scrappage Scheme Extended!". Car Scrappage. Retrieved 2010-03-10. 

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