Car scrappage scheme set out

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The chancellor has confirmed a car scrappage scheme will be implemented next month in a bid to boost the ailing motor industry.

The scheme will provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over 10 years old for scrap, under plans unveiled in today's Budget.

Darling said: "In order to help the car industry and retail trade, I can announce a a scrappage scheme will be implemented next month.

"It will provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over ten years old.

"It will be a time-limited scheme until March 2010."

A total of £300m from the government has been put aside to fund the scheme, intended to provide support on short term basis to boost the car industry following the fall in sales.

Business secretary Lord Mandelson stated the scheme was "targeted action with a capped budget and for a limited time" designed to boost the whole motor trade.

Mandelson said: "This will ensure that the benefits of a scrappage scheme are balanced with the needs of other sectors of the car industry such as the second hand market, maintenance and repair businesses, and other industries that produce consumer durables or on the taxpayer."

Stakeholder Response: British Retail Consortium

Jane Milne, BRC business director said: "While the chancellor announced some encouraging support for energy efficiency and renewables, he hasn't addressed the help businesses and households need to adopt more energy efficient appliances. This would have delivered far bigger savings than the 'scrappage' scheme.

"For example a new fridge uses a third of the electricity of a typical 1980 model and the average fridge in use today is nearly 13 years old with many far older. Encouraging the replacement of old appliances would make a big difference.

"Even if a new car has a better fuel and emissions performance than an old one, once the environmental impact of making it is factored in, there are severe doubts about whether this scheme will produce the environmental gains claimed."

Stakeholder Response: Campaign to Protect Rural England

Ben Stafford Head of Campaigns at CPRE said: "We are disappointed at confirmation of the car 'scrappage' scheme. This will do little to help rural families that can barely afford to keep their current car on the road, let alone buy a new one. It is a shame that the chancellor took this route, and spurned the chance to support community-run low carbon car clubs."

Stakeholder Response: Road Haulage Association

RHA chief executive, Roger King said: "What a contrast between the announcement of support for a car and van scrappage scheme which may well assist in the growth of imported cars, and a tax hike for British hauliers delivering food, raw materials and exports on behalf of the UK. We have no problems with the scrappage scheme but we don't see why British hauliers should contribute to its support.

"If the government really thought carefully, it could have devised a rebate scheme for UK haulage as we have requested for the last 10 years. But these pleas have clearly fallen on deaf ears."

Stakeholder Response: Unite

Unite's joint general secretary, Tony Woodley said: "We welcome Alistair Darling's decision to introduce a scrappage scheme but we are urging him to think again on keeping skilled workers in employment. Any scheme to stimulate demand for cars is welcome, but the UK can not afford to lose the workers who build them.

"Those on the right who believe it is the time for cuts are simply wrong. If they are allowed to have their way we will come out of this recession with a manufacturing base not fit for purpose."

Stakeholder Response: Finance & Leasing Association

Stephen Sklaroff, director general of the Finance & Leasing Association, said: "The success of the car scrappage scheme relies on motorists being able to replace their old cars. For that to work, the finance needs to be available. We need government support now, to ensure motor finance companies can meet that demand."