Chancellor Alistair Darling’s £2,000 “scrappage” scheme for ten-year-old cars whose owners trade them in for a new one is unlikely to unleash a mini-boom in motor sales like the one inspired by a similar offer in Germany.
The Chancellor, who is offering to fund only half the subsidy – motor manufacturers will have to find the other £1,000 – set aside only £300 million for the scheme in his Budget on Wednesday. Thomas Crossley of the Institute for Fiscal Studies pointed out yesterday this would cover only 300,000 deals covering just three per cent of the estimated number of bangers ten or more years old.
It would also restore only one-eight of Britain’s pre-recession new car sales, which are at present down by about a third on this time last year.
“This is not a strong environmental measure,” Mr Crossley said. “While new cars have lower emissions per mile, they may be driven more and there are environmental costs associated with their production.”
Apart from the issue that worried the Chancellor – using British taxpayers’ money to subsidise foreign motor makers exporting their models to Britain – many of the subsidies would go to households who would have scrapped their ten-year-old cars anyway, he noted. “The measure should cause some households to bring forward a vehicle replacement,” he added. “This will mean fewer sales later.