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Brown forced to settle Mandelson row with Treasury over 'cash for bangers' proposal
Joe Murphy, Political Editor14 Apr 2009
A DISPUTE between the Chancellor and Lord Mandelson over calls to pay drivers about £2,000 to trade old cars for new models will be settled by the Prime Minister.
With only a week to go before the Budget, Gordon Brown is being forced to intervene to bring the Whitehall struggle to a close.
The Business Secretary is backing calls from the car manufacturing industry for a version of the so-called scrappage scheme that has been used in Europe to boost new car sales. In Germany, sales have been helped through the recession by paying owners of old cars a taxpayer-funded incentive of about £2,250 to trade their old vehicle for a new model.
The Business Secretary's planned version is reported to involve giving owners of old cars a similar sum towards the cost of a green vehicle, such as a petrol-electric hybrid.
But the Treasury is against the idea, warning that in its current form it would effectively encourage imports of foreign cars at the British taxpayers' expense.
At a meeting of senior ministers last week, Chancellor Alistair Darling argued that Lord Mandelson had yet to show that his plan would be good value for taxpayers. He is not convinced that British makers would benefit more than foreign rivals or that jobs would be saved.
The Treasury argues that the public purse should pay no more than half of the bounties - with another £1,000 coming from the car industry.
It would also like to target any scheme at more expensive marques, where British manufacturers are more concentrated. Another proposal to limit the cost is cutting the payment in half for cars older than nine years.
Mr Brown is likely to meet both ministers this week in order to settle the matter before the final Budget preparations over the weekend.
Reader views (19)
Alan Surbiton - You havent got it yet have you.
This CO2/Man made global warming is a con trick to tax you firstly, but also get you off Middle Eastern oil.
FYI every year since 1998 has been cooler than the last - check and see for yourself.
However, an economy in recession doesnt provide tax revenues to keep the socialist "truck" thundering along. You need more cars built and put on the road to push the tax revenues of employees, companies and drivers.
- Dave Davies, Basingstoke, 15/04/2009 10:10
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How many businesses has Business Secretary Mandelson run?
- Anglo, Sussex England, 14/04/2009 17:37
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I have two problems with this incentive.
1/ Environmentally, it takes more energy and hence CO2 emissions to produce the new vehicle. It also takes energy/space to dispose of the scrapped (and perfectly serviceable?) 10 year old vehicle.
2/ The type of driver in this position (and I count my self as I drive a 10 year old Mercedes), even with a £2000 bonus couldn't afford the additional £8 - £10K needed to purchase something a bit more frugal but still as comfortable.
- Alan, Surbiton, UK, 14/04/2009 16:49
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Hello Frank: in the Home Counties.
I agree with you about Europe; we have been fighting them for Centuries.
Even the Russian workers agree with you; they hate Socialist Europe as well.
Unfortunately if you want a vote in Europe; you will need to become Irish.
As to being stupid; and Europe telling us what to do; take that up with both the Labour and Tory Parties; it has nothing to do with myself; or the Russians.
- Mickyinlondon, london, 14/04/2009 15:53
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The idea of encouraging scrapping what are probably perfectly serviceable cars is lunatic-because in environmental terms all the materials and energy involved in making another new car far outweighs the environmental damage involved by keeping a car about 10-15 years and getting maximum service life from its components-don't take my word for it, ask a scientist. If the car industry is so determined to foist new cars on us all then I suggest they sort the pricing out, as at the moment the depreciation on a new car means one is paying about £10/mile to use it. Give me a 20 year old 2CV or Fiat 500 anyday-that is cheap AND enjoyable motoring-most current cars are deadly boring.
- Jon Kent, Hertford. UK, 14/04/2009 15:39
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Just shows that Lord Mandelson only has the EU car industry in mind.....absolute stupid idea and you can imagine the scams that will happen. It is about time that the UK car industry sorted its pricing out....and also looked at why cars depreciate so much, mainly due to cheap deals given to fleet buyers.
- Lloyd, Glan Conwy, 14/04/2009 14:17
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- Mickyinlondon, london
We have been sold out to a socialist Europe. There is no democracy on the EU continent. We are controlled by an unelected, unaccountable executive. We also pay 20 billion a year to be told what to do, when, where and how. AND we are stupid enough to be the only EU country to implement whatever regulations that spew out of the Communist machinery to the letter.
Still waiting for my vote on the EU Constitution as promised in the last Labour manifesto. I wonder what election promises to be broken they will publish this time?
- Frank, Home Counties, England., 14/04/2009 14:12
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Nigel's point is the key one: state money subsidising our competitors. Also, the Germans are finding a lot of people taking the dosh and buying their car in Poland! The gov't can't confine the benefit to British-built cars because of anti-competition rules. Mandelson's bright idea highlights Milton Friedman's principle of the basic immorality of spending other people's money.
In marketing terms, this will be like the famous Hoover offer of 1993 that lost the company $70 million and flooded the country's attics with appliances bought solely for the sake of the travel incentive, killing sales for the next few years.
It is also a proven point that the best thing environmentally to do with any car is keep it on the road for as long as possible: the rewards should really go to the person who keeps their car for twenty years, but this isn't about the environment,is it? The car makers have been plugging schemes like this for years, but it took Mandelson to buy it.
- Mdj E10, london uk, 14/04/2009 13:46
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This is a great scam if you can get your hands on some bangers. Buy them for a couple of hunderd, then sell them on for a couple of hundred more to people wanting a discount on a new car. It is absolute madness which the taxpayer is funding. What next, taxpayers paying for peoples holidays to help the airlines?????
- James, London, 14/04/2009 13:14
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There is a weakness in Mandy's ideas for the UK. It works in other european countries as they have many who have older cars but also savings and no need of credit. Those buyers in europe also support the country's own manufacturers - NB the sales increases of Citroen , Peugeot and Renault in france.
By the way we bought a 107
- Terry, Hennebont France, 14/04/2009 13:12
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These schemes could easily lead to misuse. At the very least owners should have owned the cars for a minimum of one year before disposal. The idea of a scrapyard giving out vouchers when the police are powerless to stop them buying stolen lead seems bonkers. Its just like a taxi driver asking if you want a blank receipt. Some people are going to do very well out of this at the expense of the taxpayer.
- Jack Spratt, Richmond, England, 14/04/2009 13:09
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Yes Stuz Graz: George Orwell did warn us about all this; now look at the animal farm in the House of Commons.
But each un-to their needs.
Many Russian working class people are actually looking forward to the return of Communism; they at least had work and homes then; but like us, they have seen their country sold off cheap, under capitalism.
I bet you will find that in the UK we are controlled and monitored far more than Russians actually are; and we are a free Nation in the free world; well that is the assumption anyway.
- Mickyinlondon, london, 14/04/2009 13:02
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Stu, Aldous Huxley would be quite happy though, as he is being proved right.
- Jim, London, 14/04/2009 12:57
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Remember that the bulk of cars bought in this country are imported and the bulk that are made here are exported. So this scheme is potty.
- Nigel, London, 14/04/2009 12:48
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...'bangers for cash' sounds more appetising somehow...
- Hippus, London, london, UK, 14/04/2009 12:44
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A free bicycle for every comrade made in the bicycle factory by my fellow comrades. All cars can then be made illegal apart from official government cars of course. Then we can build thousands of flats all to the same high standard so people can give up their carbon burning homes. Obviously local government and national government comrades could keep a few houses as they are important. Then we can give everybody a job but paid the same salary except the government employees of course as they now run everything and deserve more to control this brave new world. Poor old George Orwell he tried to warn us but we ignore him.
- Stuz Graz, Wimbledon London, 14/04/2009 12:31
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Mandelson's proposals are absolute lunacy. If I have spent to the limit on my credit card and have a mortgage to pay - then by "giving" me £2000 for my old banger merely means I have to borrow yet more money in order to pay for a newer car. When he learn that we cannot borrow our way out of debt. His latest gimmick is obviously aimed at appeasing his foreign friends in the car manufacturing industry - thereby guaranteeing Mandy of countless free trips on luxury yachts.
- R.F., Yorks, UK, 14/04/2009 11:59
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We need less cars; not more cars; the government would be better advised to build cycle factories and give the cycles away free of charge to the people; this would cut our dependence on imported oil; that alone would pay for the factories; mind you; the government would not be able to tax your petrol products; if you don’t have any?
I am a pensioner of 67; and my bike is cost free, I often see motorists spending ages trying to park their cars; and getting parking fines; while I just lock my bike to the nearest lamp-post or tree; which annoys the traffic wardens who have targets to maintain; but that is their problem, not mine.
Do not listen to the Government or their wiz-kids; do your own thing and let them rot.
- Mickyinlondon, london, 14/04/2009 10:56
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So, once the scheme has proved to artificially change the market in Germany and destroy the scrap, 2nd hand and car repair markets, not to mention have serious effects on the home improvement and white goods markets (various reports last week) Mandy now wants to bring it in over here!!
- Jim, London, 14/04/2009 10:43
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