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‘Cash for bangers’ under threat as firms pull out over VAT row
Paul Waugh18 May 2009
The Government's “cash for bangers” car scrappage plan suffered a blow today when three big manufacturers suspended the scheme.
Ford, Fiat and Honda said they were halting deliveries of cars to dealers after a row over who pays VAT on the vehicles. The embarrassing setback came on the day Gordon Brown and Lord Mandelson launched the scheme.
Under the plan, motorists who trade in a 10-year-old car are eligible for a £2,000 subsidy on the cost of a new model. Lord Mandelson hailed the scheme a “wonderful bargain”
for motorists and good news for those in the car industry, and hoped buyers would take advantage.
The Government and manufacturers are sharing the cost of the scheme, which will last until the end of next February or until the £300 million government funding runs out.
But many manufacturers are hoping to get car dealers to contribute to their share of the VAT on the cars.
The UK motor industry is in need of a boost as new car sales fall for 11 months in a row. But critics fear the scheme is a waste of money as few new cars sold will be British and Treasury officials admitted a third of the subsidised sales would have happened anyway.
Sales for the first four months of this year have gone down 28.5 per cent compared with the same period last year, leading to companies cutting production and jobs.
Although the scheme is voluntary, all major manufacturers have signed up for it and many are planning to continue their own sales incentives on top of the scrappage deal.
Last week price comparison company uSwitch.com said the £2,000 incentive would effectively be “lost” in depreciation within 88 days of consumers buying a new vehicle within the
scheme.
But the AA said the scheme would benefit “hundreds and thousands of consumers”.
Reader views (3)
This is a totally stupid scheme.
In Germany where car manufacturing and associated industries accounts for a fair proportion of all employment it makes sense, particularly as the cash stays within the German economy.
Buying UK made cars is likely to have more benefits for German, US and Japanese economies than our own!
- Mark, South-East London, 19/05/2009 09:39
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Put in order 'booze up in a brewey this Government could not run a' No prizes for correct answer as its well known by all of us here in the UK
- Mike, London England, 18/05/2009 15:12
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Do the govt think this will work?, do they believe thta people drive ol bangers because they love driving them? the reality is they drive old cars because they cannot afford a new one even if they halved the price, get real Brown wake up and smell the coffee !
- Brian, Wiltshire, 18/05/2009 15:03
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