Green lobby and industry experts unite in calling for car scrappage scheme

Jan 28 2009 by Anna Blackaby, Birmingham Post

Green groups and business experts have expressed disappointment that the government’s car industry package did not include incentives to encourage people to trade polluting vehicles for more efficient models.

The announcement on Tuesday by Lord Mandelson of a £2.3 billion loans package came with a proviso that car-makers must prove they are developing environmentally-friendly technology, a statement welcomed by environmental campaign groups such as West Midlands Friends of the Earth.

But there were calls for the government to go further by introducing a vehicle scrappage scheme – a financial incentive whereby car owners receive tax breaks or grants to swop older, more polluting vehicles for newer, more environmentally-friendly models.

West Midlands Friends of the Earth campaigner Chris Crean said: “We welcome the government’s recognition that car manufacturers must be at the cutting edge of delivering a greener future, but ministers must do more to make the industry build smart cars that use less fuel and provide better incentives for motorists to choose them.

“Vehicle scrappage schemes – where motorists are given grants to swop gas- guzzlers for fuel-efficient models – could be one way forward, and must be considered.”

But he stressed that any scheme must be targeted in order to avoid a situation where more environmental damage is caused by scrapping serviceable vehicles in favour of newer cars.

“We’re not advocating that people scrap a two-year old car for a new car. It needs to be targeted,” he said.

Car industry experts have also spoken out in favour of vehicle scrappage policies.

David Bailey, professor of international business and economic policy at the Birmingham Business School and chairman of the regional studies association, said more needed to be done to stimulate demand for newer, more efficient cars.

He said: “Governments in France and Italy have introduced tax breaks for people who trade in older cars. The benefits of this are twofold – number one it helps stimulate demand and number two it gets older, more polluting cars off the road.”

Scrappage policies were among the options for reviving the car industry discussed earlier this month at an EU meeting in Brussels.

European industry ministers discussed the downturn in the automotive industry and a variety of planned national initiatives, as well as those already taken, and considered what else could be done at EU level.

The Retail Motor Industry Federation (RMIF) which represents 8,000 UK retail motor businesses, believes a scrappage policy would have the dual benefit of removing high-polluting cars from the road and help revive car sales.

The scheme would be self-financing, as the government would receive VAT income from new car sales resulting from the scheme, the RMIF said.

RMIF director Sue Robinson believes this could be a good move for the UK, as well as other European member states. She said: “Scrappage policies have been successfully adopted by a number of European countries in the last few years, including Ireland, France, Germany, and Spain and we believe that adopting the policy could help move the economy in the right direction.”

The RMIF will shortly be presenting a paper to the government that puts the case for a self-financing scrappage scheme in the UK that mirrors those successfully adopted in other EU states.

The German government has announced it will provide €2,500 for any car owner who scraps a car older than nine years to replace it with a new vehicle.

Last year the French government said it would give €1,000 for people sending an old car or van to scrap and buying a new fuel-efficient replacement in 2009.