The ‘should they or shouldn’t they’ argument playing out in the media over proposals to introduce a scrappage scheme in the UK has taken another interesting turn today.
According to The Times, leading motor industry analysis Professor Garel Rhys, of Cardiff University Business School has said that a scrappage scheme would do little to protect British jobs.
He estimates that just 4 per cent of the cars bought under the scrappage scheme would be made in Britain. Currently 78 per cent of cars made here in the UK are exported and 86 per cent of cars bought here are imported.
While many cars manufactured in the UK may not be that green (Jaguar Land Rover anyone?), it does raise the question of the environmental cost of shipping cars from abroad.
To successfully argue a case for the incentive, UK government has to try and sate the environmentalists and the unions whilst also meeting EU obligations to maintain a free market. While protectionism may be a dirty word here in the UK, the government is likely to tie the scrappage incentive to efforts to cut carbon emissions.
The German incentive for instance which has often been quoted as the model which the UK will try to copy gives €2,500 (about £2,300) to motorists for scrapping a car that is at least nine years old and buying one less than a year old but more than 65 per cent of cars bought are made in German factories.
Sceptical voices have already been raised about the environmental benefits of a scrappage incentive, the thought that the cars bought under the scheme (even if they had low tailpipe emissions) came at a high-carbon cost to the UK could make the environmentalists among you shudder. If the benefit to the UK economy only extends to motor retail, services and insurance industries; the supporters of the scheme could lose ground.
Professor Rhys told The Times: “A person who has been driving a nine-year-old car is not going to be able to afford a Jaguar, a Land Rover or even a Toyota Avensis (built in Derby). “We only make two cars that they are likely to buy: the Nissan Micra and the Mini, and these account for 4 per cent of the British market. A scrappage scheme would result in the British taxpayer subsidising vehicle factories in other countries.”
Meanwhile Whitehall is considering proposals for the scheme. A leaked Treasury note said: “Initial analysis demonstrates that the costs outweigh the benefits even when the replacement vehicle has better-than-average fuel efficiency.”
Last month Angela Eagle, the Treasury Minister, told the Commons Environmental Audit Committee; “We are not ruling it out at all but we are still quite sceptical that it is a good use of taxpayers’ money.”
Read the full Times article here: The Times
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