SMMT, govt in 'secret talks' on scrappage scheme
Britain's automotive industry has reportedly been in confidential talks with the government over a possible £1.5bn scrappage scheme or “market stimulus package”.
The Society of Motor Manufacturers and Traders (SMMT) said the measures would encourage the purchase of diesel and petrol cars on an equal footing with cleaner vehicles.
The plans under consideration would take £2,500 off the price of a car and put a further 600,000 new vehicles on the road, according to correspondence seen by the Guardian newspaper.
The SMMT said the scheme must “support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.
In a letter last month to Finance Minister Rishi Sunak and Business Secretary Alok Sharma pushing for “confidential discussions”, SMMT chief executive Mike Hawes admitted the 600,000 new cars would mainly be “additional in an otherwise moribund market”.
While the SMMT claimed that the scheme “could also support wider government ambitions in terms of climate change and improved air quality”, it said the “primary benefit would be in jump-starting the market, the sector and the economy without further drain on the public purse”, the newspaper reported.
The SMMT said the scheme would bring a net benefit to the exchequer of around £3 for every £1 spent, through tax receipts from VAT and vehicle excise duty; get manufacturing workers off the Treasury’s Covid-19 job retention scheme; and help avoid “looming redundancies in a depressed market”.
A car scrappage scheme introduced after the financial crisis in 2009 led to hundreds of thousands of extra vehicle sales.
The UK car industry has been battered by the coronavirus lockdown as production was halted at plants across the UK during April, when just 197 vehicles came off production lines and sales collapsed by 97.3% in the industry’s worst month since 1946.