
'I can haz bailout too, Terry?' The car scrappage scheme would be right up Arthur Daley's street.
The
BBC reported last night that the government is likely to introduce an incentive scheme at the budget (22 April) for car owners to scrap old vehicles in exchange for new ones. The move would probably involve a payment of £2,000 to trade in cars that are a certain number of years old.
A rather telling line is “car scrappage schemes are seen as targeting the root cause of the industry’s woes - a lack of demand for its products”. Of course the real root cause is not a lack of demand but an excess of supply; even in the boom Ford calculated that worldwide car over-production was around 24 million per year.
Instead of encouraging firms to adapt to the new “post-boom” world by producing less cars and making them cheaper by reducing costs (thus boosting real demand), they are subsidising people with taxpayers’ money to scrap perfectly good cars to buy new cars they didn’t want (or can’t really afford).
Not only is this just taking money from one taxpayer to subsidise another (robbing Peter to pay Paul the car salesman), it is just delaying the fact car firms need reform to survive at our expense (and the expense of whoever we’d have spent that money with had it not been taken as tax, as well as whoever the car buyer would have spent their money with instead - say a small shop - had they not been bribed to buy a car).
What’s more, most cars we buy are foreign made - so we are paying our taxes to boost sales of foreign cars. Even the motor industry accepts this, claiming that 25% of the purchase price is in the UK based sales industry as an argument - as if paying our taxes to boost sales of foreign cars and subsidise car salesmen is so much better!

The Chancellor wants you to buy his new stimulus package, and a new car.
The policy is of course being spun as “green”. Old cars pollute more than new ones - true - but the amount of pollution in the manufacture of the new car, to replace a perfectly good old car, isn’t counted but is vast. Some of the “greenest” cars ever made are the 1950s Land Rovers still being used now.
So with taxpayers losing out, local businesses losing out as people buy cars instead of other goods, and even the motor industry gaining little (not that it should be an excuse for subsidy even if it gained a lot) - why is the government still planning this rubbish? Oh wait, there’s an election coming and the swing seats in the Midlands are auto industry heavy…
At least Arthur Daley will be happy.