Budget 2009: £2,000 to scrap a car and clean up the roads?
Next week's Budget seems set to include measures to clean up the roads by offering as much as £2,000 for drivers to ditch older more polluting cars.
A scrappage scheme is already up and running in Germany - and it is hoped in the UK it could provide greater stimulus for the car industry, where sales have fallen off the cliff, as well as removing older vehicles from the roads.
Drivers could be paid £2,000 to take a vehicle older than nine years off the road.
In Germany a ?2,500 (£2,220) discount on vehicles after the old one is scrapped is offered, while France offers ?1,000.
Both schemes have resulted in an increase in car registrations.
The debate over the scheme - with clashes in Whitehall between business secretary Lord Mandelson and the chancellor Alistair Darling reported - however is far from over.
Gordon Brown is expected to make a final decision this week.
The plan was suggested by Society of Motor Manufacturers and Traders Limited (SMMT), which represents the UK motor trade.
John Procter at SMMT explained plans were submitted to Lord Mandelson's department for Business, Enterprise and Regulatory Reform (BERR), in February and were received favourably before being passed to the Treasury.
"Falling registrations recorded last May and the current crisis have put the squeeze on the industry," he said.
But before drivers start searching for a cheap car to buy now in the hope of selling it to the government after the Budget, any scheme is set to have a hatful of conditions.
Mr Procter explained: "A car being sent to be scrapped would have to be road worthy, have an MOT and tax."
He added the idea for the plan was not to encourage people to buy up old bangers to get hold of cash.
Cars registered before 2000 are being chosen for the scheme not through an arbitrary date, but due to European emission standard that came into force on that date.
The cash may only come for certain vehicles that are low polluting, although calls for cars made by British-based manufacturers only may fall foul of European competition rules.
"We would favour a system that is not too complex and without too many provisions to boost new car sales," Mr Procter said.
"If it is too complex it will put people off."
He added the removal of cars made before 2000 and replacing them with new vehicles would aid the environment as the newer models have cleaner emissions.
Sue Robinson, director of the Retail Motor Industry Federation (RMIF), called for the scrappage scheme to be enacted as soon as possible.
"With Germany's scrappage scheme a runaway success, surely now is the time for the Government to act," she said.
"Consumers will look to new cars again, given the right impetus, and the RMIF is continuing to lobby for the introduction of a scrappage scheme could help revive car sales, and remove high-polluting cars from the road at the same time.
"This scheme is widely supported by car retailers."
However, Nigel Humphries at the Association of British Drivers (ABD) hit out at the initiative, claiming it would distort the market.
"The measure is not green," he explained, as most cars over nine years are low mileage and so are producing fewer emissions.
He added cars over nine years "still have a lot of life in them. It is a disgrace that cars are scrapped so easily. Often just because an expensive electrical fault."
The ABD is instead calling for greater infrastructure spending on both road and rail.
The Environmental Transport Association (ETA) is also against the scrappage scheme explaining car scrapping initiatives "routinely fail" to take into consideration the amount of energy required to build a vehicle in the first place.
Andrew Davis, ETA director, said: "Altering the way you drive and keeping a car longer can be a greener option than buying new.
"Even if the new model you buy is more economical, once you take into account the energy needed to scrap the old car and build an entirely new one the overall benefits are likely to be tiny."
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