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back to article Budget reaction: Credit insurance good, all else bad

Reaction to Alistair Darling's budget is mixed to say the least. Even the £2,000 subsidy for people buying a new car and scrapping an old one has had a mixed response from the motor industry. The Federation for Small Business welcomed help in training young people but said: "We are very disappointed that this budget will do …

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Think of the environment!

Because scrapping a perfectly good old car and using lots of energy, materials and resources to build a new one is just *so* good for the environment.

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FBS

Should probably start acting like buisness people and not a trade union:

"The FSB welcomed the increase in capital allowances but regretted that nothing was done to combat late payments. The FSB wants Companies House to name and shame firms which do not pay on time."

Companies house don't have this data, and there are plenty of companys who do sell this data (£10ish a pop. Not much realy). Also, it would be illigal under both UK and EU law for the government to get involved in this.

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jon
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£2000 car subsidy

They should have limited to cars of 1L engines or less, hybrid up to 1.5L and alternative energy cars only.

Would have been nice to see it for all motorbikes that do 60mpg+ or use alternative fuels too, but I suppose that's asking a bit much.

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Car Payment

So...

I drive a perfectly good, 13 year old Audi S2...

Greenpeace say that I should have replaced that car almost 3 times alredy.

So:

Carbon released making the car...

Carbon released scrapping it and 2 other cars..

Carbon released making 3 new cars...

And Mr Darling will now pay me £2000 of the cars £3500 book vlaue to buy a new car which will struggle to last the warranty let alone 13 years.

I cant afford to go and buy an equivilent car. I'll still be looking at a good few £20K for an S6. In fact right now, I cant even go buy any new car.

BUT

A new car will fall into the tax bands that my current one misses. So in effect, I get paid to get shafted whereby the cost of taxing an equivilent car will give the £1000 back in a few years. Maybe they arent as thick as they look....

Oh hang on, they screwed about with fuel duty too :(

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So in reality

Its a grand in cash and a voucher for Honest John's car emporium.

Why could they have not been honest?

and did it have to be only *new* cars?

What does it get Joe car owner and his 11 year old motor?

He gets some cash (or the promise of cash against an actual car purchase) and a promise from some UK car mfg to cover the first grand.

So that's 2 grand down and what another 10 minimum for 3-5 years on finance?

I predict take up will "Limited" to say the least.

Badly through out and won't do what is hoped.

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£2k for rich people only

Seriously - a £2k subsidy for scrapping cars is one thing, but choose emissions MOT failures only, and give it to the poor sap who needs to replace their crap car, not someone struggling to decide between a 911 and a rangerover.

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Coat

oh noes!

Our currency has crashed in value, we have massive debt. I know, lets encourage people to spend even more money that they don't have!

Yes, I understand the paradox of thrift but we don't have that problem - we have a problem of crushing debt. If I remember correctly, the whole "sub-prime" problem was caused by insurance. Risk was spread out among financial institutions rather than staying with the organisations creating the risk (selling sub-prime mortgages). Insulated from the repercussions of reckless lending, they maximised their sales commissions and short term profits at the expense of everyone else and brought down banks all over the world. Insurance is fine for undesirable, unexpected and uncontrolled circumstances (health problems, natural disasters, fires and car crashes) but as a way to supporting a careless business model, its a rubbish idea.

If I didn't know better, I might think someone was trying to get people to buy things to help them feel good before a general election. Surely not the case!

I would predict the return of Mrs T - next to this government, she's the very icon of "clean government", militaristic restraint and general left-wing looniness.

Icon: Remember that coat that was on your back? The bankers have come for it.

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new cars

How many people do you know with 10 year old cars who will buy a new (not second hand) car, even if it is 2,000 off ?

This is hot air.

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Scrap money

We've been having the scrap-premium in Germany for some months now. Result: foreign cars sell like hell, the second-hand car market is dead and those who cannot afford a new car anyway are screwed out of the value of their old vehicle.

Once the premium runs out car sales will drop for years. Those who could afford a new one will already bought it and the rest are stuck with their old rustbucket which they will now drive until it drops - roadworthy or not.

Oh - and some manufacturers have already adjusted (i.e. raised) their prices to make up for the scrap premium. Ads for new cars quote prices including the premium.

German tax money is now subsidizing French and Japanese car manufacturers. So will British tax money, soon. We are looking forward to new green legislation that will make driving older cars still more expensive and downing their value even further. If you cannot afford a new car you deserve to pay through the nose to drive your old one.

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Scrappage

No, people who buy new cars probably won't have ten year old cars to scrap. They might buy a banger for £1k and get £2k back for it.

But the scheme is just a subsidy on mostly imported cars. At best it might shift a few of the cars currently stored on fields but it won't create many jobs. We should be using the recession to clear out excess capacity in the car industry and use our skilled workforces to build the trams and trains we need instead of importing them from the far east.

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Fail!

My car is ten years old this month. It's low mileage (about 70k), I've had it since new and it just passed its MOT with no problems. What's the point of changing it?

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@John Smith

"Why could they have not been honest?"

John, I admire your refreshing innocence.

How can you tell when a politician is lying? You can see his / her lips move!

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Damnit.

My car is only about 8 years old, so I'm not eligible. It'd be nice if the £2,000 could come off the price of a new car... OR MOTORBIKE \o/

'cos that's surely going to have lower emissions and fuel consumption :)

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Gates Horns

Hmmm, think I'm missing something ...

2K for your old banger ... sounds like this ticks a couple of re-election boxes - it's pro-active, it's green and it may actually benefit some of our working class voters whilst boosting our automotive industry ...

actually, it's none of the above ... it's not so much pro-active as it is smoke and mirrors against the real issue of spending the next 3 to 10 years (depending on who you believe) in a poor economic climate - but you'll have a nice car!

Certainly not green when you take into account the manufacturing of these things either.

I'm also unsure as to who's going to make use of this scheme - surely anyone with a 10 year old car is either happy with it, which is why they've yet to replace it, or they can't afford a new one and are only going to be encouraged to buy one using hire purchase ... ooops - isn't that what got us into this mess in the first place?

ah, a boost to our automotive industry ... or at least this year anyway - as the second hand car maket will bomb today and this time next year the forecourts will be barren places once more ... damn, doesn't that mean that the resale value on my car will also be reduced due to lack of demand - oh, and that 1K from the generous government will almost surely be coming from increased tax levies :(

So isn't this all very counter intuitive then, surely if our automotive industry is in jeopardy and in need of such stimulus then it requires a certain degree of atrophy?

So surely I'm missing something?

We need a confused icon ... went for Bill as his cars would have crashed long before now

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I predict.

A sharp rise in the price of shonky old scrappers on eBay.

When buying a new car, do you: A) take 2 grand for your well-maintained and perfectly serviceable ten year old motor that you can continue to use as a second car until the doors fall off, or B) pick up a shagged out old wreck in a private sale for 50 quid and dob that in instead?

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keynes was a fraud!

+++

By P. Lee: Yes, I understand the paradox of thrift

+++

The "paradox of thrift" is just yet more contrived academic rubbish: Within IT, for example, we have experienced falling prices and rising performance for (at least) the last 30 years; with sales rising every bl**dy year too!!!.

The truth is: Nobody holds off buying something they need Today just because it's cheaper/better Tomorrow!

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@Sabine Miehlbradt

"We've been having the scrap-premium in Germany for some months now. Result: foreign cars sell like hell, the second-hand car market is dead and those who cannot afford a new car anyway are screwed out of the value of their old vehicle."

I'd hoped UK civil servants might have learned from the German experience. Obviously not.

While forcing people to buy only cars made in the UK would have been difficult (Toyota Sunderland, Jaguar and Rover. Mini? Is Vauxhall Luton still running?) limiting it to brand new cars only is, I think, the crippler. A large part of the UK car market is in 2nd (or more) hand vehicles. The car dealer figures say 50% of vehicles mfg in 1994 are still on the road. A scheme which does not get the used car dealers in play will have very little benefit. I suspect that the profile of people who buy new cars is quite different to that of people who own 10 year old cars. This is a scheme that sounded simple to set up. To make it work well is lot trickier.

Thumbs up for the German view. Thumbs down for the UK implementation.

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Unhappy

£2000 to...

tempt you into buying a modern piece of crap that's been sat on a disused airfield for years and has so many electrics and no user servicable parts inside that you have to take it to the dealer (and their £80+ per hour labour) to get it fixed no matter how minor the problem.

The dealers must be laughing their arses off.

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Works for me...

My car is worth only scrap value. I'm looking to buy a newer 2nd hand car. If this forces the price of 2nd hand cars down it'll be great! I can get a better 2nd hand car for my money and sell my scrapper for more than scrap value to someone who wants to get £2k off a new one. I might get £500 for it now :o)

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Err...

Correct me if I'm wrong, but this will do nothing to the second hand market. Why? The scheme says you have to have owned the banger for a year. And the scheme only runs until March. Ergo, you can't buy a banger now and get the discount, and those of us already driving one are doubtful to be able to afford a new car. So this will achieve exactly what the government were after: Free headlines.

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Somewhat unimpressed

I'd say I was probably one of the prime targets for this scrappage scheme, but even I have trouble getting any benefit out of it.

My car is just over 10 years old and I'd quite like to replace it. I'm holding off because I don't think the motor industry has discounted prices enough given the state they're in. So if need be, I'll run my current car for another year or two. This scheme was intended to persuade me to buy now, I guess, but I'm not impressed.

I'd normally buy cars around a year old to avoid the steep deflation on a new one. If I have to buy new, I'll probably lose any benefit from the extra discount almost as soon as the car's on the road. And that's assuming prices don't rise in response to increased demand. Compared to running my current car, which loses almost nothing in depreciation, the benefits are marginal at best. Given that a replacement car would also be in a higher tax bracket (not to mention insurance), I'm definitely better off with my current old model.

So tough luck motor industry, come and see me again when you want to shift some stock at a more reasonable price.

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Boffin

AC@14:39

"I'd normally buy cars around a year old to avoid the steep deflation on a new one."

Exactly what you cannot do under this scheme. I suspect part of this is because 1/2 of this £2k comes from the car makers. Letting you buy a car (any car) less than say 5 years old would mean the car makers were putting £1k into the pockets of used car dealers. And that would not be OK. But it would get the used car dealer network into the game and would (in principle) lower the average emissions of the country.

This is starting to to whiff of fail.

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Joke

@John Smith

"I'd hoped UK civil servants might have learned from the German experience. Obviously not."

They're talking about quantitative easing, which in Germany lead to Nazism and over here will probably lead to Thatcherism. In the mind of a Guardian reader these are one and the same of course!

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Joke

@MarkJ

"...and over here will probably lead to Thatcherism."

You make it sound as if Thatcherism ended with the departure of Mrs T.

But your probably right about the Grauniad.

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