Blog: Dave LeggettScrappage incentives debate

Dave Leggett | 5 March 2009

The news that February's car market in Germany was up by a fifth on last year provides, on the face of it, some much needed cheer. And the scrappage incentive there has certainly helped to kick-start the market.

A few caveats are perhaps necessary though.

It would seem that the manufacturers have piled in to offer incentives on top of the scrappage scheme, which has partly acted as a catalyst. Vehicle manufacturers have excess stock they want to get rid of and as that stockpile is reduced, they may back off of incentives later this year. And, at some point in the future, purchases that have been brought forward are mirrored with 'payback' and a loss of volume. But how many of today's incentive-led purchases might reflect an element of pent-up demand? That isn't quite the same thing as a brought forward purchase. 
Anyway, as I have said before, I lean towards the idea that in current circumstances we need such schemes to raise volume and keep this industry ticking over.

The sooner we have one in Britain, the better. The 'helping importers' objection is a little spurious I think when other countries in Europe are doing it. If we want to get into where Her Majesty's Government has been reckless with taxpayers' money, I think there are other places to look. And that doesn't mean, either, that manufacturing doesn't need and deserve some support.

Losing good businesses to a recession (which won't last forever) combined with banks that won't lend will not be good for the economy in the near- or long-run.

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