Scrappage

Cars scrapped under the government scrappage scheme

Tuesday 10th March, 2015

True, the paintwork could do with a polish. Doubtless, rust may lurk underneath the elegant curves.

But this Italian sports car is in every other way a beauty - and the engine in this particular model is famously indestructible.

Given a little care, there's no practical reason why it could not draw envious glances once again.

Backfired? The car scrappage scheme may have reversed plunging sales - but British manufacturers were not always the ones to benefit

Instead, this natty two-seater Alfa Romeo convertible is bound for the jaws of the crusher. As is the 1992 Jaguar XJS, resplendent in red metallic paint and cream leather.

And the pristine, decade-old BMW 528 - once the 'best car in the world' according to contemporary reviews. And the fashionable migraine-yellow VW Beetle - a trendy retro-copy of the Fifties original.

These eye-catching motors - and all the other vehicles in this huge scrapyard - will soon be torn apart, then crushed into a metal cube, as demanded by a new law, even though most of them still have valid MOT certificates.

Welcome to automotive Death Row. These cars are victims of the Government's much-heralded 'scrappage scheme', which has just ended.

Failed? The scheme saw a number of perfectly serviceable classic cars consigned to the scrap heap

A keystone of Labour's economic revival plans, it was supposed to rescue an ailing car industry and, as a bonus, help save the planet by encouraging the purchase of more eco-friendly models.

However, it hasn't quite turned out like that. For the closer one inspects the year-long scheme, the more it becomes clear that it was flawed from the outset.

Not only is the environmental benefit questionable, but the boost to the economy is not all that it seems either.

For what Gordon Brown and Business Secretary Lord Mandelson will be rather less keen to publicise amid the election fray is that by far the greatest beneficiary of their headline-grabbing 'bangers for cash' initiative is not the British car industry at all... but a giant Korean motor conglomerate.

Nowhere illustrates the folly of the scheme better than this scrapyard, on the outskirts of Daventry in Northamptonshire.

This is not like the grubby scrapyards of old, but a clean, modern 'authorised treatment facility', one of dozens of facilities where cars are sent to die.

Here, they are plucked apart, 'depolluted' in the jargon of the trade, and crushed into cubes to be sent to the insatiable maws of steel-hungry plants of the developing world.

This is the headquarters of Autogreen, one of the big logistics firms processing the 400,000 or so cars that have met their demise through the scrappage scheme which began in April last year and which ended last month.

The plan, copied from schemes in Ireland and other European nations, was announced in the budget of April 2009. It was to be a 'voluntary discount scheme' under which motor dealers would give motorists £2,000 or more towards the cost of a new vehicle if they traded in for scrap a car or van aged more than ten years old.

Half the money would be met by the Government (and therefore, the taxpayer) with the other half contributed by the manufacturers.

It was a tempting deal - and faced with plunging sales during the global recession, most major car firms signed up to it (though as we shall see, some did rather better than others).

Alas, all was not as it seemed. For the scheme has come at a hidden cost: thousands of perfectly decent, working cars have been consigned unnecessarily to the scrapheap.

Cars like the hundreds awaiting annihilation in the Daventry yard.

In order to qualify for the scrappage cash, any car being traded in was issued with a 'certificate of destruction' by the DVLA.

That means that it can never be driven on a public road again - even if it has an up-to-date MOT, with the potential for many years' more use.

Imagine if the public was being paid by the Government to throw away a television in perfect working order, just to replace it with a newer model, and you get an idea of the madness.

Even Autogreen boss Mike Austin-Dodds admits it's illogical. A classic car nut, he bemoans the blatant waste on view in his yard, and accepts that many of the dumped cars should not, in an ideal world, be here.

'Oh yes, they all have MOTs and nearly all are perfectly drivable. I would say a fair proportion would pass their next MOT as well.'

What's worse is that in their eagerness to exploit the scheme, some car owners have simply thrown away cars that work fine, but are collectors' items.

In the past year, Autogreen has processed a fair number of classic and valuable cars - no Ferraris yet, but a Jaguar XK8, a smattering of old MGs and Alfas.

This is sad for anyone who cares about our automotive heritage. But from a purely practical perspective, the far greater scandal is the thousands of bread-and-butter cars that were suddenly worth more scrapped than as viable vehicles.

So why have so many ended up on the scrapheap? It's not entirely the fault of the scrappage scheme.

Part of the problem is that it's no longer economical to repair cars in the way it once was. So if something does go wrong, it can cost more than it's worth to repair it.

'It could be something very simple,' says Austin-Dodds.

'Lose the keys on a newish Saab and you are looking at £1,000-plus for a new set plus the labour to reprogramme the central locking.

'That alone could be enough to see the car scrapped.'

Throw in a £2,000 subsidy to do so and this becomes a near-certainty.

And in fairness, while plenty are still in working mechanical order, many of the cars here are well-past their prime and the roads are a better place without them.

This waste might be more excusable if the scrappage scheme produced massive environmental benefits - a major lobbying point by the car industry.

But, in fact, this claim looks to be extremely dubious at best. For when calculating a car's lifetime carbon footprint, you need to look at ALL the CO2 it produces - not just the amount emitted when its engine is running, but also the amount produced when it was built and, for that matter, when it was scrapped.

For instance, manufacturers need to haul about ten tons of iron ore out of the ground to make the average automobile.

That process produces a lot of CO2. As does the manufacturing itself.

Ford (which obviously has a vested interest in getting people to buy new cars) admits that between a quarter and a third of all the CO2 emitted by a car in its lifetime comes not from driving it but from its manufacture.

The best estimates are that the combined process of scrapping an old car and replacing it with a new one emits between three and five tons of climate-changing CO2.

Some of this, of course, will be compensated for by the fact that the new car will be more fuel-efficient than the vehicle it is replacing.

But the key question is: how long do you have to drive your new, more economical car for the efficiency savings to make up for the huge dollop of extra carbondioxide produced by throwing away your old one?

A long time, it turns out. For example, if you swap a 12-year-old family hatch for a brand new one of similar power, the efficiency savings will take a full six years to pay off the initial 'CO2 debt'.

But that is based on an average driver's use of about 8,000 miles a year.

Those cars that are driven less frequently will take far, far longer before there is a net benefit to the environment. So long, in fact, that it is perfectly possible that the 'new' car might be damaged, or scrapped itself, before then.

So if the car industry's environmental claims for the scrappage scheme are flawed, what then about the economic ones?

A spokesman for the Society of Motor Manufacturers and Traders claims scrappage has 'protected thousands of jobs in retail and manufacturing'.

The raw figures seem to back this up. Thanks to the boost that the bangers for cash scheme gave, the collapse in new car sales was not only halted - it was thrust into reverse.

In February, sales were up 27per cent year-on-year. And a fifth of all new car registrations in the last year have been under the scrappage scheme.

We should not forget, either, that the scrappage scheme has also allowed many people who would otherwise never have been able to afford anything other than an old banger to drive off in a shiny new vehicle.

But is it the 'British' car industry that has benefited? Well, not exactly.

If we still had a major indigenous car industry (like France, Germany and Italy), there would be a stronger economic argument for scrappage. But we do not.

We make a lot of cars for foreign firms and have a large autocomponents industry, supplying brakes, engines and so on.

And of course a huge dealer network. But the UK is no longer home to a single major car manufacturer.

As a result, probably the greatest winner from the scheme is the Korean automotive giant Hyundai, whose little i10 hatchback has been flying out of the showrooms.

Thanks to the scrappage subsidy, this model's price dropped to less than £5,000. You could pick one up on a contract for less than the monthly cost of a mobile phone.

No wonder Hyundai recorded a 102 per cent rise in sales, meaning nearly 40,000 new Hyundais drove onto Britain's roads in the last 12 months.

Is subsidising a Korean firm really the best use of the UK taxpayers' £400 million?

Mindful of potential criticism, motor industry sources recently released figures which showed that while £400million of taxpayers' money had been pumped into the scrappage scheme, extra VAT revenue from the sales of new cars produced an overall Treasury windfall of £101 million, so the taxpayer did not end up out of pocket.

But this is dubious accounting. For that 'extra' VAT simply came from people who, if they hadn't bought a new car, would most likely have been spending their cash on something else - a foreign holiday, perhaps, new clothes or a home extension.

And these purchases, too, would have attracted VAT. Worse still, scrappage skewed the second-hand car market by interfering with supply-and-demand.

The discount hammered down the prices of nearly-new cars, and, by removing thousands of viable older cars from the market, pushed up the prices of cars more than ten years old.

The net effect of scrappage, therefore, was to make motoring cheaper for the well-off, and more expensive for the poor. Hardly a result that squares with Labour's beliefs.

Within its own terms, scrappage was a success. It did not go overbudget. And yes, undoubtedly some jobs have been saved, and a few even created.

But at what cost? Many of the winners live in Seoul not Solihull, and in Britain the chief beneficiaries have been the change-jangling Rotarians who run the big car dealerships, not the blue collar assembly-line workers.

In fact, when the scheme was first mooted, Labour ministers wanted nothing to do with it and Lord Mandelson in particular was hugely sceptical.

The worst aspect of this whole fiasco, though, is surely the simple wastefulness that has seen tens of thousands of roadworthy vehicles sacrificed to a toxic combination of industry lobbying, political spin and today's throwaway mentality.

It's too late now to save the likes of that pretty little Alfa and that BMW. But whichever party takes power in a month's time, it would be madness for them repeat the scrappage experiment that has consigned so many working vehicles to Death Row.

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Cars scrapped under the government scrappage scheme