The British auto industry has held secret talks with the government about the possibility of a 1.5 billion pound scrappage scheme or “market stimulus package” which he said should encourage the purchase of diesel and gasoline cars in line with cleaner vehicles.
The plan is being considered by industry and the government will take £ 2,500 from the price of the car and put 600,000 new vehicles on the road.
Although many campaigners and business leaders demand that the postconaona industry bailout be linked to environmental goals, the British car industry says the main principle is that incentive schemes are fair for all types.
In a correspondence with the government seen by the Guardian, the Motorcycle Manufacturers and Traders Society (SMMT) said the scheme must “support the entire market, not only disproportionately support certain segments or technologies, recognize the diverse nature of British automotive manufacturing”.
While the government has encouraged the industry to quickly adopt greener technology to help meet clean zero-emission climate change targets, more than 90% of cars sold last year were purely gasoline or diesel. The largest manufacturers in the UK, such as Jaguar Land Rover, currently remain committed to diesel – although the diesel market share has fallen from about half of new car sales to more than a quarter after the VW emissions scandal, fears public health and changing tax rules.
In a letter sent to the chancellor, Rishi Sunak, and business secretary, Alok Sharma, in May pushing for “secret discussions”, SMMT chief executive, Mike Hawes, acknowledged that 600,000 new cars would mainly “add in otherwise the market was almost dead” While SMMT claims that the scheme “can also support broader government ambitions in terms of climate change and improving air quality,” he said “the main benefit is starting markets, sectors and the economy without further depleting the public wallet”.
SMMT said the scheme would bring net benefits to the treasurer of around £ 3 for every £ 1 spent, through tax revenue from VAT and vehicle excise tax; get manufacturing workers from the Covid-19 Treasury job retention scheme; and help avoid “looming redundancies in a depressed market”.
The letter said that business minister Nadhim Zahawi had been “very helpful” in earlier talks and had acknowledged that the scheme would also have “intangible benefits driven by increased consumer spending for consumer confidence”.
A The car wrap scheme was introduced after the financial crisis in 2009 led to hundreds of thousands of extra vehicle sales.
The British car industry was devastated by the locking up of the coronavirus. Production was stopped at factories throughout the UK during April, when only 197 vehicles were released production lines and sales fell by 97.3%, making it an industry the worst month since 1946.
The main request for the previous SMMT letter from April 24 – the reopening of car dealers – was given early last month by the government, with special permission for showrooms to be opened in front of other non-essential shops starting June 1.
However, the scheme that will encourage the purchase of new diesel and gasoline cars will go against the government’s net-zero commitment and plan to eliminate fossil fuel vehicles over the next two decades. Earlier this year the transportation secretary, Grant Shapps – who apparently had not been copied in the correspondence – debated to put forward the target date to ban the sale of new diesel and petrol cars from 2040 to 2032.
Lockdown has resulted in huge improvements in air quality in many cities, but there are signs that car use and pollution can soar when businesses are reopened and people return to work. While passengers using trains, buses, and other public transport are a fraction of the amount before the crisis – between 5% to 20% – road traffic has returned about 70% of normal levels.
Richard George, head of oil at Greenpeace UK, said: “If the government will save the car industry, then every penny must go to support the transition to clean electric vehicles. People have paid attention and enjoyed the clean air we have seen during locking. Putting aside gasoline and diesel for electric cars and vans will improve air quality forever, with great benefits to our health and environment, and attract the British car industry into the 21st century and secure the future for its workers. “
The SMMT plan has emerged while other industry leaders agreed that bailouts must have a green condition. Earlier this week, around 200 signatories – including BP and Heathrow bosses – wrote to the government to say that efforts to improve the economy “could and should be aligned with UK regulatory targets on net zero emissions no later than 2050”.
Asked about the SMMT proposal by the Guardian, Hawes said: “Like many sectors, we continue to communicate with the government, highlighting the situation and what support might be needed when the crisis immediately subsides.”
He said that while there appeared to be a positive response to the opening of car showrooms on Monday, and some pent-up demand, “the effect on underlying consumer confidence would be unclear and we might need to work with the government to identify ways to increase demand, especially given the sector’s contribution this is the economy and employment. At that time it was not now but the industry, and the government, needed to be prepared for all possibilities.
The government is approached to provide comments.
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