Ian
Pearson: I agree with the hon. Gentleman that there have
been big problems with regard to the dealer network in the United
Kingdom. In large part, those problems have been driven by the fact
that people have not been buying new cars, which is why a lot of people
who are working in the dealer network very much support what we are
trying to do.
I want to
return to the second-hand market.
John
Hemming: I thank the Minister for allowing me to stick to
the original point, about the efficiency of vehicles. Obviously JLR has
also been working on making its vehicles more efficient, so the more
modern Jaguars or Land Rovers are not excluded, if one is looking at a
more efficient vehicle compared with one that is 10 years old. However,
given that the system is cash-limited, why can we not try to do both
things at once, which is to improve the efficiency of vehicles and to
give the kick-start to the business so that we do not have everyone
folding all over the place? What is the problem with trying to do two
things at once?
Ian
Pearson: We are trying to introduce the scheme as quickly
as possible and it will be introduced next Monday; that is our clear
intention. In response to the hon. Member
for Hertford and Stortford, we have always said that the scheme will go
on until March 2010, or until the £300 million has
been exhausted. We will follow up that scheme very closely
indeed.
Ian
Pearson: I have not even answered the hon.
Gentleman’s question yet, but I will give way to him
anyway.
John
Hemming: I just want to add one little bit to that
original question. Would the Minister agree to keep this particular
issue under review, because we are not agreeing the words of the scheme
here, so the scheme could vary as time goes by? Perhaps, therefore, the
Minister could keep the issue under review.
Ian
Pearson: We always keep issues under review. However, I
think that it is clear that we have designed a scheme here that we
believe will be effective in helping to see a boost in car sales in the
United Kingdom. That would help the dealer network and some of the
manufacturers in the United Kingdom directly. Also, because we import a
lot of cars as well as exporting a lot of cars, foreign car
manufacturers will be helped as a result of this scheme, just as we
have been helped by the boost in demand in Germany, because our supply
chain was assisted. All that work will continue and I believe that it
will make a difference.
The hon.
Member for Hertford and Stortford asked why we have not introduced the
German scheme. We looked very carefully at the German scheme and to my
mind it is a very expensive and generous scheme. When we came to
consider what was the best use of taxpayers’ money, we thought
it right that there should be a matching contribution from industry. He
will be aware, from some of the newspaper comments that were made a few
weeks ago, that there was some push-back from industry about that idea.
I am pleased to say that the industry now completely accepts the scheme
that is being introduced and actively wants to participate.
One has to
make judgments. In our judgment, £1,000 matched by £1,000
from industry is a better scheme design than the €2,500 one that
was introduced in
Germany.
Mr.
Prisk: The Minister is characteristically generous in
giving way. Is he therefore saying that he would not expect the German
scheme, which achieved a 40 per cent. increase in sales, to be
similarly successful here? By what rate does he expect car sales to
rise—20, 30 or 40 per
cent.?
Ian
Pearson: I would not want to put a figure on it. In my
introductory remarks, I suggested that our scheme was likely to be
closer to the French scheme than the German one. The hon. Gentleman
will be aware that the French scheme is, for instance, less generous.
He spoke about a €1,000 contribution. Obviously, there will be
some price-demand effect. It is difficult at this time to provide a
reliable prediction of what that might be, but we will know very soon.
Let us wait and see what the actual results are.
Finally, I
want to offer some comments on the second-hand market, which was raised
by the hon. Member for Gravesham. As he will be aware, the second-hand
market is holding up reasonably well at present, with residual values
not far off what they had been previously. Demand for new cars has
fallen dramatically in comparison. When we were designing the scheme,
we actively sought to minimise the impact on the used car market. That
is why the scheme is for brand-new cars only, as opposed to nearly new
cars. We are all aware of schemes where one can buy a nearly new car,
and that is why we have limited funding to what we believe is a
reasonable limit. Again, that was a matter of judgment. The German
scheme has cost billions of euros. We will spend £300
million on
ours.
Mr.
Holloway: I was talking to a friend who is a Mitsubishi
dealer. He said that there is not really a feel for what will happen to
the market in used cars that are under 10 years old. Those people who
want a cheaper car—£1,500 or so—may find that the
price has gone up because supply has gone
down.
Ian
Pearson: The hon. Gentleman’s friend may have a
point. There is some uncertainty, and we will obviously monitor
developments in the second-hand market closely as the scheme is
introduced. However, I hope that he will be reassured by the fact that
manufacturers are under an obligation to pay dealers
quickly—within 10 working days—and that it
will be the manufacturer who pays the £1,000. We want to ensure
that the cash gets moving through the system as quickly as possible.
That is an important part of the
scheme. Overall,
I believe that we have designed a scheme that uses a prudent level of
taxpayers’ money to meet a clearly defined problem: the fall-off
in automotive sales in the United Kingdom. It will give a boost to the
industry—not just to the manufacturers but to the dealer network
and supply chain as
well. The
experience from car scrappage schemes elsewhere is that there is a
tendency for consumers to choose smaller, more fuel efficient vehicles.
We will not be prescriptive in the UK and absolutely require them to do
that, but that has certainly been the experience in Germany, which did
not implement any environmental standards but has seen a big demand for
vehicles such as the Ford Fiesta and the Opel Corsa. I have no reason
to believe that there will not be a similar trend in the UK, so I
believe that the concerns of my hon. Friend the Member for Morley and
Rothwell about environmental standards are likely in practice to be
misplaced. I
repeat that the scheme will give a big boost to the automotive
industry. We want to get on with it and provide real help now for
businesses that need
it. Question
put and agreed
to. Resolved, That
the Committee has considered the motion, That this House authorises the
Secretary of State to undertake to pay, by way of financial assistance
under section 8 of the Industrial Development Act 1982, in respect of
the Scrappage Scheme, sums exceeding £10 million and up to a
cumulative total of £300 million to vehicle
manufacturers for the assistance of the automotive
industry. 7.14
pm Committee
rose.
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