It is encouraging that the government’s £300m scrappage scheme has boosted the UK’s car industry, with new registrations up 6% this year
But having spurned building industry calls to encourage consumer spending on home repairs and improvements by cutting VAT, why does the car industry warrant such privileged Treasury treatment?
Is it the sector’s contribution to the economy? Car manufacturing’s total added value to the UK economy is estimated at £10bn. Construction contributes £10bn annually to Scotland’s economy alone.
Is it the environmental benefits? True, consumers have traded in their old bangers for greener new models. But home improvement incentives would also have major environmental benefits.
While evidence is increasing that the blanket 2.5% VAT cut has failed, “cash for bangers” proves that properly targeted consumer incentive schemes work. Car manufacturing will remain a virility symbol for governments worldwide. But this government must recognise that construction is also vital to future economic success.
Michael Levack, chief executive, Scottish Building Federation