So What Did The Budget Do For Us?

How about irreparable damage?  The worst news of the week was the 2 pence per litre rise from September on fuel duty, so do expect prices to go back to the beyond £1 per litre that we saw not so long ago.  Wasn’t much of a respite that we got now was it?

VED doesn’t look to have changed this year so far, although it does look as though the ‘special first year rates’ will be introduced in 2010.  What this means, essentially, is that those who buy a new car that is especially polluting may well have to pay a lot more for a first year payment.  £950 anyone?  Ouch.  Then again, if you can afford a Ferrari or Lambo that chucks out all that CO2, you’ll probably be annoyed but can easily afford it anyway.  Small changes are being introduced per year from 09-10 (about a fiver increase), whilst this rises further in 10-11.

The biggest introduction that will affect the motorist in this year’s Budget is the scrappage/incentive scheme.  Basically, this means that anyone with a car aged ten years or older will receive a grant of £2,000 (or more in the case of some manufacturers and special offers) when they trade it in for a brand new motor.  The car that is being purchased has to be registered in the UK and after the scheme starts (probably next month).

So, what are the terms?  Well, unfortunately you can’t just buy up a rag-tag bunch of old motors and fleet them along to get £10,000 off a new BMW.  You have to have owned the car for at least 12 months before a trade in, whilst the car you trade in must also have a valid MOT and be registered to a UK address.

What is the problem with this?  Well, personally, I think that just because a car is 10 years old (or more), it doesn’t mean that it should be taken off the road.  How about your cool BMW 840?  Well, it’s worth more than £2,000 anyway.  Are people who are driving around in horrific old bangers that are actually worth less than £2,000 going to be in a position to buy a new car anyway?

Frankly, I’m a bit baffled by the scheme.  As anyone who knows anything about cars will tell you, depreciation is the biggest cost of any car (unless you do happen to buy an old banger).  So, trading something in that won’t actually lose value to be given £2,000 off something that will lose about 40% (or more) of the list price after the first year seems like bad economic sense, even if it’s good for the environment.  Maybe it’s just me, but I’d rather have that money in my pocket and buy a car that’s a couple of years old.

Lastly, I hear voices of dissent amongst the manufacturers.  Naturally enough, they aren’t too happy about the government only forking out half of the money.  Others though welcome the deal.  Either way, it’s ok.  But I doubt it’s much more than that.

Lastly, for the time being, VAT is remaining the same.  Will this stay however?  Unfortunately, it can’t.  The fact is the government is putting everyone in debt.  One of the biggest ways to reduce the debt is to rake in taxes where they can, and this will mean VAT will go back up, probably sooner rather than later.

Verdict – a terrible Budget for the motorist.  Just for that, I’m going to buy something with a V8 and shred some rubber on a regular basis.  I’ll do it with a British car in mind though.  That new Jaguar XFR looks pretty tasty…