Business leaders call on Government to adopt national diesel scrappage fund

An alliance of business organisations and environmental charities has written to the Chancellor of the Exchequer, Philip Hammond, urging him to introduce the Mayor of London's proposals for a national diesel scrappage fund.

London traffic. Image: Gareth Williams/Flickr/Creative Commons
London traffic. Image: Gareth Williams/Flickr/Creative Commons

The Scrappage fund, proposed by Sadiq Khan last month would financially compensate motorists and help the Government improve air quality.

Diesel cars and vans, popular with small businesses, contribute significantly to London’s current high levels of air pollution but many were bought in good faith by companies and individuals who did not know the damage they could do.

Organisations including the Federation of Small Business, London First, Greenpeace and the Licensed Taxi Drivers' Association have expressed their support for the Mayor’s proposals for a national diesel scrappage fund.

In their letter to the Chancellor they said: "We believe the Mayor has adopted a cost-effective approach that minimises risks and simplifies administration for Government.

"The Mayor’s proposal seeks to rebalance the financial cost of improving our air away from the individual – unlocking significant emission reductions while reducing the cost for those least able to afford to upgrade their vehicle or change how they drive. This will enable the government to have greater confidence that it will fulfil its legal obligation to comply with European legal pollution limits as soon as practically possible."

Last month, Sadiq Khan delivered a report jointly developed by Transport for London and Cambridge Economic Policy Associates that provides a new framework for a national scrappage fund and modelling which other UK cities could use to produce their own scheme and subsequent share of funding required. 

Key recommendations included:

  • payments of £3,500 to scrap up to 70,000 polluting vans and minibuses in London  and a national fund to support charities and small businesses that often own older diesel and mini buses (approximately £245 million in London)
  • a credit scheme valued at £2,000 to help low-income households in cities (those with incomes lower than £231.60 per week after housing costs) scrap up to 130,000 polluting cars, with incentives for car clubs and public transport (costing approximately £260 million in London);
  • payments of £1,000 to help scrap up to 10,000 older polluting London taxis (this is in addition to extra TfL help for drivers to upgrade to greener taxis): traditionally the taxi trade has had a limited choice of heavy, polluting diesel vehicles but this proposed fund would be used alongside wider existing support to help drivers switch to new zero-emission models (approximately £10 million in London).

Currently more than 9,000 Londoners die prematurely each year as a result of long-term exposure to air pollution. Air pollution in the UK is leading to 40,000 premature deaths annually, creating an economic burden of £20bn every year.

London policy chair of the Federation of Small Businesses (FSB) Sue Terpilowski said: "FSB London is pleased that the concerns of our members have been heard. FSB supports the principle of improving air quality and removing from the roads those vehicles that contribute disproportionately to air pollution."

Khan said: "Our filthy air is a national health emergency and it is vital that the Government treat this crisis as seriously as I am doing and introduce measures that will cut air pollution and save lives.

"I am pleased that a broad alliance of business organisations and environmental charities are backing my plans for a national diesel scrappage. Now is the time for the Government to take urgent and decisive action to help get the most polluting vehicles off our roads in a fair and reasonable manner."

British Vehicle Rental Leasing Association chief executive Gerry Keaney said a scrappage fund "could make a significant contribution in reducing emissions"

He added: "The van leasing, vehicle rental and car club industry can meet these requirements."

The Mayor has made tackling London’s filthy air a top priority and has doubled funding spent on tackling air quality to £875million over the next five years. 

The T Charge, the toughest emission standard of any world city, will start in central London on 23 October. Up to 10,000 of the oldest, most polluting vehicles are expected every weekday to be potentially liable for the new emissions levy of £10, which will apply to motorists who own vehicles that do not meet Euro 4 standards – typically those diesel and petrol vehicles registered before 2006 .

He is also consulting on introduction the world’s first Ultra-Low Emission Zone (ULEZ) in 2019, and then expanding it up to the North and South Circular Road.

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