Scrappage shows that fiscal stimulus and early investment were the right moves

By Julian Ware-Lane / @warelane

I work at the Ford Motor Company site in Dunton, near Basildon in Essex, and so the recession and the government’s attempts to drag us out of it are of personal interest to me. So far, the automotive industry has been hit hard.But the Government Scrappage Scheme has reached over 154,000 orders – which puts it beyond the halfway mark towards using up the £300 million that the Government set aside to fund the scheme. Hopes are that the September plate change could stimulate more demand.

It is reported that although sales of cars are down on a year ago, this decline is slowing. Scrappage is cited as a major factor for that, and there is some cautious but detectable optimism.

This is a clear sign that the Government’s firm and decisive intervention is bearing fruit. The scrappage scheme has had a very positive impact on the market, and jobs are being created as a result.

The Society of Motor Manufacturers and Traders reports the good news about new jobs, all attributed to the support that the government has given.

The SMMT also report the July UK vehicle production figures, which clearly indicate that the “pace of decline in car output slowed considerably in July with the scrappage scheme starting to have an effect on volumes”.

This somewhat shows up David Cameron’s judgement. It will be remembered that he mocked this scheme when it was announced in the budget in April.

The out-of-step with the rest of the world Conservative Party opposed the fiscal stimulus, and we are now seeing countries coming out of recession which ignored their bad advice. No wonder Cameron wants an election now – he realises that the longer we wait the more it will be seen that Labour’s interventionist approach was right all along.