U.K. scrappage deal under pressure on day one
In a disastrous day, which Gordon Brown had hoped would at least move him back up the political ladder, both Ford and Honda have pulled out of the UK government's scrappage scheme citing concerns over VAT payments. The scheme, which offers up to £2000 towards a new car in exchange for scrapping an old vehicle, is 50% funded by the UK government and 50% funded by car manufacturers. However, there has been a serious fallout between manufacturers and car retailers regarding who pays the VAT on their £1000 share of the payment.
As a consequence we have seen Ford and Honda suspend delivery of vehicles associated with the scheme amid serious embarrassment for the UK government which had gone all out to advertise and promote the scheme. This is yet another situation which on the face of it should have been a good day for the authorities but has fallen apart due to an oversight by all of those involved. Surely the VAT element should have been sorted out before day one although unfortunately this does not seem to have been the case.
However, there are hopes that the scheme will be back on track in a matter of days once the situation has been resolved with Gordon Brown and Peter Mandelson especially keen to see it succeed.
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