The Merits of a Domestic Appliance Scrappage Scheme

In a recent move to help the environment, The British Retail Consortium has put in a request to the Government to introduce a domestic appliance scrappage scheme akin to the car industry scrappage programme that already exists in Britain. The suggestion is that the government should waive the 15 per cent VAT on white goods such as fridges and washing machines when customers trade up. The intension is that this will encourage consumers to replace old energy consuming appliances with ‘greener’ versions and stimulate the economy which will benefit us all.

Every country in the G8 and beyond has been given appropriate pollution targets to tackle. Most countries are currently struggling to meet these objectives and extra methods are required. The idea here is that rather then working against its own objectives when it sets targets for reducing carbon emissions, the Government would instead move us towards those targets.

This burden or rather challenge is our collective responsibility. Retailers are doing their bit to cut carbon but homes are responsible for 27 per cent of the nation’s emissions. Helping householders improve their performance has to be the next step.

To put things into perspective, a modern, efficient fridge-freezer uses less than half the energy of a 1995 model. Furthermore, over its lifetime it can pay for itself but having to find the cost up front puts customers off upgrading – particularly in a recession.

By removing VAT and exploring the possibility of a scrappage scheme, the Government would do a lot to get old energy and water-squandering appliances out of people’s homes. While a drastic measure with some downside, this could go a long way to helping meat these targets.

This suggestion is not an isolated move without president. Aside from the current car scrappage programme, other corporations are also taking similar approaches. The electrical giant Sony has recently announced that customers who return old TVs will be offered up to GBP150 off the cost of new set.

The newspaper, The Daily Mail (19 August) reported that customers who take advantage of its scrappage scheme will get GBP50 off small Bravia sets, GBP100 off a 40 inch set and GBP150 off any of its largest screens so we have an indication that with help, such a programme could indeed work.

It is also quite a profitable way forward for industry during the current economic climate. Sony also hopes to profit from the Government’s decision to switch off analogue TV signals in favour of digital broadcasts, as it is expected that more people will buy a newer set. The BRC claims that the Government could offer incentives during the digital switchover, through the reduction or elimination of VAT on energy efficient products.

As we see, the economics of such a wide spread scrappage campaign can help the environment, help business and should be considered. However, measures will need to be taken to ensure that the goods being replaced are recycles in an environmentally friendly way and that the good replacing them have real ecological credential rather than a basis in marketing hype alone.