Vehicle scrappage scheme expanded to support SMEs

The Mayor of London, Sadiq Khan, has announced an expansion of the vehicle scrappage scheme ahead of the Ultra Low Emission Zone (ULEZ) growing later this month.

ULEZ is a scheme that aims to take the most polluting vehicles off London’s roads. Air pollution in London is an urgent health crisis, with the Mayor’s office claiming it is responsible for around 4,000 premature deaths in the capital each year. ULEZ will expand to the whole of London on August 29.

What does this mean for SMEs?

The announcement of the expansion of ULEZ was another blow to the pockets of small businesses in the city who are already under extreme financial pressure due to high energy bills and the ongoing cost of living crisis.

However, the expansion of the vehicle scrappage scheme means every Londoner with a non-ULEZ-compliant car will be eligible for a £2,000 grant, with specific support for small businesses too.

A grant per van will be raised from £5,000 to £7,000, and the number of vans or minibuses small businesses and sole traders can scrap will increase to three – meaning small businesses could get £21,000 for a greener fleet. Minibus payments will also be increased, and so too will the payments for switching to an electric vehicle, meaning some businesses could secure even higher levels of support. Those businesses who want to retrofit an existing vehicle will be eligible for a grant of £6,000, up from £5,000. 

“These are significant changes to the current scrappage and retrofit scheme, through these extra funds which FSB have successfully lobbied for, and they will make a real difference to many small businesses and sole traders in the capital,” says Michael Lloyd, London infrastructure lead at the Federation of Small Businesses (FSB).

“We have made the case for the messaging of the introduction of the extension and the funds available to be small business friendly. The smallest firms are often the hardest to reach and so communicating the funds in the clearest possible way, in particular for those with light vans who are keen to retrofit, remains paramount over the next month and beyond – particularly now retrofit grants have increased to cover almost all of the cost. “

City limits?

The Mayor plans to use £50m of City Hall’s reserves to fund these changes to the vehicle scrappage scheme – this will bring the total scrappage funding up to a maximum of £160M.

However, there is currently no support for those who live outside London but regularly go into the city for work or appointments. Kent and Surrey county councils have said they believe the vehicle scrappage scheme should be extended to all.

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Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, TNW, UKTN, The Business Magazine and Maddyness UK. She also works closely with agencies such as CEW Communications to develop content for their startup and scaleup clients.