TDI dieselA think-tank has called for the scrappage scheme to be re-introduced for diesel cars – as well as a hefty £800 first-year tax rate for new diesel vehicles.

The Head of Environment and Energy at the Policy Exchange think-tank, Richard Howard, says car buyers should be discouraged from choosing diesel cars over petrol, hybrid, electric or LPG models.

He said: “The problem with diesels, as exemplified by the Volkswagen ‘dieselgate’ scandal, is that they perform very badly in terms of local air pollution. Emissions standards have systematically failed to control NOx emissions from diesel cars and vans.”

Studies by the Policy Exchange, in partnership with King’s College London, suggest the trend towards diesel cars (which account for 36% of cars on UK roads today – up from 14% in 2001) needs to be reversed.

But, the think-tank claims, this shouldn’t be done in a way that penalises motorists who bought diesel cars in good faith (for example, by retrospectively increasing taxes on diesel fuel or banning diesel vehicles from city centres).

Policy Exchange has outlined a proposal to increase the first year’s vehicle excise duty (VED) on new diesel cars to £800. This, it says, could decrease sales of new diesel cars by 50% yet still raise £500 million a year to help fund a diesel scrappage scheme.

In 2010, the Government ran a scrappage scheme to encourage people who’d owned an old car (more than 10 years old) for more than a year to trade it in for a new, more efficient model. In that case, the Government paid £1,000 towards a discount on a new car, with car manufacturers paying a further £1,000.

The diesel car scrappage scheme being proposed by the Policy Exchange follows a similar principle – with the Government’s funding coming from the increased VED, while “given that car manufacturers are at fault for creating polluting diesels in the first place, it is only right that they should contribute to their replacement.”

The think-tank is also calling for incentives for people to switch to vehicles fuelled by liquid petroleum gas (LPG). Currently, just 0.1% of cars run on LPG (compared to 4% in Europe), with a catch-22 situation created by a shortage of filling stations.

Policy Exchange says this could be overcome by the Government encouraging the uptake of LPG vehicles through a fuel-duty freeze.