Scrappage Scheme Extended

Lord Mandelson announced this week that the Government will extend its car scrappage scheme to cover a further 100,000 cars.

The vehicle discount or ‘scrappage’ scheme is a voluntary scheme for motor dealers who will give you £2,000 off a new vehicle if you let them scrap your old one. The scheme which was unveiled by Alistair Darling in April’s Budget started mid May 2009 and was expected to end early October when they had reached the target of 300,000 cars. But now with the extension plans in place the government are covering another 100,000 vehicles which could see the scheme ending in February 2010.

The Business Secretary told Labour’s annual party conference: “Today, I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans.” The extension means the scheme could potentially run well into next year.

So far 227,750 orders have been placed through the scheme – which at a cost to the government of £1,000 per car means £227m has been spent. The extension means a total £400m will have been committed to the scheme, which will end in February at the latest.

Other modifications to the scheme will see the age qualification changed by six months to any car registered before 29 February 2000, and cut the minimum age of vans being scrapped from 10 years to eight years.

In his speech to delegates in Brighton Lord Mandelson said: “There are encouraging signs that the economy is picking up. But recovery remains fragile and uncertain, especially in manufacturing and one of its cornerstones, the car industry.”

The Society of Motor Manufacturers chief executive Paul Everitt said it was an “extremely important decision that will inspire consumer and business confidence”. He added: “The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first year VED rates.”

Nissan’s UK managing director Paul Willcox said the scheme had provided a “vital boost” to the car industry and they were pleased “to see that the Government has rightfully placed the car industry at the top of the economic agenda where it belongs”.

The recession-busting scheme has been one of the most effective forms of subsidies to the car industry and has saved tens of thousands of jobs.

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