Mandelson: No extension to car scrappage scheme
Thursday, 10 September 2009 09:44
Peter Mandelson yesterday revealed the government will not be extending the UK car scrappage scheme.
The business secretary speaking on a visit to China stated he had "no plans for extending or renewing" the car scrappage scheme, reports the Financial Times.
The car scrappage scheme was introduced in May offering drivers a £2,000 discount on a new car when scrapping a vehicle over ten years old - with the costs of the initiative split 50/50 between the government and the car industry.
A total of £300 million funding means only 300,000 cars will qualify for the scheme.
Up to the end of August 195,009 orders were taken using the scheme - leaving only a third of the funding left.
This means 13,000 cars a week are being scrapped and at that rate the scheme will only have funding for another eight weeks.
The spike in sales following the introduction of the new '95' number plate means the scheme may close even sooner.
Industry figures have now been pushing for an extension of the scrappage scheme - as there are fears once the incentive is withdrawn a slump in sales may return.
A spokesperson for Society of Motor Manufacturers and Traders (SMMT) said its members were in discussions over the future of the car scrappage scheme - with options including the industry funding some form of discount once the government cash runs out.
A major issue is the increase in VAT set to come at the start of 2010.
"What we don't want to see is all the good work on the scrappage scheme gone as VAT goes up," the SMMT spokesperson said.
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