Mandelson extends car scrappage scheme by £100m

Monday, 28 September 2009 03:05

Peter Mandelson has promised to extend the car scrappage scheme to cover a further 100,000 cars.

The business secretary told the Labour party conference: "Our car scrappage scheme is so successful, the money is running out."

Playing with the audience, Lord Mandelson stated: "I'm sorry we cannot do everything - but this does not mean doing nothing.

"So today, I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans."

The cost to the government should be £100 million.

The car scrappage scheme came into force in May with a budget to cover 300,000 cars - with the cost split 50/50 between the government and industry.

Since the start of the scheme 227,750 orders for new vehicles have been taken and there were fears the discounts would run dry in the next two months.

The extension should now see the car scrappage scheme last into 2010.

The car scrappage scheme sees motorists being given £2,000 towards a new car when they trade in their current vehicle, if it is over ten years old and they have owned it for 12 months or more.

John Procter at the Society of Motor manufacturers and Traders, which represents the industry, welcomed the extension although he admitted they had not been consulted and awaited the final confirmation of the details.

"We have been calling for the government to extend the scheme so it runs its natural course and finishes in February, so we get past the VAT honeymoon and into the March registrations."

Michael Cole, managing director of Kia Motors (UK), said: "With VAT expected to rise from the current rate of 15 per cent, an extension to the scrappage scheme will help to soften the blow to automotive business in the UK and help maintain momentum across the motor industry.

"It will also keep footfall high in dealerships across the UK, hopefully protecting jobs and dealers."

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