Government extends car scrappage scheme

The government announced a £100 million increase to the vehicle scrappage scheme to build on the success it has enjoyed so far in boosting consumer demand. An announcement from the Department for Business Innovation and Skills said the automotive sector supported R&D, technological innovation and skills and a manufacturing supply chain that were a mainstay of the wider manufacturing sector in the UK. Industry figures had reflected the positive impacts of the scheme both within and beyond the automotive sector, with manufacturing benefitting and the whole supply chain, from plastics and steel, to individual component manufacturers receiving a boost. Business Secretary Lord Mandelson said: "The sector has been strongly affected by the recession, but the scrappage scheme has delivered a boost to manufacturers and the supply chain. We have listened to the concerns of manufacturers and are increasing the funding of the scheme to £400million. But we must make sure that the help we do offer is targeted, limited and proportionate. This is not a blank cheque to the auto manufacturers but recognition that there is still a short term challenge to boost demand and confidence in the sector." David Raistrick, UK Manufacturing Leader at Deloitte and a campaigner for the extension, said the continued support of the scrappage scheme would help the automotive industry achieve a long lasting recovery. "As Britain's automotive and wider manufacturing sector continue to play a large role in helping the UK economy emerge from recession this positive announcement comes at a very critical time." Paul Everitt chief executive at the Society of Motor Manufacturers and Traders (SMMT) said the decision would inspire consumer and business confidence. "It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable." Steve Radley, director of policy at EEF, the manufacturers' organisation said: "Industry will welcome this decision as a recognition government understands the need to underpin such a key sector, protect vital supply chains and skilled jobs. There are big challenges ahead for the industry, but UK companies should be well placed to turn the shift towards low carbon vehicles into an opportunity. Continuing the scrappage scheme will help industry weather this storm, safeguarding its future and allowing a more orderly transition." So far 227,750 orders have been placed through the scheme. The increased funding enables the scheme to fund a further 100,000 vehicles, bringing total budget to £400 million and covering up to 400,000 vehicles in total. The extension continues as a Government and manufacturer partnership, with matched funding providing the £2,000 discount for each scrappage order. Alongside the increased funding the government will work with manufacturers to extend the benefits to van owners with vehicles over eight years old rather than the current 10 year requirement. Car owners will also get a boost, with the age qualification changed by 6 months to extend the benefits to cars registered on or before 29 Feb 2000 (V registration). The scheme will come to an end in February 2010 or when the funding runs out, whichever is sooner.