Budget go-ahead for £2,000 scrappage incentive

The Government is to attempt to revive the struggling car industry with a £2,000 scrappage incentive for owners of older vehicles.

The move comes after months of lobbying from the industry, which has seen sales plummet, and puts Britain in line with other Western European countries that have introduced similar programmes.

Owners of cars that are more than ten years old will be able to scrap them and get £2,000 towards buying new vehicles.

The scheme will start next month and finish in May 2010.

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However, the budget for the scheme is much more modest than those operating in other countries.

It will be funded by £300 million from the Government and the same amount from the industry, enabling 300,000 people to take up the offer.

Germany recently trebled the value of its scrappage scheme to €5 billion (£4.5 billion) amid soaring demand.

Germany’s new car market jumped 40 per cent last month.

Lord Mandelson, the Business Secretary, said: “The car sector is under huge pressure at the moment and the Government is determined it remains a very important part of our manufacturing base. It invests heavily in research and development, supports highly skilled workers and a wider supply chain. These are vital to our future manufacturing and retail success."

Paul Williams, chairman of the Retail Motor Industry Federation, said: “The introduction of a vehicle scrappage scheme as announced in the Budget will boost the new car market, encourage consumers to get back into car showrooms and reduce the likelihood of employee downsizing in this sector.”

The effectiveness of a car scrappage programme for Britain has been questioned by some because imports make up 80 per cent of the new car market. LINK...