Tuesday, September 29, 2009
Scrappage scheme to be extended
The government is to extend its car scrappage scheme, Lord Mandelson said.
He said the scheme, which started in May and gives consumers £2,000 off a new car if they trade in one at least 10 years old, was running out of money.
The business secretary announced the move, called for by the car industry, in his speech to Labour's conference.
He said that "while we can't do everything we can do something" and said the scheme would be extended to cover 100,000 more cars and vans.
The initiative had been due to end in February, or when the £300m the government has allocated towards the scheme runs out, whichever happens first.
'Risks'
Unions and Labour MPs have urged ministers to extend the scheme to help save manufacturing jobs amid concerns car sales would fall sharply without continued incentives to boost demand.
Unite General Secretary Derek Simpson told the conference that extending the scheme was the kind of move which Labour must make to help "reconnect" with working people.
And Labour backbencher Lindsay Hoyle said it was "important" the scheme was extended soon.
Manufacturing associations recently wrote to Chancellor Alistair Darling about the "clear risks" of ending the scheme, saying demand for new cars would be hard to maintain without the incentives currently in place.
The letter was signed by the EEF, UK Steel, the Manufacturing Technologies Association and British Plastics Federation.
The 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars and exchange them for new ones.
The US version spent its $3bn allocation in a matter of weeks. The UK, US and German governments have spent a total of 8bn euros ($11.4bn; £7bn) on similar scrappage schemes.
DATED: 29.09.09
FEED: AW
