Mandelson - 100,000 more cars & vans

The UK Government has announced it is to extend its Car Scrappage Scheme beyond the original £300m allocation that was initially set aside.

Speaking today at the Labour conference in Brighton, business secretary Lord Mandelson said that the scheme, which is running out of money, would be extended to cover approximately 100,000 more cars and vans.

The scheme was on course to use up its cash allocation way ahead of the February 2010 end date, which was set at the outset of the scheme. However, Mandelson has given the industry a renewed boost with this announcement, commenting: “There are encouraging signs that the economy is picking up. But recovery remains fragile and uncertain, especially in manufacturing and one of its cornerstones, the car industry.”

Unions and Labour MPs have been urging ministers to extend the scheme to help save manufacturing jobs amid concerns car sales would fall sharply without continued incentives to boost demand. Derek Simpson, General Secretary of Unite told the conference that extending the scheme would help Labour “reconnect” with working people. 

A recent letter to Alistair Darling, signed by the EEF, UK Steel, the Manufacturing Technologies Association and British Plastics Federation, warned of the “clear risks” of ending the scheme, noting that demand for new cars could not be maintained without the incentives currently in place.

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 in exchange 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 ($11.4bn; £7bn) on similar scrappage schemes.