Mandelson set to announce scrappage extention

Posted on 28 Sep 2009 by The Manufacturer

Government will announce this afternoon that it will extend the £2,000 car scrappage scheme in an attempt to maintain the increased demand that the programme has stimulated.

The original plan, first announced in April, was for the scheme to run until February next year or until the £300m pot that Whitehall made available for it ran out.

The scheme, which sees government and car manufacturer each put up £1,000 for a discount on a new car when one over ten years old is scrapped, has been well received and the maximum threshold is set be reached over the next week or so.

Trade bodies including EEF, the manufacturers’ organisation; the Society of Motor Manufacturers and Traders; and the British Chambers of Commerce have all lobbied for the scheme to be extended over the last few days. Business secretary Lord Mandelson has also advocated the continuation to his Chancellor colleague Alistair Darling and the BIS boss’s corner is today victorious.

Mandelson will make a speech to the Labour party conference this afternoon which outlines the details of the extended plan.

David Raistrick of accountants Deloitte pointed out last week that the scheme does not effectively cost government anything as it makes more than the £1,000 it puts up for each sale back through tax and VAT.