Mandelson extends scrappage scheme

CAR industry bodies have welcomed the government&rsquo;s decision to extend the cash-for-bangers scheme, saying it will help the ailing automotive sector achieve a lasting recovery.<br /><br />Business secretary Lord Mandelson announced at the Labour party conference yesterday a &pound;100m extension to the scheme, which equates to 100,000 vehicles. He also widened the cut-off period to trade in old cars by six months.<br /><br />&ldquo;The extension will inspire consumer and business confidence,&rdquo; Society of Motor Manufacturers and Traders&rsquo; (SMMT) chief executive Paul Everitt said. <br />&ldquo;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,&rdquo; he added.<br /><br />The SMMT has been calling for an extension to the scheme since it was first announced in the Budget in April.<br /><br />Mandelson also improved the scheme for van owners, who can now trade in their old vehicle if it is over eight years old, instead of the previous 10.<br /><br />&ldquo;As Britain&rsquo;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,&rdquo; David Raistrick, UK manufacturing leader at Deloitte said. <br /><br />The scheme, which has been letting drivers trade in their old cars for &pound;2,000 towards buying brand new ones since May, was &ldquo;running out,&rdquo; Mandelson said yesterday. <br /><br />&ldquo;We cannot do everything but that does not mean doing nothing,&rdquo; he added, as he set out the terms of the extension. <br /><br />Some 227,750 orders for new cars have so far been made through the incentive. It costs the government &pound;1,000 for each car, meaning that &pound;227m has been spent on the scheme. <br /><br />Including the extension, &pound;400m will have been spent on the scrappage scheme, which is due to end in February.