The business secretary, Lord Mandelson, has announced that the
government will extend its popular car and light van scrappage

Speaking at the Labour Party conference today, Lord Mandelson
said that funding for an additional 100,000 cars and vans would be

“Our car scrappage scheme has been so successful the money is
running out,” he said.

The government’s initial £300 million funding for the scheme,
under which customers trading in a car 10 or more years old get a
£2,000 rebate, with half the discount provided by the manufacturer
and with a matching contribution from the state scheme, is
estimated to run out as soon as next month, some industry observers
have said.

The new funding for the scheme will allow it to continue into
the new year, providing a further boost for dealers and

Reaction from industry associations has been positive.

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“The extension to the scrappage scheme will be widely welcomed
in the motor industry. The government is also in talks in Brussels
on additional support for the motor finance sector. We need Lord
Mandelson to get a good result there, so that demand for new cars
can continue to be met in the future when the economy recovers,”
said the Finance & Leasing Association’s head of motor finance,
Paul Harrison.

“The extension of the vehicle scrappage scheme by government is
a victory for common sense over dogma,” said Paul Williams,
chairman of the National Franchised Dealers Association, which is
part of the Retail Motor Industry Federation.

SMMT chief executive Paul Everitt commented: “This is an
extremely important decision that will inspire consumer and
business confidence. 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.

“The additional 100,000 vehicles should help to counter the
likely negative impacts of a return to the higher rate of VAT and
the introduction of first year VED rates,” he added.