Government introduces incentive for motorists to 'scrap' old cars

Motorists are being offered £2,000 towards a new car or van if they trade in their 10-year-old, or older, vehicle for scrap under plans unveiled by the Government in today's Budget.

The decision to implement a scrappage scheme has been taken after careful consideration of car industry proposals, lessons learnt from European schemes as well as concerns raised about the impact of such a scheme on other sectors of the economy.

The UK scheme, with £300m from Government and matched funding from industry, is intended to provide immediate support on a short-term basis to boost the car industry and its supply chain in the wake of falling sales. It will also get older vehicles off the road and encourage consumers to invest in new, safer, and potentially more environmentally friendly models.

Business Secretary Lord Mandelson said: "This is targeted action with a capped budget and for a limited time, designed to boost the whole motor trade. This will ensure that the benefits of a scrappage scheme are balanced with the needs of other sectors of the car industry such as the second hand market, maintenance and repair businesses, and other industries that produce consumer durables or on the taxpayer.

"The car sector is under huge pressure at the moment and the government is determined it remains a very important part of our manufacturing base. It invests heavily in research and development, supports highly skilled workers and a wider supply chain. These are vital to our future manufacturing and retail success."

The scheme will be run by automotive manufacturers who wish to participate. It is expected to be operational from mid-May to allow industry time to prepare. There will be proper verification procedures to ensure the rules are followed, including audits by DVLA to avoid abuse that has been encountered in other countries.

Business Minister Ian Pearson said: "People will not only save hard-earned cash on buying a new car or a van for their business but they will know they are helping save jobs too.

"If you've got a vehicle that's ten years old or more, you just need to talk to a participating dealer who will do the rest. You will get at least £2,000 towards a new one."