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MOTORISTS TO GET £2,000 TO SCRAP OLD CARS

Motorists will be given £2,000 towards the cost of a new car if they scrap a 10-year old model, under plans announced by the Chancellor to revive the motoring industry.

The "scrappage" scheme, costing the Government £300 million, is intended not only to boost the ailing car industry, but to take some of the most environmentally unfriendly vehicles off the road.

It will start next month and run until March 2010 and follows the introduction of a similar scheme in Germany, which triggered a 40 per cent rise in car sales last month.

Alistair Darling believes the scheme will result in at least 300,000 new cars being bought in Britain by the time the scheme finishes and will kick-start an industry which was bracing itself for its worst year for new registrations since the recession of the early 1990s.

Full details of the scheme, which will also apply to vans, will be announced by Lord Mandelson's Department of Business within the next few weeks.

It will entail the Government putting in £1,000 towards the cost of a new car, with the amount being matched by the car maker.

Somebody wanting to participate in the scheme would begin negotiations for a new car at the dealership by providing proof of the car's age and the fact that they have owned the vehicle for at least a year.

This would prevent somebody buying a very cheap car from a scrapyard and using it to claim the discount.

The car would also have to be inspected, either by the dealer of an official Authorised Treatment Facility. Once these formalities have been completed, a certificate would be presented which would enable the motorist to buy a new model.

Manufacturers participating in the scrappage scheme will be obliged to make their entire range of cars available, including their very cheapest models, often costing less than £6,000.

Privately some industry observers fear that dealers will use the scrappage scheme to withdraw discounts they would otherwise have offered to clinch a deal.

Nevertheless the car industry, which has suffered months of redundancies and production cutbacks, welcomed the Government's decision to adopt the scheme they have spent months campaigning for.

'This will boost the new car market and get consumers to get back into car showrooms," said Paul Williams, chairman of the Retail Motor Industry Federation. "This will make further lay offs at car plants and dealerships much less likely".

It was also welcomed by Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders. "This is good news for consumers and will get people back into showrooms, kick-starting demand in the market. The scheme recognises the economic value of the motor industry and we are determined to make it a success."

Edmund King, the AA's president, also hailed the introduction of the scheme. "A £2000 incentive from Government and manufacturers will help the economy, environment and employment. Cleaner, greener and safer cars will replace some of the older gross polluters," he said.

But the "green" credentials of the scheme were questioned by some of the Government's own environmental advisers, including Phillip Selwood, chief executive of the Energy Saving Trust.

"The government's announcement on scrappage contradicts the carbon friendly announcements in the budget such as money for electric vehicles, CO2 related Company Car tax and the increase in fuel duty," he said.

"This policy will increase car purchase regardless of CO2 emissions and the government has missed a significant opportunity by spending public money to incentivise any car upgrade when they could have incentivised the lowest carbon emission cars."



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