Cash For Bangers Scheme Extended

Cash For Bangers Scheme Extended

The Government has announced £100m in additional funding for the  (a.k.a. ‘cash for bangers
scheme’ or ‘vehicle discount scheme’).  The initial budget for the scheme was
£300m, which was intended to cover up to 300,000 vehicles.  The increased budget
of £400m will cover 400,000 vehicles.

Alongside the increased funding, the scheme has been extended to van owners
with vehicles registered on or before 28 February 2002, and car owners with vehicles registered on or
before 29 February 2000.  Initially, the scheme only covered
vehicles registered on or before 31 August 1999.

About the scheme

Subject to certain terms and conditions (see ), the scheme offers a £2,000 discount when you trade in your existing
vehicle and buy a new one.  The subsidy comprises £1,000 from the Government
with matched funding from vehicle manufacturers (although many manufacturers are
actually offering more than this).  The scheme will end on 28 February 2010 or
when the £400m funding runs out, whichever comes first.

Roaring success

The scheme began in May and so far 227,750 orders have been placed.  According to the Society of Motor Manufacturers and Traders, there were 67,006
new cars registered last month, which represents a 6% increase on last year, and just over a quarter of them were bought through the scrappage
scheme.

Paul Everitt, SMMT chief executive, said: “The with
motorists and has provided an important boost to the UK motor industry.  The
scheme is clearly delivering environmental and safety benefits, in addition to
incremental business for UK manufacturing and much needed demand for retailers.”

The National Franchised Dealers Association also claims the Government
earns back more in VAT than it pays out in subsidy for most scrappage sales, so
the scheme is essentially self-funding.

Short-term measure

In announcing the £100m additional funding, Business Secretary Peter
Mandelson said:  “We must make sure that the help we do offer is targeted,
limited and proportionate
.  This is not a blank cheque to the auto
manufacturers but recognition that there is still a short term
challenge
to boost demand and confidence in the sector.”