Car and van manufacturers will continue to receive Government backing despite plans to end the scrappage scheme, Treasury Secretary Liam Byrne has pledged.
He stressed that the automotive sector was crucial to Britain’s economy – after Business Secretary Lord Mandelson appeared to rule out extending the scrappage scheme, which provides a £2,000 subsidy to car owners wishing to trade in their vehicle for a new model.
Speaking to journalists in Westminster this week, Lord Mandelson said: “The longer we make any particular sector or industry dependent on Government intervention, the harder it will be to mean that sector of that particular measure.”
He said the Government had offered help to the automotive sector “while at the same time knowing that it has to be phased out and normal market conditions reinstated, and that really does have to happen in 2010.”
Details of the Government’s plans are to be announced in the Pre-Budget Report next week.
The CBI has called for the scheme to be extended until May.
Richard Lambert, director general of the CBI, said last month that the scrappage programme had saved jobs across the country.
He added: “The scheme cannot go on forever but the Government should think seriously about extending it until the general election.”
The Government has already extended the scheme once, providing an extra £100 million so that the total motorists can save rose to £400 million.
Mr Byrne said: “Peter is right to say that the scrappage scheme can’t go on forever.
“But the automotive industry is crucial for two important reasons. One is that it employs a lot of people with high skills in advanced manufacturing, and that is a national strength that we want to see developed over the next few years, because we think we can make a lot of money in the world with those kind of industries.
“And, as the great growth markets, China, India, Brazil, all continue to flourish, there are big export opportunities for British skills, like the skills in our automotive industry.
“But the second reason the automotive industry is so important is because we are determined to shift our economy and our society into a low-carbon future, and much of the engineering excellence that is required to make that change happen sits in Britain’s automotive industry, and so that is something that we are determined to support.”