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UK car scrappage scheme extended

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The Government has announced it is extending the car scrappage scheme, due to end in February, by a month.

It will continue to the end of March or until the remainder of the subsidy for the scheme runs out, whichever comes earlier, Business Secretary Lord Mandelson confirmed.

Under the initiative, motorists get a £2,000 discount on new cars in exchange for vehicles more than 10 years old, with half of the money provided by the Government and the rest by the manufacturer.

The Government has allocated a total of £400 million for the scheme which began in May last year with an aim to boost car sales hit by the recession.

A limit of 400,000 vehicles had been set at the time and so far around 330,000 new cars have been ordered under the scheme. This means 70,000 more people will be able to benefit from the programme.

Lord Mandelson said: "Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most."

The extension comes ahead of the release of February's car sales figures, expected to be better than last month.

© Press Association 2009