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The Government is examining a scheme to promote the scrapping of older cars "very carefully indeed", according to the group representing UK car dealers.
The Retail Motor Industry Federation (RMIF) met yesterday with Exchequer Secretary Angela Eagle to discuss RMIF proposals for a scheme that would see owners of older cars and light vans awarded a discount on a new vehicle, in return for scrapping their old one.
Business Secretary Lord Mandelson indicated in a speech at the beginning of February that he was considering scrappage incentives as a way to aid the UK's struggling car industry.
Such schemes have been introduced in other European states including France and Germany, while a similar framework proposed in the United States was withdrawn from the economic stimulus plan earlier this month.
"The introduction of a scrappage scheme for nine-year-old vehicles could create a demand for up to 250,000 new vehicles [and] remove an equal number of old and more heavily polluting vehicles from our roads for ever," RMIF chairman Paul Williams said.
However, some have expressed doubt at the environmental benefits of encouraging people to scrap more cars. Writing in the Guardian after Lord Mandelson's speech, columnist George Monbiot said that a scrappage incentive was a subsidy to one of the country's most polluting industries, crudely disguised as an environmental measure.
"Were the same money to be invested in public transport networks, bicycle lanes, offshore windfarms, high-voltage direct current lines and other such neglected sectors, the carbon reductions per pound would be many times greater," he added.
Last week, industry figures showed that car production in the UK had more than halved compared to the same time last year.
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