Manufacturers call for scrappage scheme extension

Failure to extend the scheme before a stronger recovery is in place runs the risk of pulling the rug from under the automotive sector

 
Steve Radley, EEF

The trade organisation Engineering Employer's Federation (EEF) argues that the scrappage scheme introduced in May this year has proven successful in stemming a decline in the UK's production and it has written to Chancellor Alistair Darling calling for a continuation of the scheme beyond its expected end date of March 2010.

EEF claimed the scheme has helped retain “significant numbers” of skilled workers directly and in key supply chains but the body said it was “far from certain” that the demand for new vehicles would remain high beyond 2010 without the existence of the scrappage scheme as an incentive.

Steve Radley, EEF director of policy, said: “The success of the scrappage scheme has been clear for all to see and has put a floor under manufacturing recession and helped retain skilled employees. However, it is no means certain that this positive trend will continue in the near future with consumer confidence still fragile and unemployment still rising.”

“Failure to extend the scheme before a stronger recovery is in place runs the risk of pulling the rug from under the automotive sector, damaging key supply chains and prospects for a better balanced economy in the upturn,” he added.

Calls for an extension from manufacturing sector follow vehicle dismantlers last month expressing concern that there could be a “void” of end-of-life vehicles when the scheme came to a close (see letsrecycle.com story).

Figures released by the government at the start of August showed that over 300,000 vehicles had been scrapped just three months into the scheme and gave an indication that the £300 million – an amount matched by vehicle manufacturers- put aside to manage the scheme would run out well before the proposed 2010 finish.

The EEF claimed that a relapse in output from the automotive sector could have “serious consequences” for a recovery in manufacturing.