More calls for scrappage extension

* Scheme is running out of cash * Could end this week * Calls to extend until February...

More calls for scrappage extension

A major business group has added its voice to those urging the Government to extend the scrappage scheme until February.

The Engineering Employer's Federation (EEF) says that ending the scheme earlier could plunge Britain's motor industry into a second recession.

'The vehicle industry and supply chain play a vital role in Britain,' EEF director of policy Steve Radley told us. 'The scrappage scheme has worked - but we're concerned that ending it now will drop sales back and have a negative impact on the British motor industry, just as it's starting to recover.'

VAT cut coming to an end
Like the Society of Motor Manufacturers and Traders (SMMT), the EEF is concerned that the forthcoming increase in VAT, which will revert from 15% back to 17.5% on December 1st, will put off buyers.

'VAT will be going back up and consumer confidence is still fragile,' said Steve Radley. 'We're likely to see unemployment rising for a while and we think it's important to give the industry more support in the short term. We're talking about extending the scrappage scheme until February next year - by then we'll have seen more evidence that the economy is recovering.'

Scrappage scheme could end this week
Without additional funds, the British scrappage scheme is set to end very soon. Consultancy firm Deloitte has warned that the Government's initial investment of 300m could run out this week. If that happens, cars already bought under the scheme will still be delivered, but no new orders will be taken.