THE Government is set to press ahead with incentives for motorists to trade in old cars for new ones, it has emerged.
The scheme could involve handing out £2,000 vouchers towards replacing vehicles that are more than nine years old.
Reports indicated Chancellor Alistair Darling was "well disposed" toward the idea - despite suggestions that he was at loggerheads with Lord Mandelson.
The Business Secretary is understood to want the measure included in the Budget on April 22 to help revive the struggling UK motor industry.
It is based on a similar scheme in Germany that has been hailed as a success. Manufacturers claim that in this country it could generate demand for up to 250,000 new cars.
Sources stressed that no final decision had been reached over whether the plan would feature in the Budget.
But Mr Darling is said to appreciate the "merit" in the proposal. The £160 million a year costs could be shared with the industry.
Some environmentalists have opposed a scrappage scheme, saying it is better to keep running old cars because building new ones uses so much energy.
However, Friends of the Earth has come out in favour, insisting it would encourage drivers to switch gas-guzzlers for fuel-efficient models.
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