Currently reading: Car scrappage: the background
Chancellor Alistair Darling will reveal his scrappage plans tomorrow at 12.30

The UK car industry's trade body, the Society of Motor Manufacturers and Traders (SMMT), has been pushing for an exact copy of the successful German scrappage scheme, which has resulted in car sales rising almost 40 per cent year on year.

However, the scrappage scheme has been the subject of heated debate within Whitehall, with Darling and business secretary Lord Mandelson reportedly arguing over the exact details of how it should work.

In particular, it is not clear whether the Government will pay the full £2000 or call on the car industry to partially subsidise the deal, how much money the Government will put into the scheme or how long the scheme will run for.

The SMMT claims that the Government should fund it in full, saying the estimated £560 million cost will be substantially underwritten by VAT income of £400 million.

The SMMT is also pushing for suppliers to the car industry to be given financial assistance, and it is possible this may be announced in the budget.

Workers who have been put on short time during the economic downturn may also get help. There is substantial momentum for Wales' ProAct scheme, which offers wage and training subsidies for workers forced into shortened weeks, to be spread across the UK.

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