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Further pressure for scrappage scheme to be extended

An employment group has put further pressure on the government to extend the scrappage scheme.

Following calls from the SMMT to increase the incentive, the Engineering Employers Federation (EEF) has warned ministers the country’s financial recovery will be slower without it.

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Manufacturers could slide into a "double dip" recession without further assistance, the group warns.

In a letter to the Chancellor, the EEF said the scheme has helped to keep a large number of skilled workers.

"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,” said Steve Radley, director of policy.

"However, it is by 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."

The SMMT met business secretary Lord Mandelson recently to submit a formal application for an extension, following an endorsement from motor manufacturers.

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