THE BRITISH government is set to press ahead with incentives for motorists to trade in old cars for new.

The scheme could involve handing out £2,000 (€2,220) in vouchers towards replacing vehicles that are more than nine years old.

Reports indicated that chancellor Alistair Darling was “well disposed” toward the idea despite suggestions that he was at loggerheads with business secretary Peter Mandelson.

The business secretary is understood to want the measure included in the budget on April 22nd 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 Britain 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.

However, Mr Darling is said to appreciate the “merit” in the proposal. The £160 million a year costs could be shared with the industry, sources say.

Some environmentalists have opposed the principle of 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. – (PA)