According to Government sources, the UK are still thinking about introducing a car scrappage scheme in a bid to aid the fortunes of the car and car finance industries. The news follows reports that the treasury would block the idea.

The scrappage scheme would give people buying a new car the option of scrapping their car over nine years old for a 2,000 pound discount. At this stage, no decision has been made, but officials from both the Treasury and the Department for Business are thought to be reviewing the scheme.

Reports have circulated that there are rifts between Mandelson and Darling over the issue, but sources have denied that this is the case. A car scrappage scheme has been successfully implemented in Germany. The purpose of the scheme would be to lift new car registrations and increase the proportion of environmentally friendly vehicles .