Business Secretary Lord Mandelson used his podium at the Labour Party Conference to announce that the Government will pour another £100m into the scrap scheme, taking the total pot to £400m - or 400,000 cars.

One of the main issues facing manufacturers was that VAT is set to rise from 15 percent back up to 17.5 percent in January, after it was reduced to stimulate consumer spending in the midst of the recession. With the original £300m pot set to run out before New Year, many makers feared the increase would prompt a sharp drop in sales. The extension is a no-brainer for the Government, then, who are set to make a healthy return on the investment via VAT payments on the cars sold, while giving themselves a big pat on the back for keeping punters in the showrooms a little while longer.

Car industry body the SMMT lobbied the Government to extend the scheme, and the handful of makers now seeing sales spikes as a result - most notably Hyundai, Kia and Nissan - have all welcomed the news. All the terms of the deal remain the same for customers, apart from the first registration date of eligible cars, which is now 29th February 2000 for cars and 28th February 2002 for vans.

Not everyone is happy though. The Environmental Transport Association - never a proponent of the scheme - has claimed it is not the way to deal with climate change (despite the fact that nobody sees it as such in any event). No formal agreement has been signed with the manufacturers yet either (who, don't forget, essentially lose £1,000 from their profit for each car sold), although it's expected all of them will.

Mark Nichol - 29 Sep 2009