Chancellor Alistair Darling has launched a "cash for bangers" car-scrappage scheme in a bid to boost car sales.
Owners of cars that were registered before December 31 1999 will be able offered £2,000 to trade in their old vehicle for a brand new, more environmentally-friendly model.
Participants will be able to buy any new vehicle, including small vans, rather than just low-pollution vehicles, with £1,000 of the cash incentive coming from the Government and the remaining £1,000 from car companies.
Up to 300,000 consumers can benefit with the Government putting aside £300 million to the fund the scheme, which is expected to come into effect in mid-May and last until the grant runs out.
However, car companies had been hoping that the Government would foot the entire £2,000-per-vehicle bill, while environmental groups thought the scheme would be limited to choosing only "green" cars.
Business Secretary Lord Mandelson and Transport Secretary Geoff Hoon had been pushing for the scheme to go ahead, in the face of some opposition from the Treasury, after recent car plant shutdowns and plunging new car sales.
RAC Foundation director Professor Stephen Glaister said: "Currently the vast majority of cars are still on the road at 10 years old. Indeed at 14 years old, half are still on the road. The scrappage scheme announced today risks consigning a lot of perfectly good, and relatively clean, vehicles to the dustbin.
"However if the scheme leads to a reduction in the average age of the national car fleet then this has to be good for road safety as more modern cars will have a wider range of safety features built in."
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