The Chancellor has unveiled a pared-down car scrappage scheme stripped of its green credentials.

The Chancellor has unveiled a pared-down car scrappage scheme stripped of its green credentials.

As expected, motorists will be given £2000 towards the cost of purchasing a new vehicle if they trade in a model more than 10 years old. This will cover cars and vans up to 3.5 tonnes and is expected to start in mid-May.

However, the government balked at funding the scheme in full, instead announcing in yesterday's Budget that manufacturers would fund half of the subsidy.

Alistair Darling also dropped any requirement for maximum carbon emission levels on new vehicles, invoking fury from environmental groups who pointed out that owners of relatively low-emission vehicles could be paid for trading them for 4X4s with a higher carbon output.

The scrappage scheme, which is modelled on similar projects in Europe, has been budgeted at £300m, nearly half the £580m originally forecast, and will run until March 2010 or until funding runs out.

This is around half the funding provided by the German Government, which recently extended its scrappage scheme after seeing new car sales jump 40% in March, when they declined by nearly a quarter in Scotland.

Analysts pointed out that Britain has less room to manoeuvre than its counterparts on the continent because of the weakness of Sterling against the Euro, which has effectively left car manufacturers subsidising the purchase cost of a car in the UK in order to help stave off a sales slump in new vehicles.

Car manufacturers will run the scheme, which will be optional. Business Secretary Lord Mandelson said: "This is targeted action with a capped budget and for a limited time, designed to boost the whole motor trade."

The move was given a warm reception by car manufacturers and road groups.

Paul Everitt, chief executive of the Society of Motor Manufacturers, said: "This is good news for consumers and will get people back into showrooms, kick-starting demand in the market.

"The scheme recognises the economic value of the motor industry and we are determined to make it a success."

Sir Arnold Clark, whose company accounted for more than 200,000 car sales last year, welcomed the move, saying it would allow people to purchase cars that were "more reliable, economical, cheaper to maintain and safer to drive".

However, the BVRLA, the trade body for companies engaged in the leasing and rental of cars and commercial vehicles, said the scheme was "flawed" and would "damage this country's used-car industry while boosting imports of foreign-made cars".

While the scheme should theoretically help reduce emissions by replacing more polluting vehicles with more efficient models, the Treasury's own carbon analysis of the Budget concedes it will have a "neutral or modestly positive" environmental impact.

The RAC said the scheme would consign a lot of "perfectly good, and relatively clean, vehicles to the dustbin".