On Budget Day 2009 the Chancellor of the Exchequer is expected to outline a 'scrappage' incentive to help boost new car sales.

As people stay away from new car showrooms, the Treasury misses out on the 15 per cent VAT from every lost purchase.

New car registrations in 2009 are expected to be perhaps 600,000 lower than in 2008. That amounts to a lot of VAT missing from Government coffers.

So the Chancellor might as well write this off as a handout to tempt people back into showrooms.

A similar scheme has been operating in Germany for a few months and new car registrations are significantly higher than in 2008.

Customers are offered €2500 (£2000) for trading in a car at least nine years old. It has boosted sales of smaller cars in Germany.

But with Sterling's weakness against the Euro, car prices have been increasing in the UK. Ford has implemented two price increases already this year, and many other car manufacturers have
followed suit at least once.

A medium specification Ford Focus is now about £1500 more than it was in December 2008.

Many customers will be no better off than they were several months ago, and with pre-registered vehicles around in significant numbers they could make bigger savings choosing one of these.

The Government has dithered for so long over introducing this incentive that its value, if brought in later this month, will be much lower than it seemed when it was mooted a few months ago.