A scrappage scheme should be launched for cars, old computers and other equipment to help manufacturers recover from the economic downturn, a leading industry group has said.

Make UK said firms should be given help to invest in automation to boost production and exports as the Covid-19 crisis eases.

The moves should run hand-in-hand with a programme to encourage consumers to buy a new, more environmentally friendly car, through a Government-funded scrappage scheme, it was suggested.

A voucher-style system, where the Government gave a contribution of around £5,000 for each new car, would deliver an incentive for households to upgrade, with industry contributing the trade-in value of the old model, said the manufacturers’ organisation.

The double cash injection would give businesses the head start they desperately need as they struggle to replenish their decimated order books and get production up and running again, said the report.

Stephen Phipson, chief executive of Make UK, said: “The challenge faced by manufacturers as they start to rebuild their businesses and bring staff slowly back into the workplace is vast.

“Supply chains have been decimated and order books are in the worst state in decades. To survive, businesses will need to take every advantage they can of the latest technologies and equipment to boost productivity to get back on track in the coming months.

“Industry is grateful for the help Government gave them during the crisis, but now as we come out the other side, we need to look to them for innovative schemes which can help businesses recover quickly, and building their technological armoury is an important weapon in this battle.

“These initiatives will not only help businesses get back on their feet, but would at the same time tackle important environmental issues which are important to Government as we work together to build a greener Britain fit for the future.

“The UK’s manufacturing sector has always been agile and has shown in the last few months just how quickly it can adapt but as a growth providing sector we must emerge stronger and better equipped to compete in the global trade environment to be able to do our bit effectively in the country’s economic recovery.”

A Government spokesman said: “We have recently reopened car showrooms in England to help kick-start car sales and we continue to engage with the automotive industry during this time to offer support and look ahead to our recovery from the coronavirus outbreak, including investing in green technologies.

“The Government has put together a far-reaching package of support to help businesses through the coronavirus pandemic including schemes to raise capital, flexibilities with tax bills, and financial support for employees.”