Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 100 - 109)



  100. So you go down the line Ford are taking that it should not exceed 50 per cent for the manufacturers?
  (Mr Everitt) I do not think we have specified a particular amount. Overall what we are saying is the whole impact of the Directive needs a shared responsibility. The implication is the manufacturer stands behind that but there are other players who have a role to play. The owner has to take it to the dismantler, the DVLA have got to improve their de-registration system, there are lots of people who have a role to play. When it comes to assigning the deficit, under the proposal that we have put forward, the SMMT's industry position, which is agreed by everyone, individual manufacturers will pick up their responsibility at that point. At this particular moment in time we are not specifying that it should be 10, 20, 40, 50 or 60 per cent.

  Sir Robert Smith: Ford have said in their submission "the final responsibility for the producers not exceeding 50 per cent of the ELV take-back".

Richard Burden

  101. I suppose it follows on from that really, as we explored, who actually ends up paying the cost can be something of an inexact science but there is also the issue about who is accounted to pay. Specifically, in Ford's submission they put quite a lot of emphasis on the accrual rate, that under certain schemes manufacturers would initially have to show a liability for a lot of cost even if that cost was then passed on. They were putting forward the view in terms of the difficulties for manufacturers that the accrual rate seemed as important as what actually happens to the cost. How important is that as far as the SMMT are concerned?
  (Mr Everitt) The accrual issue has been a great focus of attention for the SMMT and it is going to impact every company. Clearly it depends on the size of the historic parc which will gauge how significant that might be. The accrual issue has been very important to us throughout the discussions we have had with the DTI. In Option 4 what we have sought to do is to develop that into the scheme. The advice we have consistently had from auditors, who might not be as good as economists in that respect, is that they cannot tell until the final legislation is drafted, so we have had to work on the basis of the best available advice. Under Option 4 what we have is a contingent liability, which means that you have to make a note in your accounts as to this is a future liability that you may have to bear but you do not have to write the numbers in which means the balance sheet is not affected.

Mr Hoyle

  102. Would it be fair to say that the industry taking a longer view will produce more new cars because there will be less old cars to buy and that we ought to be looking at the positive side rather than the negative?
  (Mr Macgowan) That is certainly a point that is a valuable one. I do have to say that we should not become wholly obsessed with sweeping older cars off the road. We see the benefits, the environmental benefits, but, going back to Stephen and the conflict of interest, we also have this inclusiveness. We should not make older cars impossible for people to buy because many, many people are not in a position to lay out large amounts of cash for a car. A car has got to be safe and it has got to comply but we should not make it so impossible that an older car cannot be sold.


  103. You have been very consistent in your advocacy of Option 4, which is understandable. You have also referred to timescale and everything, I get the impression, is on the basis that it should be later rather than sooner. Perhaps you could be a little more explicit in that area as to when you would like to see this Directive implemented given that there is a degree of flexibility built into the Directive? Are you worried that the DTI with its characteristic zealotry in these matters will require it to be done on the first rather than the last day?
  (Mr Macgowan) That is a concern. In fairness to the DTI—

  104. You do not have to be.
  (Mr Macgowan) I am playing my role very straight here. In fairness to the DTI it is obviously a very complex Directive to implement. We would of course prefer that it was not now rushed through. Had the right work been done perhaps at an earlier stage we would not be looking at this rather late stage at alternatives, but we are where we are and, therefore, we are anxious that it is not a rush through and, if anything, it is too late.

  105. On the other hand, you had an indication that this was coming up and going to be coming up for some time, it was not a total surprise to you. Do you not think your members should have been prepared for it in a way that could be environmentally friendly and get it going as soon as possible?
  (Mr Macgowan) We have been working on this for the best part of five years so certainly there is nothing in here that is a surprise. Bluntly speaking, after many, many months of discussions with the DTI we were just a little surprised and a little disappointed that the consultation paper did not seem to include many of the thoughts that we actually had put forward on countless occasions before, hence our need to develop Option 4.

Mrs Lawrence

  106. Aside from the timescale you did mention earlier that you were rather worried about the Government implementing this Directive in a somewhat aggressive manner and you mentioned a couple of other countries you felt had taken a different line. Can you give us an outline of what is happening in other countries?
  (Mr Macgowan) What is happening particularly in France and Germany seems to be that they are looking at the Directive and then implementing it in the spirit of the words of the Directive. We appear to be wanting to mess about with it and change it and bring some things forward. We just do not think that is appropriate because, after all, our role in life is to make certain that the UK continues to be a brilliant place to attract inward investment, to attract people to this marketplace and, therefore, if our legislation was onerous in comparison with other markets that would damage our competitive position. We want to keep those manufacturers that are here, we want them to expand their operations, and any legislation that gets interpreted in a gold-plated way, frankly, is unhelpful. We just want a level playing field. We are not looking for special privileges or special options, just a level playing field.

  107. I was interested in what you were saying earlier about Denmark, the Netherlands and Sweden, which are minor players in the scheme, and their attitude does seem to be fundamentally different from those countries where 85 per cent of European cars are produced, including Germany. My understanding is from 2007 on the producers will be required to cover all costs. It does appear that the argument you are putting forward for the Government taking up that option goes against the whole thrust of Option 4 which you have so openly declared is governed by market forces.
  (Mr Everitt) Just to pick up on the German scheme, it is slightly different in that there is an obligation placed on both the dismantlers and the shredders in that country. In order to be an authorised treatment facility you have to meet quite strict recycling and recovery targets. Essentially it is a variant on the same theme, which is the shredders and the dismantlers have to demonstrate that they have actually recycled certain materials, and that is their official target, so the targets for recoverability are being pushed down to the dismantlers and shredders. In the same way it means that any deficit at the end of the day will be less for the manufacturers. We believe that Option 4 is a slightly more elegant way of achieving it.
  (Mr Franklin) The German scheme also provides for 100 euros per vehicle to go on the ticket price.

  108. I am sorry, I do not understand.
  (Mr Franklin) They have allowed for 100 euros to be put on to be declared as an environmental cost on the price of a new vehicle from 2007.

  109. And that is footed by the government?
  (Mr Macgowan) No, that will be paid for by the consumer.

  Chairman: We have covered all of the areas we wanted to explore with you, so thank you very much, gentlemen. If there is anything else we need we know where you are. Thank you very much.

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