Select Committee on Trade and Industry Minutes of Evidence


Memorandum by the British Metals Recycling Association

  In response to the House of Commons Trade and Industry Select Committee's proposal to conduct an inquiry into the economic impact of the End of Life Vehicle Directive, this memorandum is submitted by the British Metals Recycling Association (BMRA).

  The BMRA is the trade association for the metal recycling industry in the UK, which has an annual turnover of over £1 billion. The sector plays an important role in the UK economy, employing over 10,000 people and generating significant export revenue, in excess of £500 million. If the metals recycling sector is not properly considered, there could be a severe economic impact for recycling businesses, many of whom are small to medium sized enterprises.

  The BMRA represents some 350 members who, collectively, recycle around nine million tonnes of ferrous, and one million tonnes of non-ferrous scrap metal annually into secondary raw materials. This includes almost all of the approximately two million end of live vehicles (ELVs) arising annually in the UK.

BACKGROUND

  ELVs enter the recycling chain either through dismantlers for parts re-use and then on to the metals recycling industry or, increasingly, directly into the metals recycling industry (see attached ELV flow chart). The metals recycling sector recovers 98 per cent of the metallic content through 37 capital intensive, high productivity shredding plants. This combined process recovers around 75 per cent by weight of ELVs.

  The remaining 25 per cent by weight (comprising plastics, glass and other non-metallics) are currently landfilled as these materials are not commercially viable to recycle in the UK (without subsidy).

  The recent decline in global steel prices has caused a significant reduction in the value of ELVs. Consequently, the market value of a natural ELV (one which is scrapped due to old age as opposed to a crash damaged late model) at the point of entry into the recycling chain is currently negligible, zero, or even negative. This has led to an increase in the abandonment of vehicles by the last owners, as there is little financial incentive nor easily enforced legislation to prevent them being disposed of in an unsuitable manner.

IN RESPECT OF THE ELV DIRECTIVE ITSELF, THE BMRA SUBMITS THE FOLLOWING

  The individual treatment/de-pollution of ELVs, as prescribed by the Directive, does not presently occur in the UK, as there is no statutory requirement to do so. This activity is predominantly a manual operation that initial studies have indicated will cost significantly more than the market value of a natural ELV.

  In addition, the Directive requires that, in due course, higher levels of recycling than those currently being achieved must be attained. As this will necessitate recycling those materials which are presently uneconomic to process, it is clear that additional costs will be incurred.

  Implementation of the Directive's requirements is impossible without specifically addressing the question of the funding of the costs of both the capital investment necessary to install appropriate treatment/de-pollution facilities and their ongoing operational costs. Operators will require robust business plans to raise the capital necessary to invest. Ultimately, these costs will have to be borne, directly or indirectly, by the consumer.

  We recognise that the early introduction of manufacturer funding could put many vehicle makers in a difficult financial position. Equally, the essence of this legislation is to impose producer responsibility, and any suggestion by other interested parties that costs should be borne by the metals recycling sector is not acceptable, as it would not apply these principles. It seems likely that a measure of Government support may be needed for an interim period until full producer responsibility can be established.

  In the past, producer responsibility systems for Packaging have been enacted elsewhere in Europe (and initially in the UK) which have given rise to competition policy issues. We would favour a system that embodies fair and reasonable access by all stakeholders to the post-Directive ELV management market for our members, and not a monopoly control system issuing contracts to a small number of players.

  The legislation should seek to preserve, substantially, the existing recycling infrastructure, comprising many small to medium sized enterprises as well as major publicly and privately owned businesses. The current numbers have grown organically and a competitive and economic structure is in place across the country. Critically, any substantial reduction in the number of players is likely to lead to more fly-tipping as facilities would be further away from ELV owners who are frequently those most inclined to fly-tip.

  Regulations must be introduced to ensure that the abandonment of ELVs does not dramatically escalate and increase the financial and management burden already placed on Local Authorities. This could be achieved through a disincentive to fly-tip; for example, through a system of continuous licensing by the DVLA; or by an incentive to the last owner to deliver ELVs to an authorised treatment/de-pollution facility, ie a bounty system.

  Once implemented, the policing of the legislation must ensure a "level playing field" for economic operators, to protect those that have invested and ensure that no commercial advantage can be gained by those who do not.

  Representatives of the BMRA would very much welcome the opportunity to explain and expand upon these views at the Select Committee oral evidence session in October.

British Metals Recycling Association

21 September 2001


 
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