Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 180 - 199)

TUESDAY 23 OCTOBER 2001

MRS DAWN ALLEN, MR JOHN HESKETH AND MR DUNCAN WEMYSS

  180. Can I take you back to your concrete, you mentioned concrete; presumably, that means where the operation goes. Surely, that ought to have been done under local planning regulations in the establishment of dismantling yards anyhow; I thought that would have just been good practice?
  (Mr Wemyss) It may be good practice. I would just refer you to many car parks, where you may park your car, that have not yet the benefit of concrete.

  181. Of course, the danger is that you will have contamination costs if you have not got concrete down; so, in effect, you could be saving the industry money?
  (Mr Wemyss) If you have priced concrete lately, I do not think you would come to that view.

  182. You only put it down once, not every week, I hope?
  (Mr Wemyss) No, sure; but, nevertheless, it is in a working environment that is pretty harsh, and there is depreciation.
  (Mr Hesketh) And be sure to take the point that not everybody owns their site; and if you are renting a large site it is an awful big cost to put down for your landlord.
  (Mrs Allen) I think some of the larger dismantlers and the responsible ones are working on this and have been for some time and have got some routes ready; but, it is like we have said, we have been waiting really for someone to decide which way. If the manufacturers have their way, the dismantlers will disappear, then where are we; we have spent thousands of pounds on doing all this, just to be told that we are out of the stream. So there has been that element, to a certain extent, with people, such as my firm, who only deal with the End of Life yards; and so there has been that hesitation over which way to jump. Having said that, my firm is one that has got some money tucked away to do it with, when we know when, how and in which direction we want it to go.

Linda Perham

  183. In the DTI consultation paper, the estimate from the DVLA is that the average cost to an ATF of investing in an electronic system to issue Certificates of Destruction would be around £2,000, which is apparently a lower running cost than a paper system. Have your members put electronic systems in place yet; does £2,000 sound right to you?
  (Mrs Allen) It is not going to be too bad, because we are finding that the system is replacing the paper system, so you have got one against the other there. The only problem we are having is the time it is taking to actually put the throughput to the DVLA, that is slower than we would have hoped it to be; but that is the thing the DVLA are working on. But, yes, I would have thought that £2,000 was right.

  184. Is it their fault that it is slow?
  (Mrs Allen) At the moment, we think so, and so do they, but they do not quite know why; so we have got a meeting next week to try to come to some thoughts as to what is causing the problem.

  185. Because they are trialing these electronic systems?
  (Mrs Allen) Yes; we are on the trial, and I think part of the problem with my specific firm, in fact, is because of the high volume, we are putting a high volume through at a time, we are not perhaps doing 20 or 30, we are doing 80, or something like that, at once. But it is working very well.

  186. Thank you. And one dismantler estimates that the administrative cost for an ATF would be around £12 per LVA, and I think there is a motor manufacturer who has estimated about £8. Does that sound right to you, for each vehicle?
  (Mr Wemyss) Is that for the processing of the data for this?

  187. It is just administrative cost, is how it is worded in the consultation document, between £8 and £12?
  (Mr Wemyss) I think that would probably be fair.
  (Mr Hesketh) Somewhere in that area sounds reasonable.

  188. So there would be a cost of about £14 million to £22 million a year?
  (Mr Wemyss) Yes.

  189. And how do you see the Certificates of Destruction process working; would you expect there to be two stages, or would you liaise with the shredders over the CoDs?
  (Mrs Allen) I feel that their issue point should be when the vehicle starts to be depolluted, because then it goes into the dismantling system. And, yes, probably, I had not thought of a two-stage, but, thinking about it, from this morning's evidence, that would be ideal, we would issue the last owner with a purchase certificate which proved he had passed it on to a registered site, and then when we commenced the process of dismantling it we would register the CoD.

  190. So you think that this system would work, with CoDs?
  (Mrs Allen) That would work, yes. It would take out of the loop the cars that possibly would resell again. Abandoned cars, again, they can come in but they may be reclaimed by their owners, and they could go out again without having that certificate attached to them; and I think that would save some problems in that direction too.

  191. You were talking about meeting the DVLA over the new system; are you confident that the electronic system would be in place in time for the CoDs?
  (Mrs Allen) That I could not say. It is going to have to deal with a lot more cars than we are at the moment, obviously; but that is their mandate, to get it up and running by whenever the Government needs it to be.

  Linda Perham: Thank you. Thank you, Chairman.

Sir Robert Smith

  192. In your submission to us you have considered the arguments for the introduction of an Automotive Recycling Credit Scheme, and ARCS, I think, you have abbreviated it to, under which, on the purchase of a new car, a sum would be paid into a fund, and when the last owner received a Certificate of Destruction they could apply for a refund of the recycling credit; you are sort of arguing it as an incentive for people to dispose of cars properly. Do you envisage the amount added on to a new car under the proposed scheme would cover all the processing and administrative costs of the End of Life Vehicles Directive?
  (Mr Hesketh) The scheme we proposed was purely a capture scheme, to get vehicles into the system. Our view is that a sort of vacuum cleaner approach, rather than a brush approach, is going to be a lot more successful, and we have evidenced that by the fact that when scrap metal was very valuable there were no abandoned vehicles to speak of, it is a fairly straightforward thing; so, obviously, an artificial value for the vehicle. That does not, however, mean that we could not tack on another chunk, as it were, to deal with the processing.

  193. Right; so this is more like the sort of overseas' view with bottles, the purchaser pays something for the bottle and anyone who hands the bottle back in gets the refund?
  (Mr Hesketh) Yes, very much so.

  194. And would you see it as being a flat rate for all cars, or would you see some kind of environmental incentive built in, depending on the recyclability of the car, a different rate?
  (Mr Hesketh) Again, I think that a recycling rate would only be important if there were some processing costs built into it. If it is just in terms of a deposit system, as it were, then I do not think it would be significant; it should be a set rate, such that the people introducing the environmental hazard, as it were, are putting something down for the future for it to be disposed of.

Richard Burden

  195. In your conclusions, you say "it will be essential to ensure that funding is delivered directly to the ELV processors as they will be faced with the significant extra costs of operation at the point at which vehicles enter the system". Can I just clarify what you mean there. First of all, are you thinking of that as a sum in addition to the sum paid on the ARCS, or is that the same thing?
  (Mr Hesketh) No. The ARCS is purely to attract vehicles into the system, to avoid the current problem of abandoned vehicles; that was something we proposed some time back, on the basis that it will attract the vehicles in, rather than them having to be pursued, and it would limit the amount of policing requirement, given the current state of information about vehicle ownership and the problems with the ownership and transfer to ownership, etc. With regard to the entry into the system, we see the Treatment Facilities as a point of entry into the system, and obviously the point at which people are going to have to carry out extra work as a result of the implementation of the Directive. The people accepting the vehicles for treatment are the ones that are going to actually do the work involved, in the main; for example, the depollution and removal of various bits and pieces. I think it is important that that should be the focal point of any funding that is attracted, where the work takes place.

  196. And that is completely separate from the ARCS?
  (Mr Hesketh) The two could be combined, or not, as the case may be. How funding can take place is dependent upon who is going to do it.

  197. That is what I am trying to work out, who you are saying would pay into that fund that would go to the ELV processors?
  (Mr Hesketh) We would think that that is the manufacturers' responsibility, more than anything, as set down by the Directive.

  198. And could you just perhaps clarify again, when you are talking of ELV processors, who are you talking about there, are you talking about dismantlers, shredders?
  (Mr Hesketh) No, we are talking about Automotive Treatment Facilities, because in order to deal with the vehicles under the Directive you will need to be an Automotive Treatment Facility. Now providing you meet those criteria it does not matter whether you are a dismantler or a scrap metal processor, or even somebody who just takes a shine to the business and thinks they will have a go; as long as you meet those criteria you can be a Treatment Facility. But what will be apparent is that we must have a place for vehicles to go where they are going to be treated properly.

  199. What would be your best guess as to who that will actually be, those Treatment Facilities, in that case, the balance between what are currently shredders and currently dismantlers?
  (Mr Hesketh) I think, scrap metal dealers, dismantlers and scrap metal dealers feeding into shredders, or maybe their own sites as well; a combination of everything, I should imagine. I cannot see that people will choose necessarily not to do it, but if people have got a current business focused on end of life vehicles then they are going to choose to do it, and there are various ways in which end of life vehicles come into the system, and people will have to choose to be Treatment Facilities or not.
  (Mr Wemyss) If I may say, whilst you have heard of the shredders and this wonderful answer of these shredders that they are going to be a panacea answer, from somebody else's suggestions, Option 4, there are only 37 of them, and those are the people that actually chop up the metal, they chop up the vehicle. They will still have to depollute, somebody will still have to depollute that vehicle before it goes through that shredder operation. And so what we are supporting from our membership is that dismantlers will, if they wish to play in this game, become AFTs and become Treatment Centres and will do the depollution and take off parts; do not let us forget sight of the recovery of certain parts, even on the older vehicles, which have use, and part of the Directive encourages us to do that. And if we put that straight to the shredder, with it bypassing the current dismantling industry, that use would be lost, because the shredder would not be interested in taking various bits off, he would stick it through his rather large machine to chop it into bits.


 
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