Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 260 - 277)

TUESDAY 23 OCTOBER 2001

DR ALISTAIR KEDDIE, MS SARAH CHAMBERS, DR MARK DOWNS AND MRS SHEILA MCKINLEY

  260. And has the European Commission drawn up the minimum standards, it was supposed to be done by October 2001, the minimum standards for the CoDs?
  (Dr Keddie) Not to my knowledge, but we would need to consult the DVLA on that, because they are dealing with the Certificates of Destruction rather than ourselves, the details of it.

  261. So they would know if the Commission had done that?
  (Dr Keddie) They would do; but I know that the DVLA have actually looked at this in a fair amount of detail now.

  Chairman: We will write to them about that matter.

  Linda Perham: Thank you.

Richard Burden

  262. If I could just take you back to the issue of timing? We discussed, earlier on, the question of the timing of the consultation document, and so on, I think you said, in response to Mr O'Neill, that you had hoped to have your ducks in line by the implementation date for the Directive, in other words, next April. Now that implementation date is for the Directive to be incorporated into national law. There has been a suggestion that you have not ruled out actually not just incorporating it into national law but implementing the Directive in some form or other from 2002. Is that the case, and, if so, what would you say would be the advantages or disadvantages of that?
  (Dr Keddie) We have to implement the Directive by 2002.

  263. If I can clarify a bit. The Directive has to be incorporated into national law by 2002; provisions, for instance, for free take-back of vehicles do not have to be implemented by 2002, the Directive says, depending on how you read it, 2006, 2007?
  (Dr Keddie) The Directive is actually very clear on certain things, and it actually leaves Member States with flexibility on others. And, in terms of what we do vis-a"-vis producer responsibility between 2002 and 2007 and who pays, there is a degree of flexibility and discretion left to Member States. The specific answer to your question on that is that we have not taken any decisions on that at the present time; our intention, very definitely, as my Secretary of State said in her covering letter to the Committee, is that however we go about implementing it will be broadly in line with what is happening in other Member States. So we are not intending to jump ahead of other Member States.

Chairman

  264. Is that a shift in position?
  (Dr Keddie) That is not a shift in position. We have been quite explicit about that in all our discussions with business and all our discussions internally within Government. There has been a lot of speculation that we have been considering bringing forward provisions in the Directive; that is not the case, in terms of having taken decisions on that.

  265. Before we leave this issue, could you clarify the position for me, because the European motor market is variable, even within the Community, there are different types of manufacture, or different types of cars assembled, and there are those companies who have a very large car parc, a long history of production. And though it is for the purposes of, let us say, Rover, which is in somewhat different circumstances and has a record of far bigger production than it has currently, equally you have in the UK Ford, who have a similar position, although not quite as pronounced, their market share has fallen but they have got a big tail, and yet you have within, say, the Federal Republic, in Germany, you have the cars with a naturally longer life, they are not quite like Morgans, but Mercedes and Audis and BMWs do not fall into the same category as, let us say, the cheaper Fords, for want of a better expression; as the owner of a cheaper Ford, I know what I am talking about.
  (Dr Keddie) Ford manufacture and sell in Germany as well. It is genuinely an international market.

  266. But what I am saying is, if the dominant view in Germany were to say it is not a problem because the lives of cars are longer in Germany—and Ford might be disadvantaged there—but if we were to take the German model as the ideal, or if we were to nod in the direction of the new players in Britain, who are largely indifferent to this issue at the present moment because of import restrictions, and the like, I am a wee bit worried. I would like you to be a bit more specific as to what you are talking about in relation to European comparators, because there could be a case for saying that, regardless of what the other countries do, the precarious nature of a couple of our big players, in terms of manufacture of cars, is such that their future could be prejudiced, even if we took the German model of implementation as the appropriate one. Sorry, it is a long way of getting to a question, but you understand what I am getting at?
  (Dr Keddie) I understand very well, and Sarah may want to comment as well, but we are very conscious of that and that is actually part of the complexity of implementing this Directive in the UK, is taking account of the very issues you mention.

  267. None of these issues in themselves is surprising, they are, at least in part, historical in character, so you must have gone some way to anticipating them; so could you maybe share your thoughts with us?
  (Ms Chambers) You are absolutely right about saying that the UK is in a different position from other Member States, in terms of having a different picture in terms of our manufacturing. And you must not forget that we have a lot of imported cars, over 70 per cent of cars in our car parc are imported, and importers have responsibilities too. And it is because of the particular nature of our industry that we talk about not doing exactly what any other Member State is doing, but implementing the Directive on a broadly level playing-field, which is quite a different thing. We are taking account of what other Member States are doing but we are also taking account of the position of all of our car manufacturers, and we are having individual discussions with each of them, quite lengthy, and we have not completed those discussions, because we are aware of the position that they all have and the interests that they all have. And that is one of the reasons why it is taking quite a long time to get to conclusions on that.
  (Dr Keddie) And it is also why you have got three Options in our consultation document, because, to some extent, the sorts of issues you are talking about are actually catered for differently according to which of those Options you go for; and that is why we are particularly interested in industry's own views on these Options, but not just, of course, the vehicle industry, there are all the dismantlers, shredders, and so on, as well, who are actually part of this.
  (Ms Chambers) One thing I would say, you said that some of, you called them, the newer manufacturers in this country, you said they were indifferent to this Directive. I think you would find, if you asked them that, they would say that they disagreed. I do not think any of the manufacturers are indifferent, I think they are all very concerned, because there are potentially big issues here. It is going to affect the economics of all the car manufacturers, the importers, the shredders, the dismantlers, everybody; which is why we do have to be very careful to make sure that we do not have any unintended consequences in this.
  (Dr Keddie) It is how we equitably and effectively deal with the historical car parc is a major issue for us; no question about that. And, I can assure you, that is at the top of our minds and it is at the top of Ministers' minds.

  Chairman: I think that brings us perfectly to Mrs Lawrence's question on Option 4.

Mrs Lawrence

  268. Within the document, you have your three Options, and the motor industry, the SMMT, have come up with Option 4. Within the document, and obviously you have picked out key issues to discuss and to consult on, I realise the consultation period has not yet closed, but what is your preliminary assessment of the feasibility of Option 4, and why did you not think of it?
  (Dr Keddie) We have no monopoly on wisdom. Part of the whole process of consultation is to get industrial input into what we are doing, and, indeed, if industry can come up with a more effective and better way of doing it, and it can also meet the environmental objectives and our obligations, then we will seriously look at it, there is no question about that. The Option 4 from SMMT, or the industry itself, looks to us—and this is an initial reaction at the present time, this is not a decision or conclusions about it—very much a variant of our Option 1, and it has got some ingredients in it which we certainly want to look at in more detail, some of which we think we understand now, others we are not sure about how they will work in practice, and we will want to discuss them with industry. So it is an Option that has ingredients in it that we will certainly wish to look at.

  269. That brings me on to the next point really about discussions with the industry; you mentioned about the discussions that you have had. One thing I think we have found today is that, on the Option 4, many aspects of the industry are not particularly aware of the details and what is involved. Have you just had informal meetings with the industry, or do you plan on discussing the implications in Option 4 with them further before the end of the consultation process?
  (Dr Keddie) Yes, we would have. Option 4 is relatively new to us as well, so as far as having a discussion with industry about that we have not, in any detail. But I can only repeat what I said earlier, we have had extensive discussions with all parts of the industry, informally most of the time, over the last two-plus years. What we have not always been able to do is discuss some of the specifics, the issue of finance came up, and so on, some of that we have not been able to discuss in the detail we would like; the intention is that we do so. But Option 4 has got some potential good points to it and some potential difficult points in it, and we want to discuss that with SMMT and with others. We also need to take into account, again, what the whole depolluting, dismantlers, shredding side of the business feel about Option 4 as well.

  270. Yes, that was actually what I was getting at particularly.
  (Dr Downs) I was just going to make the point, we have three Options in the consultation paper, and they did not materialise through a discussion in Whitehall, they very much came out of discussions with industry in the first place. So I think the whole of industry is aware of the types of options that are going to be in the consultation document, to some degree, because there has been initial informal consultation. Option 4 has come out after that process, so we now have to look at it quite closely; but Option 4 also resembles the French system, to some degree, and the French system was only recently made public, so that is perhaps the reason why that has come late in the day.

  271. On a more general note, it has been suggested that the initial purchaser of a new car could pay an additional sum that would eventually cover the ELV cost. If that is adopted, do you intend to run a public information campaign to inform consumers of the implications of the ELV Directive?
  (Dr Keddie) Can I answer that. There are two stages, is the answer to that question. One, Ministers need to take a decision on that sort of issue, as to whether that was a realistic option or not, in their view, politically; and then, depending on what options they decide to look at more seriously, in terms of financing, yes, if there is a need to broadcast, communicate to the general public, or whoever would be directly affected by that, then we would do that, yes.

Sir Robert Smith

  272. We also heard earlier of a suggestion of a sort of deposit scheme, the Automated Recycling Credit Scheme, outside the actual operating costs, as a sort of incentive to the final user to responsibly dispose of the vehicle, whereby the initial purchase price includes a deposit, say, £50, and the final disposal of vehicle involves a refund of £50 to the final owner. Has that crossed your desk at all as an idea, or is that something the Department has looked at yet?
  (Dr Keddie) I do not recall it crossing our desks in that particular form that you have described it. Lots of variants of how you could finance this have crossed our desks.

  273. This was not so much of financing, but this was to take it further and to actually encourage compliance, in the sense that there would be a positive incentive on the final user to retrieve the deposit that had been paid by the initial purchaser?
  (Dr Keddie) It is a variant on a bounty system of some sort, yes. Bounty systems, of one form or another, yes, have crossed our desks.

Chairman

  274. Ms Chambers, could I just ask you, given the nature of the car industry at the moment, given the price of cars and the issue of car taxation, do you think that it would be reasonable to put in place regulations which could affect car prices in advance of a change, or an amendment, a potential amendment, to the Block Exemption?
  (Ms Chambers) The direct link between the ELV Directive and the Block Exemption Directive I do not quite see.

  275. It is called price?
  (Ms Chambers) I can see the indirect link. As Alistair has already mentioned, we have no choice but to implement the ELV Directive; where we do have choice about where we implement the degree of producer responsibility and free take-back, we have already made clear that we are going to do that in a way which is with a light regulatory touch and which is on a broadly level playing-field, and those are the principles that we will be proceeding with. We have not yet heard what the Commission want to do with the Block Exemption, so I do not think I can really speak to that yet, we have to wait and see what they come up with.

  276. Does that suggest that there is a compelling argument for doing as little as possible for as long as possible and framing the SI, which I imagine would come out end of January, beginning of February, if you want it to be in place for April, in such a way that it perhaps does not kick in until later, when the Block Exemption changes, if there are to be any, are easier to anticipate?
  (Ms Chambers) I think there are compelling arguments for doing as little as possible and doing things with as light a burden as possible anyway, whatever we do with the Block Exemption; but, as I say, what we do with the Block Exemption is not up to us, it is up to the European Commission.

  277. They do respond to stimulus from Member Governments, from time to time?
  (Ms Chambers) Indeed; indeed.
  (Dr Keddie) Yes, they do respond very well, on occasions, and sometimes not so well; but, yes, they do respond. Just reiterating the point that Sarah made, our intention is not to get out of step with other Member States, we are not in the business of putting the UK industry at a competitive disadvantage to other Member States, and that is the bottom line for us.

  Chairman: On that happy note, of unanimity, I think, can we thank you for your frankness today, your candour. We realise that the cement has not even been mixed and we are not even sure how slow- or quick-drying it is, but we are very grateful to you for the information you have given us, and obviously if there is additional information we need we will be in touch. Thank you very much.





 
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