Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 9

Memorandum by the Automobile Association

THE ECONOMIC IMPACT OF THE END OF LIFE VEHICLES DIRECTIVE

VIEWS OF THE AUTOMOBILE ASSOCIATION—THE CONSUMER'S PERSPECTIVE

  The Automobile Association welcomes and supports the aims of the Directive and recognises the need to control waste and environmental hazard from End of Life Cars.

  The two main economic aspects of this Directive concern, firstly, how the disposals of existing UK vehicles are to be paid for and, secondly, how post 2002 registered cars will be dealt with. These comments relate to how the proposals may affect the motorists concerned.

EXISTING VEHICLES

  In the UK there has historically been a "cottage industry" disposing of cars in an uncontrolled fashion, but reasonably cheaply in that a motorist with a terminal car has usually been able to take it to a scrapyard and let them deal with it, at no charge. This is no longer the case. Most firms will now require payment for disposal—and as many last owners are unwilling or unable to pay for the disposal of their car, car dumping has climbed to some 250,000 pa. More thorough methods of handling waste can only increase disposal costs, increasing the problem, despite the threat of substantial fines on erring owners.

  Abandoning a car is an antisocial and potentially dangerous act. Law abiding, environmentally aware motorists take the responsibility for the disposal of their end of life cars, but there will be a minority, and a growing one, who won't or can't afford to pay. Faced with the prospect of finding a disposal facility willing to take a car, and paying for the transport and disposal, the quick and cheap alternative of dumping may be taken. While this cannot be condoned, it is important in this debate to understand why so many owners choose to abandon their car.

  If the DVLA record systems carried all the requisite current information, tracing the last owner would be an effective deterrent. However, for example looking at 1989 registered cars in 2000:


  Thus the balance of 624,000 cars from that one year alone was accounted for. These figures appear not untypical, and as few of the last owners actually traced may be able to pay a £1,000 fine, the complicated and expensive process can recover very little. The administration and recovery costs fall on the local authority direct or on the police if removed as a hazard.

  The dilemma is that charging the last owner the full cost of disposal may have an adverse affect, resulting in further increases in dumping and therefore substantially increased recovery costs, local hazards and complicated, expensive administration.

  On the other hand, free take-back, or even some positive financial incentive (such as free public transport vouchers) for getting the car to a disposal site could help contain the problem. This was the evident intention of the Directive, recognising the fact that these ageing cars are all out there, and the overall cost of disposal can only increase in the absence of proper controls. It must be preferable to reduce the size of this total cost burden that would require public funding: only an easily accessed efficient disposal process can hope to achieve this end.

  The funding of this process can hardly be put entirely upon the industry in view of the retrospective nature of the charge—at least a period of time would need to be allowed for a fund to be accumulated. One option would be a taper system whereby the cost is subsidised but reduced annually until the manufacturers' scrappage fund is accumulated.

POST 2002 CAR REGISTRATIONS

  A scheme of "bonds" for the ultimate disposal costs, applied on the sale of new cars is a reasonable measure. There are of course several important provisions, including the following:

    Bonds must be set at a discounted rate to cover the future disposal costs.

    The bond value must be reviewed and audited by an independent body—certainly not by Government nor by the Treasury.

    There should be no surcharges or tax applied to the bonds.

    The 45 Euro figure used in Holland could be a good starting point.

      Bonds would not follow individual cars. Hence once passed by the vehicle producer to the central fund, no further action would be needed by the subsequent vehicle owners for free take-back.

OTHER ECONOMIC IMPACT ISSUES

  To ensure easy access for the last user to disposal facilities, either many more sites or an efficient collection and routing service will be needed. Considerable capital expenditure will be involved in setting up adequate disposal facilities. If the large numbers of cars involved are to be handled effectively within the time-scales specified, special funding may be required.

  Incentives will be needed for disposal centres to attract cars, possibly as part of their recycling target system, rather than just letting centres deal with those cars that are presented by last owners.

  It is quite logical to use some Local Authority parking revenue to cover some of the costs, as legitimate transport-related expenditure.

  Falling residual values of older cars has had the beneficial effect of increasing the uptake of newer technology vehicles, thus contributing to improved air quality and better occupant protection. Easier disposal could help in this respect, as the prospect of repairing a near-EoLV will be that much less attractive. Car scrappage schemes have foundered in the past due to market distortions and complexities. A very positive benefit could be shown by a well-designed incentive which in the end could cost Public Authorities less than enforcement and disposal otherwise would.

CONCLUSIONS

  The owners and users of these near terminal cars are running them on very tight margins, and even relatively small payments can be a real problem. A short-term outlook may be taken when unexpected repair or disposal costs arise. The processes involved need to be made very straightforward and easily accessible to avoid too many cars being dumped.

  A scheme to provide free take-back, with a positive incentive such as travel vouchers, would cut dumping and make the whole operation much more efficient and manageable. It may be cheaper for the public purse, and safer, and could bring about other environmental benefits such as increasing the proportion of catalyst equipped cars on the roads.

  For cars registered after 2002, a bond scheme from a charge at sale could cover the ultimate disposal costs.


 
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Prepared 6 December 2001