The Need for Effective Arrangements for
the Disposal of End of Life Vehicles
COMPULSORY DE-REGISTRATION OR AN AUTOMOTIVE
RECYCLING CREDIT SCHEME
1.1 The purpose of this paper is to put
forward a case for a system that will ensure that the requirements
of Article 5.2 of the End of Life Vehicle Directive (ELVD) are
met. The rationale behind this is that the current system of vehicle
licensing and tracking falls down the closer a vehicle gets to
the end of its life.
1.2 This paper considers the arguments for
the introduction of an Automotive Recycling Credit Scheme (ARCS),
which will ensure that all ELVs are attracted into an authorised
treatment facility (ATF).
2.1 Article 5.2 of the End of Life Vehicle
Directive (ELVD) requires that "member states shall also
take the necessary measures to ensure that all end of life vehicles
(ELVs) are transferred to an authorised facility".
2.2 The ever increasing problem of abandoned
vehicles in the UK, and the cost of their disposal by local authorities,
illustrates the inadequacy of the current vehicle, licensing and
de-registration system. This is the result of several factors:
there is no statutory requirement
to provide proof of notification of change of ownership. As a
result, it is possible to claim that a change of ownership has
been notified by post and the new owner (whose name and address
has been lost!) is now responsible for the vehicle;
there is no requirement to prove
the existence of the purchaser of a vehicle. Again, this makes
the pursuit of a last owner very difficult, as the notification
of sale of a vehicle to someone who does not exist cannot be prevented;
the Statutory Off Road Notification
(SORN) system does not represent a cost to the owner, and does
not require any proof that the vehicle in question is still in
existence. Thus a vehicle can be registered for SORN, but be disposed
of outside official channels. The burden of SORN once a year would
be negligible and would disappear with a change of address.
the pursuit of last owners who abandon
vehicles is expensive and usually fruitless. Even if a last owner
can be found, they frequently do not have the funds to pay any
imposed fines; and
as the value of scrap steel has fallen,
the market for ELVs has moved from positive to negative. Where
once vehicle dismantlers and scrap merchants would buy ELVs, now
in many cases they require payment to accept and dispose of them.
(In the mid-90s when the price of scrap steel was at an all time
high, abandoned vehicles were very rare).
2.3 This all points to a need to have in
place a system that will ensure proper, and comprehensive, "tracking"
of a vehicle from the initial sale to the first purchaser right
through to its disposal as an ELV. This will ensure that criminal
activity linked to vehicles will be minimised, and possibly stopped
altogether. The system needs to be flexible, eg to take account
of those who may wish to "de-licence" their vehicle
for a period of time. The following options consider the merits
of two alternative schemes.
3. OPTION 1:
3.1 A possible way to deal properly with
the problem of ELVs would be to introduce a compulsory de-registration
system. However, as can be seen from the background set out above,
the introduction of a compulsory deregistration system will be
extremely expensive requiring as it will major changes to the
existing system. Once introduced the policing of such a system
will be both difficult and expensive.
3.2 There is a need to change the current
the insurance industry estimates
that in excess of one million drivers do not have insurance cover;
a large number of vehicles are known
to be operated without a current road fund licence.
It is a fair assumption that the vast majority
of vehicles being used in these two circumstances are near ELVs.
Given that the owners are already flaunting one, if not two, statutes,
they are most unlikely to obey a third!
3.3 It is well known, but difficult to prove,
that there is a substantial black economy on the edges of the
motor trade where paperwork is at a minimum and all transactions
are in cash. A compulsory deregistration system will lead to an
expansion of this type of business as, probably, not very affluent
or responsible last owners seek to avoid the costs of using an
ATF, and less than scrupulous operators seek to assist them. The
prospect of large fines for non-compliance will not act as a deterrent
unless the prospects of detection and conviction are demonstrably
3.4 The introduction of a compulsory de-registration
system is probably not a viable option unless the resources are
made available to ensure that the inadequacies of the existing
system are properly addressed. A further complication is to have
a system in place in time for the implementation of the ELVD in
April 2002. This is probably not achievable unless there is some
flexibility over implementation.
4. OPTION 2:
4.1 Experience shows that if ELVs have a
reasonable value they will be taken to where that value can be
realised rather than being dumped illegally with the potential
to harm people and the environment. Given the current low value
of ELVs and projected markets for reclaimed automotive materials
(scrap metals, plastics, rubber, glass) such a value needs to
be generated artificially. This could be achieved as follows:
at the point of sale of a new vehicle
a sum (eg around £50, but the exact amount would need to
be determined properly) should be added to the purchase price
and be paid by the vendor into an Automotive Recycling Credit
when the last owner consigns the
vehicle to an ATF a Certificate of Destruction will be issued
allowing the last owner to apply for a refund of the recycling
practically many disposers will want
to be paid in cash at the point of transfer and so it is probable
that the ATF would purchase the vehicle and then issue the COD
to itself. Obviously, the AFT would have to ensure that a COD
could be legitimately issued as a refusal would mean a loss to
the AFT (a simple self-policing mechanism).
4.2 In principle, the more affluent original
purchaser is paying (indeed loaning as the recycling credit will
reflect in the vehicle's resale value) a small premium to ensure
that the vehicle's last owner, who is likely to be less wealthy,
will have an incentive to ensure that the vehicle is disposed
of properly and through official channels.
5. SOME CONSIDERATIONS:
For any system of issuing CODs the
proof of identity and ownership would be difficult, but over time
an incentive scheme is more likely to encourage better attention
to notify change of ownership
it is understood that there are a
large number of V5/log books still in circulation, the vehicles
to which they relate have long since been disposed of. Obviously,
this is a potential for fraudulent claims but SORN and excise
license records should indicate whether further investigation
may be warranted;
only ATFs would be able to issue
CODs but they would also need to be required to ensure that no
vehicle once issued with a COD could be moved from the facility
as a vehicle;
if only ATFs can trigger the credit
repayment then there would be little incentive for the last owners
to dispose of their vehicles other than into the system. This
would starve fringe operators of their supply by rendering them
the suspension of an ATF's ability
to issue CODs for breaches of its permit conditions would be a
way in which the EA could take swift action against an offending
company. The loss of financial incentive would persuade the last
owners of ELVs to take their vehicles elsewhere making it a self
policing system rather than one requiring enforcement action through
6.1 An Automotive Recycling Credit Scheme
offers many advantages over a compulsory de-registration scheme
and although there are issues surrounding the issuing of Certificates
of Destruction these will in the main apply to both systems.
6.2 A compulsory de-registration system
will be necessary to ensure a legal framework for operation. The
problems of policing this however would largely disappear if it
was combined with an incentive type scheme as proposed.
6.3 Administration of the recycling credit
fund could be a matter for Government, industry, or a combination
of both, with the amount of charge or repayment being reviewed
at regular intervals to meet the costs involved.
6.4 This proposal does not take account
of processing costs being reimbursed, but it is not inconceivable
that the credit could be divided into two elements, ie collection
and treatment. Obviously, how the treatment element could be funded
is a matter for another paper.