SCRAP METAL DEALERS BILL

These notes refer to the Scrap Metal Dealers Bill as introduced in the

House of Commons on 20 June 2012 [Bill 9]

Explanatory Notes

---

introduction

1. These Explanatory Notes relate to the Scrap Metal Dealers Bill as introduced in the House of Commons on 20 June 2012. They have been prepared by the Home Office, with the consent of Richard Ottaway, the Member in charge of the Bill, in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by Parliament.

2. The Notes need to be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a section or part of a section does not seem to require any explanation or comment, none is given.

summary

3. A summary of the Bill is set out below, the Bill has 20 clauses and 2 schedules:

4. This Bill repeals the Scrap Metal Dealers Act 1964 and Part 1 of Vehicles (Crime) Act 2001 and brings forward a revised regulatory regime for the scrap metal dealing and vehicle dismantling industries. The Bill maintains local authorities as the principal regulator of these industries. The Bill gives local authorities the power to better regulate these industries by providing a power to refuse to grant a licence and a power to revoke licences if the dealer is considered ‘unsuitable’. Unsuitability will be based on a number of factors including any relevant criminal convictions. The Bill will also provide local authorities and police officers with suitable powers of entry and inspection.

5. The Bill provides that an application for a licence must be accompanied by a fee, with a power for the Secretary of State to set out or determine the applicable fee in Regulations. This allows the Secretary of State to set a maximum fee, providing local authorities with some discretion as to the level of fee set. This fee will be an essential component of the new regime as it will provide local authorities with the funding they need to administer the regime and ensure compliance with it.

Bill 9-EN

55/2

6. The Bill intends to raise trading standards across the scrap metal industry by requiring more detailed and accurate records of transactions to be kept. Scrap metal dealers will also be required to check the identity of those selling metal to them– this builds upon the notable successes of a recent police operation which required identical voluntary measures from the scrap metal industry.

7. The Bill incorporates the separate registration scheme for motor salvage operators under the Vehicle (Crime) Act 2001 into this new regime. This is to replace the current overlapping regimes for the vehicle salvage and scrap metal industries with a single regulatory regime. The Bill also revises the definition of ‘scrap metal dealer’ and ‘scrap metal’ to ensure they reflect the twenty-first century scrap metal industry.

8. The Bill also repeals and re-enacts the amendment to the Scrap Metal Dealers Act 1964 in section 146 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 which created the offence of buying scrap metal for cash etc.

background

9. The recent growth of metal theft offences, driven by increased commodity costs, has highlighted the ineffectiveness of the existing regulatory regime under the Scrap Metal Dealers Act 1964 which has not prevented the scrap metal industry being the central market for stolen metal.

10. In 2010/11, the Home Office estimated that there were 80,000-100,000 reported metal theft offences a year which cost the economy at least £220-£260m (Deloitte, 2011) to £777m per year (the Association of Chief Police Officers, 2010). The impact of metal theft was felt across the United Kingdom in a range of sectors – including national transport infrastructure, electricity and telecommunication links; street furniture; heritage buildings; memorials; commercial and residential buildings.

11. Initial legislative steps to: prohibit cash payments for scrap metal; amend police powers of entry into unregistered scrap metal sites; and increase the existing financial penalties for offences under the Scrap Metal Dealers Act 1964 were contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 which amended the Scrap Metal Dealers Act 1964.

12. This Bill repeals and replaces the existing regulatory regime with a more robust regime.

territorial extent and application

13. Clause 20 sets out the territorial extent of the Bill.

14. The Bill’s provisions will extend to England and Wales only.

Provisions in the Bill that apply in Wales

15. The provisions in the Bill relates to non-devolved matters in Wales. The Bill does not affect the powers of Welsh Ministers and does not make different provision in relation to England and Wales. If amendments are made to the Bill that trigger a requirement for a legislative consent motion, the consent of the National Assembly for Wales will be sought for them.

The act – commentary on sections

Clause 1: Requirement for licence to carry on business as scrap metal dealer

16. Clause 1 requires a scrap metal dealer to obtain a licence in order to carry on business as a scrap metal dealer. It is an offence to carry on a business as a scrap metal dealer in breach of the requirement to hold a licence. This offence in punishable on summary conviction to a fine not exceeding level 5 on the standard scale.

Clause 2: Form and effect of licence

17. Clause 2 provides further detail in respect of the licence, including that it authorises the licensee to carry on business as a scrap metal dealer in the local authority area. A power is provided for the Secretary of State to prescribe the form of the licence in Regulations.

18. A licence will be issued by the local authority in whose area a scrap metal site is situated or in respect of a mobile collector in the area that the collector operates. A licence will either be a site licence or a collector’s licence. A site licence names all of the sites at which the licensee carries on the business as a scrap metal dealer within the local authority area. It also authorises the licensee to operate as a mobile collector within that area. Therefore if a licensee holding a site licence wishes to operate as a mobile collector in a different local authority area, where he does not have a site, he will need a separate collector’s licence in that local authority area.

19. A collector’s licence authorises the licensee to operate as a mobile collector in the area but does not authorise the licensee to carry on a business at a site within that area.

20. An individual can be named as the site manager at more than one site in a local authority area if appropriate; however they must have direct management responsibility for any site named.

Clause 3: Issue of licence

21. This clause requires the licensing authority to be satisfied that an applicant is a suitable person to carry on business as a scrap metal dealer. In considering suitability the local authority may have regard to any relevant information, including whether any relevant enforcement action has been taken against the applicant or whether the applicant has been convicted of a relevant offence. The Secretary of State has a power to prescribe in regulations the meaning of relevant offence and relevant enforcement action. It will be a criminal offence punishable by a fine up to level 3 on the standard scale to knowingly or recklessly supply false information in an application. The authority must also have regard to any guidance determining suitability which is issued from time to time by the Secretary of State and the authority may consult other persons regarding suitability.

22. Subsection (8) will also allow the local authority to impose conditions in the licence restricting opening hours and imposing quarantine periods if it thinks fit.

Clause 4: Revocation of licence and imposition of conditions

23. Clause 4 provides the licensing authority with the ability to revoke a licence on particular grounds, including where the local authority is no longer satisfied that the licensee is a suitable person to carry on the business as a scrap metal dealer. The revocation of a licence can only be carried out by local authorities as the licensing authority. It also provides that the local authority can vary the licence to impose one or both of the conditions in clause 3(8).

Clause 5: Further provision about licenses

24. Clause 5 provides that the Schedule 1 has effect. Schedule 1 sets out procedural issues relating to the licence.

25. A licence will be issued for a period of three years from the date of issue. The Secretary of State will have the power under paragraph 1(4) to alter the duration of the licence.

26. The local authority can also vary the licence where there is a change of circumstance relating to particular details contained in the licence. This means that there will not be a need to issue a new licence for a further 3 year period, with a further fee being paid, each time certain details change e.g. the name of the licensee. The ability to vary a licence includes the ability to change it from a site licence to a collector’s licence or vice versa.

27. The application process for a licence is set out in paragraph 3, including a requirement to provide information relating to relevant enforcement actions and convictions for relevant offences.

28. The Secretary of State has a power by order to alter the requirements as to what information must accompany the application. In addition the Secretary of State may by regulations set out, or determine, the fee that is to accompany an application.

29. The Schedule also sets out how the applicant or licensee can make representations where the licensing authority either refuses to issue/renew an application or revokes a licence or imposes conditions. There will be a requirement for the licensing authority to provide the applicant with a notice to outline the decision that they have come to with regard to issuing/revoking a licence. The procedure for making representations will be outlined in the notice, giving at least a 14 day time limit, or further time as is reasonable for representations to be made. The applicant will also have the right to appeal to the magistrates’ court against any decision made by the licensing authority to refuse to issue or renew a licence. A licensee can also appeal a decision by the local authority to revoke a licence.

Clause 6: Supply of information

30. Clause 6 places a duty on the local authority to supply any such information as requested relating to a scrap metal license or to an application for or relating to a licence to any other local authority in England and Wales, the Environment Agency and the police.

Clause 7: Register of licences

31. Clause 7 requires that a register of licences issued under this Bill should be held by the Environment Agency. Local authorities will provide the Environment Agency with information of all licences issued in order that this register can be updated regularly. The register should be made openly accessible to the public and will include: the name of the authority which issued the licence; the name of the licensee; the business name; the type of licence; the site(s) covered by the licence and the expiry date of the licence.

Clause 8: Notification requirements

32. Clause 8 imposes an obligation on an applicant to notify the authority of any changes which materially affect the accuracy of any information which the applicant has provided in connection with the application. It also imposes an obligation on a licensee to notify the licensing authority if the name under which the licensee carries on the business as a scrap metal dealer changes (if they trade under a different name to the name of the licensee). If there is a variation in other matters that are entered in the register, i.e. those in clause 7(2)(b) and (d), these will be subject to an application to vary the licence under paragraph 2 of Schedule 1. The licensing authority has a duty to inform the Environment Agency of any changes to the licence that affect the entry in the register in respect of that licence. The Environment Agency must then amend the register accordingly.

Clause 9: Closure of unlicensed sites

33. Clause 9 provides that Schedule 2 has effect. Schedule 2 makes provision for the closure of sites at which scrap metal business is carried on without a licence. The power is based upon the existing closure powers for unlicensed alcohol vendors under the Criminal Justice and Police Act 2001.

34. This closure power does not affect the ability of the police to bring charges for the offence in section 1.

35. The Schedule sets out that police constable or an officer of the local authority can issue a closure notice specifying the reasons for such action and the steps that may be taken to ensure the alleged use of the premises cease. Once a closure notice issue has been issued, the local authority officer or constable can then make a complaint to the justice of the peace for a closure order to close that site. Complaints cannot be made where the premises are no longer being used as a scrap metal dealer in the course of business and there is no reasonable likelihood of future unlawful use of the site in a scrap metal business. If the court is satisfied, the court can then make such an order that it considers appropriate for the closure of the premises. A closure order can only be made by the court. Such a closure order can vary between requiring the immediate closure of the premises, immediately discontinuing its use by a scrap metal dealer and requiring a sum to be retained by the court until the requirements are met.

36. A constable or local authority officer can issue a certificate at any time to terminate the closure order where they are satisfied that the need for the order has ceased. Likewise, the courts can issue a discharge order at any time where they are satisfied that there is no longer a need for such an order. Appeals in relation to all stages of this process will be available to the Crown Court.

37. The offence of operating a premise in contravention of a closure order is punishable on summary conviction to a fine not exceeding level 5 on the standard scale.

Clause 10: Verification of supplier’s identity

38. Clause 10 places a requirement on scrap metal dealers to verify the identity of the person they are receiving metal from and their address. This verification can be done by reference to documents, data or other information obtained from a reliable or independent source, such as the Identity and Passport Service, the Driver and Vehicle Licensing Authority, a bank or utility company etc. Therefore the scrap metal dealer has some discretion as to which documentation can be used for this purpose. There is also a power for the Secretary of State to prescribe in regulations the data or documents which are sufficient, or not sufficient as the case may be, for verifying identity.

39. It will be an offence not to obtain and verify the seller’s identity, punishable by a fine not exceeding level 3 on the standard scale. The scrap metal dealer, site manager and a manager (other than the site manager) who failed to take reasonable steps to prevent the metal being received without the supplier’s identity being verified will be guilty of this offence. Likewise, a person who on selling metal to a scrap metal dealer gives a false name and address is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Clause 11: Offence of buying scrap metal for cash etc

40. Clause 11 re-enacts with modifications the prospective amendments made by section 146 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which inserted section 3A into the Scrap Metal Dealers Act 1964, creating the offence of purchasing scrap metal for cash. The offence will apply to all scrap metal dealers.

41. This offence prohibits scrap metal dealers from paying for scrap metal other than by cheque or by electronic transfer – the Secretary of State can make an order to permit other methods of payment if considered appropriate under subsection (2).

42. If a scrap metal dealer is convicted of this offence they are liable on summary conviction to a level 5 fine on the standard scale. Under subsection (4), each of the scrap metal dealer, site manager and a manager (other then the site manager) who failed to take reasonable steps to prevent the metal being received in breach of the prohibition, will be guilty of an offence.

Clause 12: Records of dealings

43. Clause 12 sets out the record keeping requirements in respect of any scrap metal received by a scrap metal dealer in the course of business. Failure to comply with the requirements of this section is an offence attracting a penalty up to level 5 on the standard scale.

Clause 13: Right to enter and inspect

44. Clause 13 provides officers of the licensing authority and police officers with a right to enter and inspect licensed scrap metal dealers.

45. Subsection (1) provides a right of entry and inspection to a constable or local authority officer to a licensed site at all reasonable times on notice to the site manager.

46. Subsection (2) provides circumstances where a constable or local authority officer can exercise a right of entry and inspection at all reasonable times without giving notice to the site manager. Subsection (3) makes it clear these powers of entry in subsection (1) and (2) (which are exercisable without warrant) do not apply to residential premises and subsection (4) makes it clear they cannot be exercised with the use of force. Subsection (5) provides a right of entry exercisable by warrant to secure compliance with the provisions of the Bill and to ascertain whether the provisions of the Bill are being complied with. This right of entry applies to premises, including residential premises, that are a licensed site or to premises that are not licensed but there are reasonable grounds for believing that they are being used by a scrap metal dealer in the course of business. Reasonable force may be used in the exercise of a right of entry under warrant.

47. It is an offence punishable on summary conviction to a fine not exceeding level 3 on the standard scale to obstruct the right of entry or inspection or fail to produce the records that are required.

Clause 14: Offences by bodies corporate

48. Clause 14 makes provision for where an offence under the Bill is committed by a body corporate to attribute liability to both an individual and the body corporate. This applies to offences that are committed with the consent or connivance of a director, manager, secretary or other similar officer.

Clause 15: Review of Act

49. Clause 15 places a duty on the Secretary of State to review the Act within five years of the licensing requirement coming into force. The purpose of this review is to assess whether the licence regime has achieved the objectives that it was set out to achieve and whether it is appropriate to retain the licence. The Secretary of State must publish a report of the conclusions of this review.

Clause 16: Repeals

50. Clause 16 makes necessary repeals including the Scrap Metal Dealers Act 1964, Part 1 of the Vehicles (Crime) Act 2001 that regulated motor salvage operators and the relevant provisions of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Clause 17: Orders and regulations

51. Clause 17 makes provision for the procedural requirements for any orders and regulations made under the Bill.

Clauses 18 and 19: Definitions:

52. Clauses 18 and 19 provide definitions for the purposes of the Bill.

Clause 20: Extent, commencement and short title

53. Clause 20 is self explanatory.

Commencement

54. Clauses 17 and 20 will come into force on Royal Assent. The other provisions of the Bill will be brought into force by means of commencement orders made by the Secretary of State. It is anticipated that a period of at least six months will be required between Royal Assent and commencement to allow licensing authorities to put in place suitable infrastructure to meet the new demands.