Examination of Witnesses (Questions 220
TUESDAY 23 OCTOBER 2001
220. Would I be pessimistic in anticipating
a Mexican stand-off between three different Departments with responsibility
for your own activities, the DVLA and the Environment Agency,
even allowing for the fact that you do have the green bits of
the DTI; would I be pessimistic?
(Dr Keddie) On the basis of the discussions we have
had with these organisations and devolved administrations up to
now, yes, you would be being pessimistic.
221. So this is an historic first?
(Dr Keddie) There are always firsts, and part of my
job is to break new ground as well.
222. I will not say we live in hope then?
(Dr Keddie) You can judge us later on.
223. Can I just take you back to something which
I think I got right before. You said that the issue of take-back
and treatment costs should be finances, with Ministers?
(Dr Keddie) That is something that is being discussed
with Ministers, yes.
224. If that is the case, how can the consultation
really mean very much? I guess, you could say any of the players
in this will want to minimise their costs and pass them on somewhere
else, whether it be manufacturers, shredders, dismantlers, whatever,
but given the kind of potentiallywhat we are hearing from
everybody, from their own perspectivehuge sums involved
here, issues of accrual, issues of historic car parcs versus current
car parcs, if there is no guidance as to what people are being
consulted on, on costs, how can they respond to the consultation?
(Dr Keddie) The purpose of the consultation document,
as it expressly says, is not to deal with finance; you are saying,
how can we consult without doing that.
225. What we have been hearing is, it is pretty
important to everybody's perspective.
(Dr Keddie) Yes, but I think you have also been hearing,
and certainly reading the memoranda you have got and our own consultation
document, that there is actually a lot of substance and technical
issues that also need to be discussed, collectively understood,
as to how various options might work, and so on. There are ways
then, however the financing is done, to match the financing to
what we think is likely to be the most effective way in terms
of implementing the Directive. So it is not just purely finance,
important as finance is.
226. But we are dealing with commercial enterprises,
who at the end of the day live or die by the bottom line or their
ability to convince their bank managers that they are worthwhile
investing in for their acquisition of equipment that the new tasks
will require; and it is all to be sorted out by April?
(Dr Keddie) That is the intention, yes.
227. One of the concerns that I saw was in relation
to the consultation document not indicating the number of existing
dismantlers, scrap-yards and shredders. I think one of the concerns
here is in relation to having a level regulatory playing field;
if we do not know how many there are, perhaps the Department now
has this information but it did not seem to have done so at the
time when the consultation went out, concern could be had that
there would be a blanket authorisation for most of the existing
sites, given the tight timetable, and that, therefore, there will
not be an even playing field?
(Dr Keddie) I am not sure I understand the question,
and I am going to ask Sheila McKinley, in a minute, to come back
to you. But, in fact, in terms of knowing the numbers, and so
on, yes, we did; if they are not in the consultation document
228. No, they are very vaguely stated in the
(Dr Keddie) Yes, but, I mean, the basic scale of the
facilities out there, the numbers of them, the types of facilities,
yes, we were aware of; but I am not sure I quite understand your
point about blanket authorisation.
(Mrs McKinley) Neither am I, but I think, certainly,
yes, we do have an idea about how many of these facilities there
are, and I can tell you roughly what that is. We have got about
1,500 businesses currently operating under a Registered Exemption;
so these are generally the smaller businesses who would handle,
say, 40 or fewer vehicles in every seven days, or so. You then
have larger businesses who are handling salvage vehicles or dismantling
them, and these would be doing so under the terms of a Waste Management
Licence, which is slightly different, and there are about 750
of those. And those would include people like, for example, the
large shredders, who would be dealing not just with end of life
vehicles materials but also with other, for example, waste electronic
and electrical equipment, or even packaging. So, on top of that,
you would have, of course, the little grey area of dismantlers
who perhaps are operating without any authorisation at all, and
naturally we do not know exactly how many there are. But that
gives you a total of between 2,000 and 3,000.
229. And they will have to apply for the Licence
(Mrs McKinley) If they want to go on handling end
of life vehicles, they will have to apply for a permit, yes.
230. And you feel confident, as a Department,
that that process will happen smoothly within the time-frame?
(Mrs McKinley) Yes, I think I do. We have got two
strands of activity going on at the moment. There are discussions
that the Department is holding with dismantlers, shredders, salvage
operators, the vehicle manufacturing industry and the Environment
Agency, and they are talking about what sort of permanent system
should be developed. I think that is going relatively well. Separately,
but linked to that, there is, if you like, a more technical discussion
being handled by the Environment Agency together with the industry,
and they are looking at the terms of how to implement, and indeed
interpret, Annex I, which the dismantling industry referred to
231. The fear being that, because most dismantlers
are not up to scratch to make the Directive actually work, the
Government will just have to turn a blind eye to what could be
(Mrs McKinley) I do not think that is really what
the Environment Agency would be intending to do at all. There
will be a new permit, people will have to apply for it and comply
with the standards required in Annex I, if they want to go on
handling end of life vehicles material. Clearly, we know that
there are some operators at the moment who are not licensed at
all, but I think you will find that the Environment Agency already
has in train, whether or not we have an End of Life Vehicles Directive,
an exercise to try to find these unlicensed operators and bring
them either within the system or out of it.
232. Is it true that there are going to be about
1,500 dismantlers operating illegally?
(Mrs McKinley) My own feeling is that that is a rather
high figure, I would put that closer, I think, to about 700, perhaps
700 or 800, but, by definition, we do not have an exact number.
233. Between the need for getting people to
take licences and cracking down on illegal activity, in what is
a rather tight time-frame, do you see a major shake-up of this
market going to be going on over the next few months?
(Mrs McKinley) I do not know that I would see a shake-up
in the next few months. I think the shake-up will start and I
think there will be a shake-up but possibly over the next couple
of years, as things readjust and people get accustomed to the
new system that gets implemented in due course.
234. Have you given any assessment to possible
job losses resulting from this?
(Dr Keddie) You used the term "shake-up of the
market". One of the things we are learning from Directives
of this sort, because they do have considerable ramifications,
very often beyond the businesses directly affected by them, is
that, to some extent, you change the structure of business and
the business relationships. In terms of impact on jobs, every
assessment I have seen of environmental legislation or similar
legislation on jobs is, in fact, you tend to change the structure
of the businesses more than actually either having great pluses
and minuses. All the economic assessments I have seen, any job
changes are on the margins, they tend to be very small and undetectable
when you actually look at the overall business that is affected.
235. If I can now turn to the other side of
the spectrum, the shredding industry, which seems to be dominated
by two large players who have something like 80 per cent of the
shredding capacity in the UK, surely in the context of the proposals
any market that is dominated to such a great extent by two players
raises competition issues; what was the Department's attitude
(Dr Keddie) At the present time, we feel that the
situation should be okay, but, in fact, we are taking advice from
OFT on that and we have been consulting with OFT all along, so
to get their view as well on the competition implications. I am
not sure I can give you a more detailed answer at the present
time, other than that we are very aware of the issue, but we do
not think it is a major issue, at the present time, as we see
236. You are not looking at ways of resolving
it in the next few months?
(Dr Keddie) Not within the next few months on that,
no, we have got other things to do; but we are very alive to the
issue. So, yes, it is an issue we need to keep an eye on.
237. If one of them were to bid for the other
one, for instance, what would the Department's view be?
(Dr Keddie) That takes us into territory that is outside
my sphere of responsibility, but, clearly, as a Department, and
the OFT, we need to probably look at that; but I do not think
I can say more just now.
Mr Djanogly: It is clearly an area of concern,
238. It is certainly something that we will
(Dr Keddie) Sorry, Chairman, to interrupt you. I think
we need to bear in mind, however, that there is an infrastructure
out there working at the present time and it is actually recycling
75 per cent by weight, at least of vehicles, at the present time.
It may not be to all the standards in the Directive but there
are not competition policy issues around there at the present
time. So we just need to watch that we do not jump to conclusions,
because we do have a reasonably well operating system at the present
239. I am sorry, you are talking about the non-shredding
(Dr Keddie) Well the whole process; shredders are
out there shredding vehicles today. There are no competition policy
issues at the present time.