Select Committee on Trade and Industry First Report


(a)Although the ELV Directive is an environmental one, in this inquiry we have focussed on the economic impact of the Directive and have not considered the environmental requirements in any detail (paragraph 6).
(b)The Government must aim, through a combination of the outcome of the consultation paper and an effective system for disposing of ELVs, to reduce, or even eliminate, the problem of abandoned cars (paragraph 11).
(c)We would hope that the implementation of the ELV Directive will not only reduce considerably the number of illegal dismantlers, but also that a more accurate picture of the market will emerge. We recommend that the DTI continue to monitor the competitiveness of the shredding industry after the Directive has been implemented to ensure that the market is operating competitively (paragraphs 13 and 14).
(d)Whatever system is put in place to deal with ELVs, it is imperative that the Environment Agency has sufficient resources to be able to monitor treatment facilities and ensure compliance with the terms of the Directive (paragraph 20).
(e)The individual treatment and depollution of ELVs prescribed by the Directive does not presently occur in the UK. Any facility, be it a dismantler, scrapyard or shredder, that wishes to handle ELVs will, under the terms of the Directive, need to have a permit and to comply with the required standards (paragraphs 21 and 22).
(f)It seems likely that a number of existing dismantlers will cease to operate once the ELV Directive is implemented. We are concerned that there may be a shortfall in the number of Authorised Treatment Facilities ready to deal with ELVs in April 2002. We are not confident that the Government has made an accurate assessment of the condition of the vehicle treatment industry after the Directive is implemented (paragraphs 26, 27 and 28).
(g)Although we understand that the DTI's consultation paper would not wish to pre-empt discussion on such a key issue [as the costs of take-back and treatments] it is unfortunate that with only a few months to go before the Directive must be implemented, the DTI has not set out clearly how these costs will be met (paragraph 34).
(h)It is not yet clear exactly how the system of issuing Certificates of Destruction will work. The DTI and DVLA must issue clear guidance on each step in the process and where the ultimate responsibility lies. We think there is some merit in a two stage process. The owner would receive a document to prove that he/she no longer had responsibility for the vehicle, but the vehicle would not be finally 'signed off' until it was actually destroyed. We trust that any problems the DVLA are currently having with handling large numbers of CoDs are dealt with well in advance of the system going live (paragraph 40).
(i)Given that the electronic system for issuing CoDs will not be rolled out when the Directive comes into force in April 2002, we are concerned there will be some confusion when the initial CoDs are issued. We recommend that the DTI set out clearly how the initial issuing of CoDs will work. We trust that there will be a smooth and speedy transition to the fully automated system (paragraph 41).
(j)It appears to us that the obligation 'Option 4' places on shredders to take all vehicles may not work in practice; that under 'Option 4' there would be strong incentives on owners of old cars simply to abandon them. We are concerned that there does not appear to have been dialogue between the motor manufacturers and the recycling industry about Option 4 or about the implications of the Directive. We strongly suggest that dialogue takes place to determine, more accurately, the pros and cons of Option 4 and other possibilites (paragraph 46).
(k)Given the short timescale, we were somewhat alarmed to discover that the DTI's consultation paper did not address the issue of funding. The question of who pays, and how much, is at the heart of any system of implementation of the Directive. We recommend that the DTI address the issue of funding, and make public their views, as a matter of some urgency (paragraphs 47 and 48).
(l)We understand that the responsibility for all or a significant part of take-back costs lies with the manufacturer. Manufacturers will have to make specific provision to cover the cost of disposal of ELVs. To finance this, it is likely that original car prices will rise. We believe that the cost to producers of take-back would ultimately be passed on to original purchasers (paragraph 50).
(m) Given the DTI's commitment to a "level playing field" with other Member States it would seem perverse to insist on a much more stringent timescale for the UK than for other Member States (paragraph 52).
Account of the historic car parc
(n)We appreciate that the issue of how to deal with the historic car parc is a thorny one. We do not presume to recommend any particular option for apportioning costs: whether current or historic market share is chosen, someone will suffer. However, we note that, if the date of implementation for the historic parc is left at 2007, the 'historic' car parc will largely reflect the market share in 1995-1997, given that the average age of a natural ELV is 10 to 12 years. If the date is kept at 2007, we would not expect any particular manufacturer to be excessively penalised. Moreover, given that the free take-back of all cars does not have to come into force until 2007, provision can be made in the interim to cushion the effect of the historic car parc. The solvency of companies could be protected by the adoption of a mechanism which avoids companies having to book substantial reserves rather than contingent liabilities (paragraph 55).
(o)We are not convinced that leaving the market to decide whether a vehicle has a positive or negative value is in the best interests of the last owner of the vehicle. We recommend that the DTI publish guidelines and information for consumers as to what they may reasonably expect to receive for an ELV (paragraph 57).
(p)The ELV Directive, by imposing legal obligations on the parties, distorts the operation of the current market. That being so, we do not think it would distort the market further to have an agent of last resort (other than the courts) to determine disputes between car producers and ELV processors. We recommend that the DTI consider whether any existing body could be given this task or whether the industry should be required to set up a disputes mechanism itself (paragraph 59).
(q)It is imperative that the last owners of vehicles are aware both of their obligations and what they may expect on handing in their car. We recommend that the DTI set out clear and unambiguous guidelines for what determines a 'complete' car (paragraph 60).
(r)The DTI should continue to monitor the implementation of the Directive in other Member States, and ensure, so far as possible given the different situations in other Member States, that the UK car and scrap industries are not disadvantaged by the way the Directive is transposed here (paragraph 62).
(s)We urge the Government to clear up the uncertainty over the funding of the implementation of the Directive as soon as possible (paragraph 64).
(t)The DTI should monitor the situation closely to ensure that the Directive is implemented in an efficient and speedy manner to minimise confusion and disruption (paragraph 65).
(u) We recommend that the DTI run an information campaign early in the New Year to ensure all players, including last owners, are clear where their responsibilities lie (paragraph 66).

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