Makers row with DTI over ‘£200m’ car disposal levy

The UK government is denying industry claims that it will be landed with a multi-million pound bill to dispose of used cars next year.

The Society of Motor Manufacturers and Traders claims the government intends to slap what it calls a new tax worth at least £200m a year on the car industry, at a time when it is still suffering from export difficulties and a worldwide downturn in demand.

Christopher Macgowan, chief executive of the SMMT attacked the government’s proposals to comply with an EU directive which requires member states to have written an automotive disposal and recycling scheme into domestic law by spring next year.

The directive itself stipulates that from July 2002 car producers will have to pay for collecting, disposal and recycling of cars manufactured by them from that date. They will not have to pay for all the cars already on the road until 2007.

Member states have a degree of flexibility to decide when to start asking for producer contributions, what size the contribution should be and how best to meet any remaining costs, both before and after 2007.

But the SMMT is claiming the government wants to apply the rules to all cars rather than just new models sold as of July next year. This would create a much harsher regime than those in Germany and France.

‘The French and German governments have made it clear that they intend to follow the letter of the directive, with manufacturers responsible for meeting cost-free take-back of all cars on the road no sooner than 2007,’ Macgowan said.

The row broke out over the wording of the consultation document which was circulated to industry last week. The consultation, which ends in November, sets out options for car makers to take responsibility for the disposal and recycling of old cars. It is the financing of those options that caused the friction between the industry and the DTI.

‘We are both disappointed and angry that the government appears to have completely ignored the concerns of the UK’s largest manufacturing sector,’ Macgowan said.

‘This consultation seems to show that our government is content to burden manufacturers in this country further with a costly and totally impractical liability as soon as next year. The consultation does not say why and it just doesn’t make any sense.’

Government denial

A DTI spokesman denied that this was the government’s intention and said that the consultation process was just that. No firm decision had been taken.

But the SMMT insists this will mean the motor industry will be hit with a bill of at least £200m a year. Its head of policy and economics Paul Everitt told The Engineer that the government was intending to make the industry pay for disposal, instead of the car owner. ‘In every discussion we have had with the government over the last 18 months it has been implied that they expected the industry to pay,’ he said.

The End of Life Vehicle Directive is intended to resolve the problems of disposal of hazardous materials from scrap cars, the random dumping of old cars, and to reduce landfill waste.

The UK car industry has known about the directive for six years and believed that through negotiations it had gained concessions regarding the timetable for implementation.

About 1.5 million cars are scrapped every year in the UK. Industry sources estimate one old car would cost £138 to dismantle, dispose of its toxic elements and organise the recycling of 85% of its content – the government’s recycling target. That amounts to an annual bill for the UK motor industry of more than £200m.

But the figure is disputed by the experience of car producers in the Netherlands. There, the consultation document says, the costs of disposal and recycling is £50 per car, less than half the UK estimate, and the Dutch even achieved a recycling level of 86%.

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