BMRA has today published its official response to the Home Office Review of the SMDA 2013.

While the full document can be downloaded from the bottom of this page,  the main points made in the response are outlined here:

BMRA response to Home Office review of The Scrap Metal Dealers Act 2013

The British Metals Recycling Association (BMRA) is the UK trade association for ferrous and non-ferrous metal recycling companies. It represents some 250 businesses from multi-nationals to small family-owned enterprises. This £5 billion industry processes over 11 million tonnes of metal annually into valuable secondary raw material for metal manufacturing in the UK and for a variety of export markets. 

BMRA worked closely with Government, police services and others to support the introduction of the Scrap Metal Dealers Act 2013 (SMDA). The SMDA introduced sweeping changes to the regulatory landscape in the metal recycling sector in an effort to reduce metal theft across England and Wales. The changes included: banning cash payments for scrap metal; introducing seller identification verification; enhanced record-keeping requirements; and, a new licensing regime.

In December 2016, the Home Office launched a review of the SMDA to assess the effectiveness of this legislation to date. This document summarises BMRA’s response to this review.

Improving enforcement to prevent increasing metal theft

Whilst there has been a significant reduction in metal theft since the introduction of the SMDA, it would be complacent to attribute this reduction purely to the SMDA.

  • There is a clear correlation between interventions and effective enforcement the legislation, and the number of recorded metal theft offences.
  • Since funding for enforcement of the SMDA was cut and regular visits by police to metal dealers’ premises reduced, there has been a reported upsurge in the use of cash payments in scrap metal transactions.
  • The introduction of the SMDA coincided with a fall in global demand for scrap metal and a consequent drop in metal prices. From Q1 2012/13 to Q4 2015/16 the global demand for scrap metal fell significantly, with a commensurate average reduction in value of 57%.
  • However, recent months have seen metal prices increase. There are already signs this is contributing to an increase in metal theft across England and Wales leading to growing concern amongst the victims. The latest figures are not yet available and the full extent may be masked as some thefts are not reported as their value falls under high insurance excesses.
  • Crucially, the effectiveness of the SMDA has not yet been tested in a market where metal prices are rising.

BMRA strongly supports the retention of the SMDA, but is concerned that incidences of these crimes will continue to rise over the coming months unless government action is taken to ensure effective enforcement of the legislation. Without effective enforcement of the SMDA, metal theft will continue to blight the UK’s infrastructure and cultural assets, as the price of metal and the demand increase. Poor enforcement creates an uneven playing field and harms legitimate businesses. Supporting the legitimate scrap metal industry ensures the disposal outlets for stolen metal are reduced and illegal operators are shut down.

Boosting the SMDA’s effectiveness: recommendations

In its submission to the Home Office, BMRA has called on Government to introduce a number of amendments to the Act including:

  • Creating disincentives to receive cash payments with a new offence of receiving cash for scrap metal
    • Despite cash payments for scrap metal being illegal, many holders of lawfully sourced metal, such as engineering companies or plumbing merchants, continue to demand cash for their scrap metal. In their quest for cash, they may seek out scrap metal dealers prepared to pay cash.
    • Those holders of legitimately sourced metal who are seeking cash, would be greatly deterred if it were also an explicit offence to receive cash for their scrap. Reducing the overall number of people seeking cash for lawfully sourced metal, would allow the police to focus on those wishing to dispose of stolen material.    
  • Expanding police powers to inspect itinerant collectors
    • ​​​​​​​The SMDA does not give police and local authority officers the power to inspect vehicles used for the purpose of carrying on business as a mobile collector. Moreover, if a collector stores their records at a home address, police have few options if they wish to inspect a collector’s records. Police officers wishing to inspect a collector’s records under the SMDA, may require a warrant to search a home address if the collector fails to produce records when stopped.
    • Specific powers should be conferred for the purpose of inspecting mobile collectors. Specifically, police officers may request collectors produce records of transactions required under the SMDA on-the-spot. Expanding inspection powers in this way would help to ensure all members of the scrap metal community are compliant with the requirements of the SMDA. 
  • Creating a more rigorous local authority licensing regime to ensure transparency and consistency:
    • Harmonising licensing renewals procedure: There is widespread variation in how metal dealer and mobile collector licence applicants are assessed. Additionally, the cost of licensing across local authorities varies widely. We therefore call for the licensing renewals procedure to be simplified and harmonised across all local authorities, including the introduction of a single licence and application fee covering England and Wales for mobile collectors.
    • Improving application process: Knowledge of scrap metal dealer licensing requirements and procedures within local authorities remains patchy and there is no formalised, common procedure for applications. We propose that local authorities are enabled to better scrutinise an applicant’s suitability to operate a scrap metal business. If consultations were carried out, interested parties could share their concerns. Local authorities could take any legitimate concerns into account when determining a licence application. This may lead to greater transparency in the application process and demonstrate how fees are used to administer the licensing requirements. 
    • Local authority requirement to provide data: There is a Public Register of metal dealers and mobile collectors, but this is not kept up-to-date. We call on Government to make it a requirement for local authorities to submit accurate, up-to-date information on licence holders to the Environment Agency. This will then be a valuable tool to assist the police in enforcing the SMDA, by allowing them to easily identify whether scrap metal dealers are licensed.

Further reducing opportunities for criminal behaviour through reverse-charge VAT

We have called on Government to support the above amendments to the SMDA with the implementation of a reverse-charge VAT system. Some scrap metal dealers are paying cash as they know there is little enforcement and subsequently little risk. Some vendors seek out operators prepared to pay cash because they know the cash they receive is outside the taxation system and they either do not know or care that paying cash is illegal.

Implementing reverse-charge VAT would make the metal dealer responsible for accounting to HMRC for the VAT. This would serve as a deterrent to metal dealers paying cash and or under- declaring on their VAT returns. 

For more information about the Association's response, please contact Sam.

BMRA response to the Home Office Review of the SMDA

Notes for editors:

1. The British Metals Recycling Association (BMRA) represents the £5 billion UK metals recycling industry.

2. The BMRA’s 250+ members include large and small businesses in the ferrous and non-ferrous sectors including shredder operators, merchants and traders.

3. Metals recycling is a globally competitive and environmentally important industry. It supplies secondary raw materials, which preserves natural resources, saves energy and reduces CO2 emissions by up to 80 per cent in metal production.

4. The UK metal recycling industry is so efficient at recovering metal from end-of-life products that more is recovered than can be consumed domestically; some 80 per cent of all ‘waste’ metal is exported.

5. Recycling of metals is the major contributor to the UK’s achievement of targets under EU Directives such as end-of-life vehicles and packaging.

6. In 2015, the UK exported 8 million tonnes of recovered ferrous (iron and steel) metal and approximately 750 thousand tonnes of non-ferrous metal (such as aluminium and copper).