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Scrap Metal Dealers Act 2013

Scrap Metal Dealers Act 2013

2013 CHAPTER 10

Introduction

1.These Explanatory Notes relate to the Scrap Metal Dealers Act 2013 which received Royal Assent on 28 February 2013. They have been prepared by the Home Office, in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by Parliament.

2.The Notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. 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 Act is set out below. The Act has 23 sections and 2 schedules.

4.This Act repeals the Scrap Metal Dealers Act 1964 (and linked legislation) and Part 1 of Vehicles (Crime) Act 2001, creating a revised regulatory regime for the scrap metal recycling and vehicle dismantling industries. The Act maintains local authorities as the principal regulator but gives them the power to better regulate these industries by allowing them to refuse to grant a licence to ‘unsuitable’ applicants and a power to revoke licences if the dealer becomes ‘unsuitable’. Suitability will be judged on the basis of a number of factors as outlined in section 3 of the Act including any unspent relevant criminal convictions. The Act will also provide local authorities and police officers with appropriate powers of entry and inspection.

5.The Act provides that an application for a licence must be accompanied by a fee. The fee will be set locally by each local authority on a cost recovery basis, but local authorities will have a duty to have regard to guidance issued by the Secretary of State which will outline the issues that should be considered by local authorities when setting the fee and what activities the fee can cover. 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.

6.The Act aims 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 verify the identity of those selling metal to them.

7.The Act incorporates the separate regulatory scheme for motor salvage operators under the Vehicles (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 scheme. The Act also revises the definition of ‘scrap metal dealer’ and ‘scrap metal’ to ensure they reflect the twenty-first century scrap metal industry.

8.The Act 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. This offence came into force on 3 December 2012. The other two measures within the Legal Aid, Sentencing and Punishment of Offenders Act 2012 relating to tackling metal theft, namely a revision of police entry powers into unregistered scrap metal stores and increasing the financial penalties for offences in the Scrap Metal Dealers Act 1964 have also been repealed on the grounds that these provisions are covered separately in the new Act.

Background

9.The recent growth of metal theft offences, driven by increased commodity costs, has highlighted the ineffectiveness of the existing registration scheme in 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) and up to £777m per year (the Association of Chief Police Officers, 2010). The impact of metal theft was felt across the United Kingdom by a range of sectors – including national transport infrastructure, electricity and telecommunication links; street furniture; heritage buildings; memorials; and commercial and residential buildings.

11.It was widely considered that regulatory reform of the scrap metal sector was needed. 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 in 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. These were brought into force in December 2012.

Territorial Extent and Application

12.Section 23 sets out the territorial extent of the Act.

13.The Act’s provisions will extend to England and Wales only.

Provisions in the Act that apply in Wales

14.The provisions in the Act relate to non-devolved matters in Wales. The Act does not affect the powers of Welsh Ministers and does not make different provision in relation to England and Wales (except to reflect the division of environmental responsibilities between the Environment Agency and the new Natural Resources Body for Wales).

The Act – Commentary on Sections

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

15.Section 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 is punishable on summary conviction with a fine not exceeding level 5 on the standard scale.

Section 2: Form and effect of licence

16.Section 2 provides further detail in respect of the licence, including that there are two types of licence, one for a site and the other for a mobile collector (carrying on business otherwise than at a site). The licence authorises the licensee to carry on business as a scrap metal dealer at the sites listed in it (in the case of a site licence) or within the local authority area (in the case of a mobile collector’s licence). A power is provided for the Secretary of State to prescribe the form and content of the licence in Regulations.

17.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 site licence will require all of the sites at which the licensee carries on the business as a scrap metal dealer within the local authority area to be identified and a site manager to be named for each site. In doing so, they will be permitted to operate from those sites as a scrap metal dealer, including transporting scrap metal to and from those sites from any local authority area.

18.A collector’s licence authorises the licensee to operate as a mobile collector in the area of the issuing local authority, permitting them to collect any scrap metal as appropriate. This includes commercial as well as domestic scrap metal. The licence does not permit the collector to collect from any other local authority area; a separate licence should be obtained from each local authority the individual wishes to collect in. A licence also does not authorise the licensee to carry on a business at a site within any area - should a collector wish to use a fixed site, they will need to obtain a site licence from the relevant local authority. There is no restriction as to the location where the collector can transport and sell their metals.

19.The form in which a licence is issued must enable it to be displayed in accordance with section 10 (see below).

Section 3: Issue of licence

20.Section 3 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 is intended that this will be in line with the criteria used by the Environment Agency when issuing environmental permits under the Environmental Protection Act 1990. The authority must also have regard to any guidance on determining suitability which is issued from time to time by the Secretary of State, and the authority may consult other organisations to assist in determining suitability.

21.This section also allows local authorities, when issuing a licence, to include conditions in it if the licensee or site manager has been convicted of a relevant offence. Subsection (8) specifies the two conditions that can be imposed by local authorities on a licence, namely a restriction on opening hours and imposing ‘quarantine periods’.

Section 4: Revocation and variation of licence

22.Section 4 provides the licensing authority with the discretion 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 a local authority as the licensing authority. The section also allows the licensing authority to vary a licence, imposing the conditions stipulated in section 3, if the licensee or a site manager is convicted of a relevant offence. This power includes the power to impose conditions pending an appeal, where a licensee is appealing a decision to revoke a licence.

Section 5: Further provision about licenses

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

24.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.

25.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 three 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.

26.The application process for a licence is set out in paragraph 2, including a requirement to provide information relating to relevant enforcement action and convictions for relevant offences. The Secretary of State has a power by order to alter the requirements as to what information must accompany the application.

27.Paragraph 6 permits local authorities to charge a licence fee at cost recovery. This fee will be set locally. The Secretary of State will issue statutory guidance, which local authorities will have a duty to have regard to, which will outline the activities that can be funded by this licence fee.

28.The Schedule also sets out how the applicant or licensee can make representations where the licensing authority proposes either to refuse to issue/renew an application or to revoke a licence. There will be a requirement for the licensing authority to provide the applicant with a notice to outline the decision that they propose to make about issuing/revoking a licence. The procedure for making representations will be outlined in the notice, giving at least a 14 day window, 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, to vary or revoke a licence or to impose conditions within a licence.

Section 6: Supply of information

29.Section 6 places a duty on the local authority to supply any such information as requested relating to a scrap metal licence to any other local authority in England and Wales, the Environment Agency, the Natural Resources Body for Wales and to police forces.

Section 7: Register of licences

30.Section 7 requires that a register of licences issued under this Act should be maintained by the Environment Agency in England and the Natural Resources Body for Wales in Wales. Local authorities will provide the appropriate information on all licences issued in their geographic areas 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; any trading name; the type of licence; the site(s) covered by the licence and the expiry date of the licence.

Section 8: Notification requirements

31.Section 8 imposes an obligation on an applicant to notify the relevant environmental body 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 section 7(3)(b) and (d), the licensee is required to make an application to vary the licence under paragraph 2 of Schedule 1. The licensing authority has a duty to inform the relevant environmental body of any changes to the licence that affect the entry in the register in respect of that licence, including any licences that have been revoked, within 28 days of the change taking effect. The Environment Agency or the Natural Resources Body for Wales, whichever is appropriate, must then amend the register accordingly.

Section 9: Closure of unlicensed sites

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

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

34.The Schedule sets out that a 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 that the alleged use of the premises ceases. Once a closure notice issue has been issued, the local authority officer or constable can then make an application to a Justice of the Peace for a closure order to close that site. Applications cannot be made where the premises are no longer being used by a scrap metal dealer in the course of their business and there is no reasonable likelihood that the premises will be used in this way in the future. If the court is satisfied, the court can then make such 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.

35.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 court 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.

36.The offence of operating premises in contravention of a closure order is punishable on summary conviction with a fine not exceeding level 5 on the standard scale.

Section 10: Display of the licence

37.Section 10 requires that the licensee displays a copy of their licence. For site operators this must be in a prominent place in an area accessible to the public. For mobile collectors, it must be in a manner which enables the licence to be easily read by a person outside the vehicle. A criminal offence is committed by any scrap metal dealer who fails to fulfil this requirement. This offence is punishable on summary conviction with a fine not exceeding level 3 on the standard scale.

Section 11: Verification of supplier’s identity

38.Section 11 places a requirement on scrap metal dealers, site managers and employees who have been delegated the responsibility to do so, to verify the identity of the person they are receiving metal from and the person’s address. This verification must be done by reference to data, documents or other information obtained from a reliable or independent source, such as the Identity and Passport Service, the Driver and Vehicle Licensing Agency, a bank or utility company etc. The Secretary of State will 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 offence will apply to the scrap metal dealer, the site manager and any person, who under arrangements made by either the scrap metal dealer or the site manager, has responsibility for fulfilling this requirement on behalf of the business. A defence of making arrangements to ensure this requirement should be met and taking all reasonable steps to ensure those arrangements were complied with can be used by the scrap metal dealer or the site manager; this will cover situations where an employee has acted in a rogue manner, in breach of established working practices. In addition, a person who on delivering scrap metal to a scrap metal dealer gives a false name or address is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Section 12: Offence of buying scrap metal for cash etc

40.Section 12 re-enacts with modifications the 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.As with section 11, the offence applies to the scrap metal dealer, the site manager and any person who makes the payment acting for the dealer. A defence of making arrangements to ensure this requirement is met, and taking all reasonable steps to ensure those arrangements were complied with, can be used by the scrap metal dealer or the site manager. Anyone convicted will be liable on summary conviction to a level 5 fine on the standard scale.

Section 13: Records of dealings: received metals

43.Section 13 sets out the record-keeping requirements in respect of any scrap metal received by a scrap metal dealer in the course of their business. Information that is required to be recorded includes the type of metal being purchased; the time/date of the transaction; personal information on the seller; who is acting on behalf of the dealer and proof of the non-cash transaction. Failure to comply with the requirements of this section is an offence attracting a penalty up to level 5 on the standard scale (see section 15).

Section 14: Records of dealings: disposal of metal

44.This section makes similar provision to the previous one but relates to records of metal being disposed of by a site licensee or collector. The same sanctions apply.

Section 15: Records: supplementary

45.As with section 11, breach of the requirements of section 13 or 14 is an offence. The offence applies to the scrap metal dealer, the site manager and any person who has responsibility for fulfilling the requirement under arrangements made by a dealer or seller. A defence of making arrangements to ensure this requirement should be met, and taking all reasonable steps to ensure those arrangements were complied with, can be used by the scrap metal dealer or the site manager. Anyone convicted will be liable on summary conviction to a level 5 fine on the standard scale.

Section 16: Right to enter and inspect

46.Section 16 provides police constables or officers of a local authority with a right to enter and inspect the premises of licensed and unlicensed scrap metal dealers.

47.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.

48.Subsection (2) sets out the circumstances in which a constable or local authority officer can exercise a right of entry and inspection, at a reasonable time, 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.

49.Subsection (5) provides a right of entry exercisable by warrant to secure compliance with the provisions of the Act and to ascertain whether the provisions of the Act are being complied with. This right of entry applies to premises, including residential premises, which are a licensed site or to premises that are not licensed but where 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.

50.It is an offence punishable on summary conviction with 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.

Section 17: Offences by bodies corporate

51.Section 17 makes provision for where an offence under the Act 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.

Section 18: Review of Act

52.Section 18 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 Act. The Secretary of State must publish a report of the conclusions of this review before both Houses.

Section 19: Consequential Amendments

53.Section 19 makes the necessary consequential amendments to existing legislation to give effect to this Act including the Scrap Metal Dealers Act 1964 and all linked legislation; Part 1 of the Vehicles (Crime) Act 2001 (which regulated motor salvage operators) and the relevant provisions of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Section 20: Orders and regulations

54.Section 20 makes provision for the procedural requirements for any orders and regulations made under the Act.

Sections 21 and 22: Definitions:

55.Sections 21 and 22 provide definitions for the purposes of the Act including the definitions for ‘a scrap metal dealer’, ‘a mobile collector’ and ‘scrap metal’.

Section 23: Extent, commencement and short title

56.Section 23 is self explanatory.

Commencement

57.Section 20 and 23 come into force on Royal Assent. The other provisions of the Act will be brought into force by means of a commencement order or orders made by the Secretary of State in line with the Department for Business, Innovation and Skills’ Common Commencement Dates, unless otherwise agreed. 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.

Hansard References

58.The following table sets out the dates and Hansard references for each stage of this Act’s passage through Parliament.

House of Commons
First Reading20 June 2012

Volume 546

Column 880

Second Reading13 July 2012

Volume 548

Columns 576-616

Committee Stage11-12 September 2012Public Bill Committee for the Scrap Metal Dealers Bill
Report Stage and Third Reading9 November 2012

Volume 552

Columns 1142-1195

House of Lords
First Reading12 November 2012

Volume 740

Column 1274

Second Reading30 November 2012

Volume 741

Columns 408-430

Committee Stage18 January 2013

Volume 742

Columns 879-891

Report stage5 February 2013

Volume 743

Column 140

Third Reading12 February 2013

Volume 743

Column 567

Royal Assent28 February 2013

House of Commons – Volume 559 Column 491

House of Lords –

Volume 743 Column 1155

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