Scrap Metal Dealers Bill

Lord Hanson of Flint Excerpts

Friday 13th July 2012 Commons Chamber

[Mr David Hanson (Delyn) (Lab)]

It is a pleasure to follow the hon. Member for Shipley (Philip Davies). I hope that it will not do his reputation too much damage when I say that over the past two years he and I have found common cause on a number of law and order issues, much to my surprise and, indeed, his. I am sorry that today there is a slight difference of opinion between us on the content of the Bill, because I believe that the measures it sets out will be a valuable addition to the police’s armoury. I say in passing that, if that was a short speech, I look forward to hearing one of his longer ones at some point, because it was certainly a good effort on his part.

I congratulate the hon. Member for Croydon South (Richard Ottaway) on bringing forward the Bill and thank him for doing so. He has been unfailingly courteous in helping to inform Opposition Front Benchers and other Members of the House about the Bill’s objectives. We have had a good dialogue on the Bill before Second Reading and I believe we should support it. He made a very strong case in his speech, and I believe that the Bill will be a good addition to the police’s armoury in tackling metal theft.

Metal theft, as we have heard today in contributions from my hon. Friend the Member for Walsall North (Mr Winnick) and other Members, is a huge and growing problem that has increased over the past three to four years largely because of issues to do with the price of metal. There have been many high-profile cases, and in every constituency, as the hon. Member for Croydon South said, churches, school halls, war memorials and cemeteries have been hit by thieves, who take metal for profit, for cash and for their own gratification, and who in doing so cause immense disruption and distress and have damaged the fabric of our society.

I was particularly struck by the experience of the hon. Member for Croydon Central (Gavin Barwell), whose own father’s grave was desecrated, and only this week we saw the conviction of two individuals who took part in the theft of the memorial to Tim Parry and Johnathan Ball, who were killed in Warrington some years ago.

So there is a real issue, and in cash terms the Association of Chief Police Officers estimates that metal theft costs the UK economy about £770 million a year. The British Metals Recycling Association, which supports the Bill as a group of people who deal with the matter daily, says that 15,000 tonnes of metal is stolen each year, and it is clear that the Scrap Metal Dealers Act 1964 still allows hundreds of businesses to operate outside the licensing and inspection regimes. I pay tribute to the association, with which I have had meetings on the issue, and it fully supports the measures before the House.

The Energy Networks Association reports that the cost of metal theft to energy generation industries rose from £11.7 million in 2010 to some £60 million in 2011. Metal theft in churches rose by 48% between 2010 and 2011, and the cost of repairs to railways has risen to £60 million over the past four years.

The British Transport police estimate that between 1 April 2010 and 31 March 2011 there was a 70% increase in the theft of cable, which is undoubtedly the No. 1 crime on the railways, accounting for almost 40% of railway property theft—not to mention the delay, danger and inconvenience it causes.

The British Transport police also confirm that the prevalence of metal theft is tied closely to the price of metals on international markets, and sadly, or positively, depending on which way we look at it, that is expected to rise until at least 2015.

I am pleased that my hon. Friend the Member for Tynemouth (Mr Campbell) is on the Opposition Front Bench today, because as a Home Office Minister with me in the previous Government, when the trend began to emerge, he took action and undertook surveys and reports in the north-east, in particular, on the recognition of that emerging trend. He was instrumental in founding what has turned into Operation Tornado, which is now being rolled out nationally, and it is an issue that we certainly need to deal with throughout the United Kingdom.

In my constituency, metal theft is a real issue. Indeed, in March, Judge Niclas Parry, sitting in Mold Crown court in north Wales, said that metal theft had reached “epidemic proportions.” It is not something that judges take lightly, and in a sense I agree with the hon. Member for Shipley that, on that aspect, we need a tool in the box for catching criminals and for ensuring that they are convicted and sentenced effectively, but the Bill provides for another aspect—tackling the issue at source, because sadly the police cannot be at every statue, plaque, cemetery, railway junction and railway line. They certainly have to catch criminals, but they also need to help us consider how we tackle the issue in a different way.

My hon. Friend the Member for Hyndburn (Graham Jones) tried to do that in a Bill before the House last year, but at that stage the Government did not support his proposals. I do not wish to introduce to our discussions this morning a note of discord, but the Government were slow to recognise and act on the large and increasing problem of metal theft. It is only because Back Benchers, the Opposition and others put pressure on the Government that tough and urgent action was taken, but sadly what we had was a piecemeal approach.

The reforms proposed were new clauses inserted at a very late stage into what is now the Legal Aid, Sentencing and Punishment of Offenders Act 2012. They tackled the problem in part but left a number of loopholes, which the Bill from the hon. Member for Croydon South will close. So poorly thought out was the 2012 Act that some measures that were brought before us only a few weeks ago are now subject to repeal in this Bill, supported by the Home Office, which took the 2012 Act, when it was a Bill, through the House only weeks ago.

Clause 16(f) of the Bill before us repeals

“sections 145 to 147 of the Legal Aid, Sentencing and Punishment of Offenders Act”,

which received Royal Assent on 17 May 2012. I do not know whether there is a Guinness record for the shortest time that a piece of legislation, which, indeed, will not even come into effect until October, has remained on the statue book, but if there is, sections 145 to 147 of the 2012 Act would certainly qualify—[Interruption.] The Under-Secretary of State for the Home Department, the hon. Member for Old Bexley and Sidcup (James Brokenshire) smiles a knowing smile—[Interruption.] He says that he was thinking of some of our legislation, but I challenge him to find something that lasted from 17 May 2012 until its repeal in a Bill—supported by the very same Department and produced by the hon. Member for Croydon South—today.

But let us leave that aside, because we do not want a note of discord, and a sinner repented is better than a sinner not.

I am very pleased to see that the Bill mirrors much of what the Opposition, including the shadow Home Secretary, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), called for last year. We called for tougher powers to close down rogue traders; for anyone selling scrap to have proof of identity and a record from the point of sale; for the licensing of scrap metal dealers, rather than the current method of registration; and for a move to ban cash transactions, especially for large-scale, high-value scrap metal deals. The plan was supported by the British Transport police, the Association of Chief Police Officers, Neighbourhood Watch, the Association of Train Operating Companies and the Local Government Association.

The proposals that we talked about in January were a balanced and comprehensive package to deal with issues that Members on both sides of the House recognised, and they would have made it more difficult for organised criminals and opportunistic thieves to profit from metal theft. The measures formed the basis of much that my hon. Friend the Member for Hyndburn did in his Metal Theft (Prevention) Bill, which was prevented from receiving further scrutiny although it contained much of what is in the Bill before us.

During the passage of the Protection of Freedoms Bill on 6 February, my hon. Friend the noble Lord Rosser included one of the provisions in the Bill before us, on powers of entry into scrap yards, in an amendment to that Bill, but the Government defeated his proposed change, albeit by only six votes.

Again, earlier this year, we tabled an amendment to delete the itinerant metal sales exemption on cash payments, a measure that the Government now support in the hon. Gentleman’s Bill before us, so I should certainly welcome today the Government telling the House again the basis on which they exempted itinerant metal sales from the Protection of Freedoms Bill in February. Our amendment would have closed that loophole, and it is thankfully being closed today, but I still do not get the logic behind the Government’s view in the first place.

Speaking in another place on 20 March, the noble Lord Henley on behalf of the Government said:

“We are only talking about a very small number of people”.—[Official Report, House of Lords, 20 March 2012; Vol. 736, c. 888.]

Yet the Minister here today, the hon. Member for Old Bexley and Sidcup, said in a holding answer from 26 March to a written parliamentary question:

“There is no accurate information available on the total number of itinerant collectors operating in the United Kingdom.”—[Official Report, 16 April 2012; Vol. 543, c. 34W.]

I am glad that the Bill closes off that exemption for itinerant dealers.

We need to consider verification of suppliers’ identity, which we have called for and is now addressed in clause 10. The Bill gives the police greater powers of entry and the right to make closing orders. We welcome the increased fines and the extension of the rights of entry under clause 13. There is still a discrepancy as regards the right of entry to unlicensed sites, although the Government attempted to deal with that previously. We need to consider that in Committee. I welcome the banning of cash transactions, as I did when it was considered during the passage of the Legal Aid, Sentencing and Punishment of Offenders Bill earlier this year. We need to consider this seriously.

We need to have verification of suppliers’ identity, which we have called for previously. I therefore welcome the proposals in clause 10, which allows the Secretary of State to prescribe regulations on documents, data or information sufficient to order and verify the supplier’s identity. There is a fair amount of discretion for the dealer. I would welcome the Minister’s thoughts on this. We will explore in Committee what regulations will be brought forward, particularly with regard to verification. I would particularly welcome some detail on that, as it leaves open a wide range of potential options. The Bill refers to

“a reliable and independent source.”

I would be interested to know whether that includes passports, driving licences or utility bills. Perhaps it could have been solved by an identity card, but I will not go down that route, as I do not want to introduce any discord. I put the Minister on notice that in Committee we will want some clarity on what is a reliable document for these purposes.

We support the more comprehensive and co-ordinated approach to licensing. The Bill allows for scrap metal licences to be issued by local authorities and, in turn, the Environment Agency must maintain a register of licences. I welcome those measures, and I am pleased that the Local Government Association supports them. This is an extremely important part of the Bill and one that we cannot afford to get wrong. In Committee we will need to explore how we ensure that licences and databases are fully maintained and accessible. Saying that we want those things and will put them in place is very different from delivering them on the ground. I would welcome some clarity from the Minister on how he intends to maintain the database and keep an eye on it.

Schedule 1 sets out the Secretary of State’s powers to set a fee for registration. That was raised by the hon. Member for Shipley. I welcome the power for the Secretary of State to set a fee and the fact that there is discretion for local authorities to be flexible about what the fee is dependent on their work load and the number of potential sites in their areas. I would welcome an indication from the Minister, now or in Committee, as to what he envisages the level or range of fees to be. Although the British Metal Recycling Association supports the introduction of a fee, the key point is what level it is set at and how that impacts on businesses. An early indication would take some of the pain out of the equation for those who oppose the Bill.

There are still a number of outstanding issues that the Bill does not address, including the use of Environment Agency funding and the agency’s inability to use its resources to target those who do not pay their fees. The Environment Agency’s role in the context of current legislation needs to be examined in detail by the Committee.

The BMRA has called for second-hand domestic appliance traders and used gold traders to be brought within the scope of the Bill. I put the Minister and the hon. Member for Croydon South on notice that we need to look at those issues. We need not come to a conclusion on them as yet, but I would welcome some detailed thought and consideration as to whether we need to amend the Bill in Committee to include those types of traders. There may or may not be a case for that, but we need a considered examination of the issues.

There is also the general issue of enforcement and the overlapping of the scrap metal dealer and environmental regimes. If there is not sufficient clarity on this approach, there could continue to be enforcement issues.

I have received representations about the exportation of stolen metals, which we can consider as the Bill progresses. If we tighten up the system in this country, there is still no barrier to people exporting stolen metal and recycling it elsewhere in the European Union or further afield. Calor Gas, for example, is losing 100,000 canisters a year, with a large number being exported to Africa. The law of unintended consequences means that tighter policing, regulation and enforcement regarding restrictions on stolen metal recycling in the United Kingdom might lead to increased exports and the involvement of more organised crime rather than just petty criminals.

[Dr Thérèse Coffey]

Felixstowe is in my constituency, so I recognise that it is a big challenge to make sure that we are monitoring goods going out as well as goods coming in. Given that it was suggested earlier that about 30% of crime is organised activity, does the right hon. Gentleman agree that the Bill represents a great opportunity to tackle the other issues as well?

[Mr Hanson]

I support the Bill because it does provide an opportunity to tackle those issues. I am merely saying that I want clarity from the Minister, who has the resources of the Home Office behind him, in considering whether activities may be displaced towards exportation. The involvement of organised crime means that stolen metal being recycled at local institutions could be replaced with its being exported to places such as Africa. Calor Gas has expressed to me the concern that canisters from its business are being stolen and exported for recycling rather than that happening in the United Kingdom. We need to think about how we address that. Can the new National Crime Agency get involved? How do we work with the Environment Agency? Do we need to look at any amendments to strengthen the Bill?

[Julie Hilling (Bolton West) (Lab)]

Scrap will tend to start off in smaller scrap yards and be moved along a chain, so by the end of the process, when it is ready for export, it is in a huge conglomeration and nobody is looking at the detail as it is done purely by weight. We need to make checks as we go along to ensure that the plaques and other goods are not in there, but the end of the road of export is a difficult place to do that, so we have to make sure that it is done much earlier in the chain.

[Mr Hanson]

I am grateful to my hon. Friend for her intervention. I know that she has taken a great interest in metal theft in her constituency.

This is a very valuable Bill. Policing is very strong in this respect, and the Bill will help, but there are still potential displacements and unintended consequences that we need to monitor downstream. In relation to the comment by the hon. Member for Suffolk Coastal (Dr Coffey), when scrap arrives at Felixstowe it may well be too late to deal with the problem. I want to put the great minds of the Home Office on notice that we would like some consideration of those issues when the Bill arrives in Committee.

We will not oppose the Bill. I want to give it a fair wind and enable it to pass into Committee, where we will scrutinise it very closely. We want swift progress because the level of metal theft is causing irreparable damage to people’s lives and unacceptable disruption to our communities. I thank the hon. Member for Croydon South for producing a Bill that is worthy of support. He has handled himself in an exemplary way in his discussions about the Bill. We will give it a fair wind today, but I give notice that there are certain issues to which we will return in Committee. I hope that in a spirit of cross-party co-operation we can, in September or October, examine those issues for the benefit of our constituents.

--- Later in debate ---

[Mr David Nuttall (Bury North) (Con)]

As always, it is a great pleasure and honour to follow my hon. Friend the Member for Croydon Central (Gavin Barwell)—it is a Croydon day today, is it not? He made some moving points, and the whole House will have been moved by what he said about his personal experience of the effect of metal theft.

Whether we have been affected personally, as my hon. Friend has, or just read about the problem in the papers, we all know that metal theft affects everybody. Some people may have been stuck on a train that has been delayed because the tracks have been taken up and destroyed. Even though a particular church might not have suffered any metal loss, it will still suffer from having to pay increased premiums as a result of thefts from other churches.

There is no doubt that there is a problem, but I rise to express concerns about the Bill. I will not repeat everything that my hon. Friend the Member for Shipley (Philip Davies) said, because he did a thorough job of going through the problems that could arise with the Bill, and because those problems might well be dealt with in Committee.

I congratulate my hon. Friend the Member for Croydon South (Richard Ottaway) on his success in coming second in the private Member’s Bill ballot, which has given him a place at the top of the agenda this morning. Although the Bill is a private Member’s Bill, it has much the look of a Government Bill—it has 20 clauses and two fairly lengthy schedules. That is perhaps not a surprise, because, as we know from the House of Commons note, the Bill is a handout Bill. The note helpfully describes a handout Bill as a Bill offered by the Government to a Back-Bench MP to take forward as a private Member’s Bill, and states:

“These are usually Bills for which the Government has not been able to find time in its”—

legislative—

“programme or, for some other reason, it does not want to present itself.”

I do not know why the Bill is not a Government Bill, but perhaps we will find out when we hear from the Minister. I can think of at least one Bill—namely, the House of Lords Reform Bill—that could be jettisoned so that the Government can find time for the House to consider a Government scrap metal dealers Bill. People outside would be much happier for the House to discuss a problem such as that caused by the theft of metal.

[Mr Hanson]

Just so the hon. Gentleman is clear, the Government made proposals in a previous Act in the previous Session but rejected the measures in the Bill. The Government therefore made a political decision in the previous Session not to proceed with the provisions. They are supporting them in this Session because of pressure from Back-Bench Members such as the hon. Member for Croydon Central (Gavin Barwell).

[Mr Nuttall]

I am grateful to the right hon. Gentleman for clarifying that point. It will be interesting to hear whether the Minister takes that view when we hear from him.

Metal theft is doubtless a serious problem, but it is also an increasingly high-profile problem. The Association of Chief Police Officers estimates that metal theft costs the UK economy approximately £770 million a year. The British Transport police, who have the lead policing responsibility for metal theft, experienced 2,000 incidents in 2010-11, up some 33% compared with the previous year.

The reason for the increase in metal theft is largely tied to the international scrap metal price. A useful diagram in House of Commons Library research paper 12/39 demonstrates that. The graph shows that there is almost an exact correlation between the level of metal theft and the price of metals on the international market. The increase in the price of metal on the international market has led in recent years to an increase in the problem of metal theft.

I am sure all hon. Members would like to see an end to the problem, just as we would like to see an end to all other forms of crime that cause so much damage to our society, and I am absolutely sure that the promoter of the Bill, my hon. Friend the Member for Croydon South, and its six sponsors, are entirely well meaning. I have great respect for their views.

I mentioned that scrap metal theft is a particular problem for churches. The Ecclesiastical Insurance Office, which deals with church insurance, wrote to me on 6 July seeking my support for the Bill:

“Metal theft is an on-going epidemic in this country. Since 2007, the problem of mindless criminals stealing metals from churches, schools, heritage properties, railway lines and even hospitals has continued to rise as the demand for such metals on world markets has increased. 2011 was the worst year on record for the number of metal thefts from churches with some churches in this country now being targeted for more than 10 times in the space of only five years.”

As a church warden of my parish church, I ought to declare an interest. We are as concerned as anyone about the increasing cost of insurance. Many examples have been mentioned—war memorial plaques stolen, chaos on the railways, churches desecrated—but the scrap metal industry is already extremely well regulated. Society has long accepted the need for regulating the industry. The Scrap Metal Dealers Act 1964, which the Bill would replace, repealed the Old Metal Dealers Act 1861 and several other Acts. So the regulation dates back well over 150 years.

It is already an offence to steal metal under the Theft Act and to handle stolen goods, so we need to examine why these offences continue, given that apparent deterrents are already on the statute book. The existing regulation is not driving out the rogues from the industry, so what will make the new regulations any more successful? The Legal Aid, Sentencing and Punishment of Offenders Act 2012 received Royal Assent just 74 days ago, but has not come into force yet, so we do not know what effect the increased penalties will have.

One fundamental change to the regulatory regime will be the introduction of a scheme of registration and identification similar to the one requiring solicitors to ascertain the identity of their clients for the purposes of money laundering legislation. I had some experience of conducting such tests when I practised as a solicitor, and I know only too well the rules and regulations dealing with money laundering and the detailed information about clients that has to be kept.

I note that the Bill does not state what sort of identification will be sought from those seeking to sell scrap metal, but leaves it open for future debate. No doubt that is one of many matters that we can consider in more detail on Report. However, being able to establish someone’s identity is not quite as straightforward as some people might think. Very often people will come without any form of identification, which will no doubt cause inconvenience at the very least, when they are told, “I’m sorry, I can’t pay for your scrap because you’ve not got any identification,” and they will be sent away. They might scrub about in their pockets and pull out a credit card, but that will not have their address on it and so will not be satisfactory, so they will go away disgruntled and have to find further proof of who they are before they can return. It remains to be seen, but I suspect that the evidence will have to be photographic—a passport, a driving licence with a photograph on it or some other photo ID—so that the person conducting the check can verify that the person whose identity documents have been produced is indeed the person before them. The matter is therefore not quite as straightforward as people might otherwise think.

As has been said, a lot of action has already been taken to try to sort the problem out. We have heard that in November 2011 the Government announced the establishment of a dedicated £5 million national taskforce, led by the British Transport police and comprising officers from across England and Wales whose job it would be to target metal thieves and scrap metal dealers trading illegally in stolen metal. The taskforce’s first steps apparently included a programme of action to target scrap metal dealers suspected of trading illegally in stolen metal. At that time, the Government said they would consider longer-term options to tackle the problem of stolen metal being traded too easily in the scrap metal industry. As we have seen, the Government then changed the Legal Aid, Sentencing and Punishment of Offenders Act 2012, increasing the fine available under the Scrap Metal Dealers Act 1964 to

“level 5 on the standard scale”—

that is, a fine not exceeding £5,000—and introducing a new criminal offence that prohibits cash payments.

All that has not really had a chance to work; nevertheless, we are now faced with the possibility of new legislation, and we have to consider whether it will be successful. Clause 20(1) states that the Bill applies only to England and Wales. One does not have to be Einstein to work out that the Bill risks creating a possible loophole that those involved in underhand, illegal and criminal activities of this nature will quickly spot. It is that people would simply go to Scotland or Northern Ireland to dispose of their ill-gotten gains. Before anyone intervenes on me, I should say that I accept that Scotland is looking at the problem and that it might well come up with a similar set of rules and regulations to those that we have here in England. I do not know whether Northern Ireland is going down a similar road. Nevertheless, if this Bill is to be successful, discussions will need to take place between the other constituent parts of the United Kingdom on what they are doing to tackle the problem.

If the Bill is successful, it will repeal the Scrap Metal Dealers Act 1964, but there is no doubt that it will also increase the level of regulation. That is what it is all about. Its raison d’être is to create more rules and regulations to restrict the opportunities for those involved in criminal behaviour to get away with it. That brings me to the Government’s one in, one out policy, which I strongly support. What regulations will be scrapped to make way for the creation of these new ones?

The Government’s report, “One-in, One-out: Third Statement of New Regulation”, that was issued in February this year shows that, unfortunately, the Home Office does not appear to be doing too well in the league table. According to annex A of the report, its contribution to the overall total was a negative one. It had three “ins” and only one “out”, and the zero net cost is listed as 5. In terms of the annual regulatory cost to business, the Home Office’s “ins” cost £50.8 million, with an “out” cost of only £0.83 million, leaving a net balance of £49.97 million. I submit that the Bill will only leave the Home Office further marooned at the foot of the one in, one out league table.

That leads me to the benefits of increasing regulation in the scrap metal industry, and to ask how successful that will be. In this regard, I am obliged to Philip Booth’s blog posted on the Institute of Economic Affairs website on 5 January. He writes about the fact that the regulation designed to tackle money laundering is being recycled for the scrap metal industry, and relates the views of the British Transport police on the matter. His blog states:

“The British Transport police go on to say: ‘My serious belief is that if you put those measures in place, Johnny in the white van isn’t going to want to turn up, produce his passport or his driving licence and proof of where he lives so we can then very quickly check where [his metal] comes from.’ Precisely…This will be the case whether Johnny in the white van is a builder or a criminal—the two will be treated exactly the same. The naivety of the proposals is stunning. Already, about ten per cent of economic activity in developed countries takes place in the shadow economy and serious work suggests that regulation and taxation are a major cause of this. Whilst Johnny Plumber in the white van may just decide to dump his scrap in landfill rather than have it recycled, Johnny Criminal will turn to the black market which will thrive. Indeed, Johnny Plumber may decide to become a criminal himself and use the black market. So, as ever, well-meaning measures lead to more stress on the natural environment, more business costs, more criminality and the people who it is designed to hit will just carry on as normal in a thriving criminal world.”

There is therefore a real danger that the Bill will not be as successful in tackling the problem as its promoters hope.

A number of changes to the regulatory regime have already been passed, but have not yet come into force. Also, Operation Tornado has certainly been relatively successful. We know that from the debate in this Chamber on 18 June, when the Minister said that

“Operation Tornado, a voluntary scheme supported by the British Metals Recycling Association”

had been so successful that it had reduced metal-related crime

“by half in the first three months of 2012 across the three north-eastern police force areas of Northumbria, Cleveland and Durham.”—[Official Report, 18 June 2012; Vol. 546, c. 718.]

In anybody’s book, that is pretty impressive. If such a level of success could be rolled out across the country, that could be just as beneficial to society as the measures in this Bill.

Let me repeat my support for some of the remarks on sentencing made by my hon. Friend the Member for Shipley. There is a problem if the risk of being detected is low. If people think they can get away with crime, they will be more likely to be tempted down the criminal path. Secondly, we must have stronger sentences that actually act as a deterrent to criminals. We need honesty in sentencing, too. I remember the days when it was Conservative party policy to have honesty in sentencing, and I look forward to that once again being the case, so that when someone is sentenced to six months in prison, they spend six months in prison, and when they are sentenced to five years, they spend five years in prison.

I trust that the concerns that my hon. Friend and I have raised will be looked at when this Bill goes into Committee, and I assure the House that its measures will be examined very closely on Report.