New cash ban threatens metals recycling industry

A new piece of legislation banning cash transactions at scrap metal yards was passed through the Commons last month, prompting criticism from industry leaders.

While many reputable recycling firms including Recycling Lives agree that more needs to be done to discourage metal theft, the outright ban on cash payments for scrap metal is set to hit the industry hard and is causing concern among established scrap dealers.

The ban is likely to have a significant impact on the day-to-day operations of most scrap-yards. In terms of logistics, many scrap yards rely on the speed and ease with which cash payments can be made in order to keep their business running at full speed; cashless transactions may require new technology, procedures, training, and even staff members.

The ease of cash payments is one of the big draws for customers wishing to sell scrap metal. With local authority-approved itinerant traders controversially and confusingly exempt from the new legislation – and thus still able to offer cash payment – small and medium metals recyclers fear that much of their clientèle will go elsewhere. While the big industry leaders can afford to pay over the odds for scrap in a bid to tempt customers into accepting to cashless transactions, SMEs will be unable to absorb both the extra costs and the reduced income.

There is no doubt in the minds of Recycling Lives’ directors that tougher guidelines needed to be introduced to reduce the sale of stolen scrap metal. For too long, unscrupulous metal dealers have been damaging the reputation of the industry by accepting scrap metal from potentially illegal sources and carrying out cash-in-hand transactions for sellers who give no, or obviously falsified, details. It is hard to accept, however, that the best way to tackle this issue is to penalise all scrap metal dealers by preventing them from using their own cash to purchase metal from their customers.

Aside from concerns about the impact that cashless transactions will have on the industry, Recycling Lives is also unsure of how the new legislation will prevent stolen scrap metal from being purchased. Willingness on the part of a customer to accept a cashless transaction does not mean that the metal being purchased is from a legitimate source. While cashless transactions are more traceable than cash transactions, Recycling Lives already keeps records of every purchase it makes from customers, taking relevant details and keeping data on file.

Last July, Recycling Lives welcomed members of Operation Starling to its sites in a bid to ensure that the company was doing as much as possible to prevent the sale of stolen scrap metal from taking place. The scheme followed a shocking 50% rise in the number of scrap metal thefts being carried out in the region every year, with a total of 3,014 incidences in Lancashire between April 2010 and March 2011.

Quoted at the time, British Transport Police officer, Supt. Eddie Wylie commented:
“With scrap metal dealers’ support we can make it very difficult for metal thieves to operate as clearly they have to have an avenue to convert what they’ve stolen into cash.

“Good record keeping makes this very difficult and without this dealers can establish a perfect environment for criminals to sell on stolen goods, safe in the knowledge they will never be traced.”

In accordance with the Scrap Metal Dealers Act 1964, and in line with industry best practice, Recycling Lives ensures that the appropriate records are kept for all of its scrap metal transactions, including those that are made with cash. CCTV and a check-in system record the vehicles coming to and from the company’s sites and data is kept for an appropriate length of time to ensure that Recycling Lives is not an easy target for scrap metal thieves. Scrap metal is also not accepted from customers arriving in a taxi, on foot or on a bike, in line with the company policy of recording the registration plate of every incoming vehicle. The company’s sites are carefully managed and monitored with the express intent of preventing illegitimate purchases to be made, and regular contact is made with the local police in order to cross check records.

The introduction of the new legislation seems to create more problems than it solves. Recycling Lives would like to join other reputable metals recyclers in calling for a reconsideration – or, at the very least, an extensive clarification – of the legislation that has been introduced so that the metals recycling industry can continue to thrive without legitimate firms paying such a heavy price for the misdeeds of the few.

A more moderate first step, such as the introduction of mandatory ID documentation for all scrap metal sellers, would be welcomed. Recycling Lives supports the introduction of Operation Tornado, an initiative developed by the British Transport Police (BTP) that aims to combat metal theft and support legitimate metals recyclers in their business. While a number of the requirements were already in place at Recycling Lives, our adherence to Operation Tornado guidelines is a demonstration of our commitment to best practice, which is why, from now on, photographic ID and proof of address will be required for all transactions at our sites. CCTV footage and data will be kept for 28 days and 12 months respectively.

Initiatives like Operation Tornado, which have the support of the BMRA and BTP, can help to bring all metals recyclers in line with the high standards that reputable firms like Recycling Lives maintain. It is our hope that the Government will listen to the voices of those connected to the recycling industry, who can suggest effective steps for protecting our sector without negatively impacting on company operation and profits.