Issue

1. The Vehicles (Crime) Act 2001 received Royal Assent on 10 April 2001. Part II of the Act includes proposals to control the supply of number plates and contains measures requiring number plate suppliers in England and Wales to register with the Secretary of State. The Driver and Vehicle Licensing Agency (Government) will keep and maintain the register and it will be an offence to operate as a number plate supplier in England and Wales without being registered. A registration fee would be payable.

2. Suppliers will be required to keep records of the sale of number plates and to obtain certain information from customers before making a sale. The registration scheme will require a system of enforcement to deal with a large number of outlets that assemble number plates (estimated in the region of 27,000). The task of enforcement would fall to the police and local authorities. These measures will be brought into effect following the making of regulations.

3. The registration of small businesses for this purpose does not come within matters which are reserved to the UK Government under the Scotland Act 1998, so the provisions only extend to England and Wales.

Objective

4. To extend the measure to provide primary powers to make regulations controlling the supply of vehicle number plates in England and Wales, under Part II of the Vehicles (Crime) Act 2001 to Scotland.

Options

5. The Driver and Vehicle Licensing Agency (Government) undertook a consultation involving the industry, the Home Office Vehicle Crime Reduction Action Team (VCRAT), together with the VCRAT-Government Task Group, the police and Government on 1 August 2000 prior to the introduction of the Home Office Vehicles Crime Bill. Three options were considered:

Option 1 - to continue without any controls;

Option 2 - to introduce a voluntary code of practice,

Option 3 - to develop a Statutory Scheme.

6. Following consultation, Option 3 was considered to be the preferred option to provide the most secure control over the supply of number plates.

7. Taking account of the result and the scope of the Consultation undertaken by the, the following options to extend the provisions to Scotland have been considered carefully by Scottish Executive Ministers.

Four Options have been identified:

Option 1 - not to extend the provisions to control the supply of number plates contained in Part II of the Act to Scotland;

Option 2 - a local authority licensing scheme implemented by Order under the Civic Government (Scotland) Act 1982;

Option 3 - Scottish primary legislation to set up a national Scottish Registration Scheme;

Option 4 - amendment by the UK Government of the Vehicles (Crime) Act 2001 so that the England and Wales registration scheme extends to Scotland.

Option 1

8. The Scottish Parliament has a shared interest with the UK Government in reducing vehicle crime. Not to extend the provisions to Scotland would risk undermining the England and Wales scheme by providing a potential source of false plates that would no longer be so readily available in England and Wales. Additionally, it would mean that the number plate industry in Scotland would continue to be vulnerable to abuse by criminals.

Option 2

9. The Vehicles (Crime) Act 2001 introduces powers in England and Wales to regulate the motor salvage industry and require motor salvage operators to register with local authorities, and to keep records, and for the police to have right of entry to registered premises without warrant. The Civic Government (Scotland) Act 1982 already makes provision in Scotland for certain activities to be regulated. This includes metal dealers and scrap dealers who have to be licensed and are required to keep records of transactions, with the licensing departments of local police forces permitted to carry out inspections. The Civic Government (Scotland) Act 1982 also covers the licensing of taxis and private hire cars; second-hand dealers, and miscellaneous licences for example, for window cleaners, street and market traders.

10. Section 44 of the Act states that "the Secretary of State may, by order made by statutory instrument, designate any activity other than one of those specified in this part of the Act". Therefore, it may be possible to use the Civic Government Act 1982 provisions to enable Ministers to designate by order activities relating to supply of number plates for which a licence must be held.

Option 3

11. The option of introducing a separate national scheme through Scottish primary legislation would involve the creation of a separate Scottish licensing regime. Consideration would have to be given to setting up a new licensing agency in Scotland and the need for its operating and charging procedures to be as close as possible to those of the England and Wales agency, so as to avoid any loopholes developing and to minimise the administrative burden on suppliers operating on both sides of the border. The legislation therefore is likely to be very similar to that contained in the Vehicles (Crime) Act 2001. A legislative opportunity would have to be found within the Executive's legislative programme.

Option 4

12. The fourth option, to invite the UK Government to find a suitable Bill in its own legislative programme to extend the provisions of the scheme to Scotland, would remove the need for Scottish primary legislation and for a separate Scottish administrative authority, making the the sole registration authority for Great Britain. A provision extending Part II to Scotland would relate to devolved matters under the Scotland Act and would therefore require the Scottish Parliament to approve the proposal to legislate in the UK Parliament by means of a Sewel motion.

13. Scottish Executive Ministers consider that Option 4 presents the best option for providing secure, effective and consistent control over the supply of number plates on a UK wide basis (also under consideration by the Northern Ireland Office). UK Ministers' views have been sought on this. They are willing in principle to promote the necessary legislation but cannot make a firm commitment as to timing, given that it will not be possible to seek to identify a suitable legislative opportunity at least until the Scottish consultation has been completed.

Risk Assessment

14. The RIA prepared for England and Wales indicated that around 6-7 million number plates are supplied each year. Two million are fitted to new vehicles, two million to "trade-ins" and the balance is accounted for by replacement plates.

15. Vehicle crime has been the largest single category of recorded crime. The scheme is designed to make it more difficult for thieves to dispose of stolen vehicles by helping to tackle the problem of vehicle ringing - the practice of using the identity of a scrapped vehicle to disguise a stolen vehicle. All rung vehicles require a change of registration plate and it is estimated that 30-40,000 vehicles are being rung each year. At present it is not difficult for criminals to obtain false plates for that purpose.

16. Many criminals also use false plates to facilitate serious criminal activity. Such activity can range from terrorism to housebreakers using vehicles to transport stolen goods. The use of false plates also hinders Vehicle Excise Duty (VED), roadworthiness and insurance enforcement. In addition, the misrepresentation of registration marks can make it difficult or impossible for Automated Number Plate Reader (ANPR) cameras to identify registration plates and may be used to undermine eyewitness evidence. The Act will make it an offence to sell number plates that do not comply with regulations relating to dimensions spacing and font etc.

17. Of the 320,000 or more vehicles stolen in England and Wales last year, around 44% remain undetected. These vehicles will have either been rung and resold to unsuspecting purchasers, exported or broken up. It is estimated that 25% of all unrecovered vehicles (estimated between 30-40,000) are being rung every year in England and Wales. Using figures provided by the Association of British Insurers, this means that vehicles with a total value of £112 million a year are being lost as a result of vehicle ringing. The average cost to society (including criminal justice costs) of a single stolen vehicle is estimated at £4,700. With up to 40,000 vehicles being rung in England and Wales annually, this equates to £188 million. In Scotland, 23,200 vehicles were recorded by police as stolen in 2001 - a 12% drop from the previous year and the lowest level recorded since 1987. However, only 32% of theft of motor vehicle crimes recorded by police in 2001 were cleared up. On this basis, 68% of vehicles remain undetected with an estimated 3944 (25%) vehicles lost to ringing. For Scotland, this would equate to around £11 million annually in insurance terms and an average cost to society (including criminal justice costs) of an estimated £19 million.

Issues of Equity and Fairness

18. The proposed measure would impact equally throughout the industry providing a "level playing field" for all number plate suppliers in the UK. It is proposed that each supplier would pay a single "one-off" registration fee which would be the same throughout the UK. However, the fee could be increased for organisations with multiple outlets to reflect the administrative costs of registration. Administrative and set up costs for businesses would be in proportion to the scale of the operation and the number of plates sold. A statutory scheme would address the industry's concerns about the lack of a "level playing field".

Benefits and Costs to the Consumer (General Public)

Option 1

19. There would be no additional inconvenience or cost to the consumer, but the high cost of vehicle crime to the general public would remain. There would be no benefit in terms of reducing vehicle crime.

Option 2

20. DTLR's earlier proposals for local authority licensing in England and Wales were not favourably received, particularly by businesses. This option would also present difficulties as to whether a local authority licensing scheme for Scotland would work consistently alongside the registration scheme in England and Wales. Also, there may be issues about fee levels and whether Scottish local authority costs would be covered by fees set at the levels charged by for England and Wales.

Option 3

21. To create a separate Scottish scheme through Scottish primary legislation would require the setting up of a new licensing authority to undertake this duty and would require the Scottish Executive to meet any additional resourcing and set up costs. In order for the scheme to dovetail with that in England and Wales the legislation would have to be similar. As with Option 2 it is not clear whether the level of fees would be the same as that south of the border or higher or lower on a full recovery basis. Otherwise the implications would be the same as for Option 4.

Option 4.

22 In view of the proposed statutory requirements there could be a small reduction in the number of outlets as a result of businesses having their licences revoked. However, in this case legitimate businesses would benefit from an increased share in the market. There would still be a wide range of outlets available for obtaining number plates. The cost of registration fees and administrative costs might be passed on to the consumer, but this would be negligible. There would be a benefit to the taxpayer through a reduction in vehicle crime and its costs to society. The Scottish Executive may have to contribute to's set up costs but the sum is likely to be significantly lower for options 2 and 3 because of scale economies.

Business Sectors Affected

23. The scheme would not affect charities and voluntary organisations. The

businesses affected fall into three categories.

It is estimated that around 27,000 UK businesses (mainly in category c) would be affected.

Compliance Costs and Benefits to Business

Option 1

24. No need to register with or separate Scottish licensing authority. No additional costs.

Option 2

25. The cost of administering the scheme would be borne by local councils or their appointed agents offset by revenues from the registration fees.

Option 3

26. Again, costs would be defrayed from revenues from licence fees. There would be set-up costs. However, a separate Scottish agency would require to be established specifically to undertake this duty and would therefore require additional resourcing for its set-up costs.

Option 4

27. This option would permit the to undertake the duty of registration agent for all of the UK and whilst funding would be required for to cover set-up costs, Scotland's share of this would be small and probably much less than under Options 2 and 3. There would be costs for the registration fee for the maintenance of accurate records and for general administration and staff training. It is envisaged that the registration fee would be paid once rather than annually and there would be a single registration for each business. It is estimated that the registration fee would be in the region of £50. However, this is only an indicative figure at this stage. The level of the fee would be set to meet the reasonable costs of establishing and maintaining a registration scheme. The fee would be levied on a sliding scale according to the number of sales outlets operated by the business.

28. It is estimated that the new regulations will affect around 27,000 businesses UK wide and will cost each an average of £219 start up costs (including a one-off £50 registration fee or less depending on the size of business) in the first year (around £6m in total if all businesses register) and £121 for ongoing annual costs (totalling around £3.3m). The costs would be substantially less or even negligible for smaller businesses because they would sell and record fewer plates. The Association of Chief Police Officers considers that the measures taken together would be very effective in tackling ringing. They are unable to offer reliable estimates of the relative contribution of each measure, but they see the proposal to regulate the supply of number plates as having a wider significance because it would help prevent criminals from disguising vehicles involved in general criminal activities. The Superintendent's Association of England and Wales believes that strict measures to control the issue and supply of number plates has the potential to be effective against ringing. They estimate that savings in terms of police time could amount to £0.5m per annum. In the absence of further information it would be reasonable to suppose that costs and savings arising in Scotland would be around 10 per cent of these totals. A Table of estimates for the first year and ongoing costs is attached as Annex A.

29. There would be a benefit to responsible businesses in that the entire industry would be required to operate the same system of controls. Insurance Companies would benefit through the reduction of vehicle crime (vehicles up to the value of £112 million a year in England and Wales). Businesses that use vehicles would benefit directly from a reduction in vehicle theft (e.g.small businesses using vans for delivery etc.)

Other costs

30. Funding would be required for the to cover set up costs.

Results of Consultation in England and Wales

31. A statutory scheme was recommended by the Home Office Vehicle Crime Reduction Action Team (VCRAT) - Task Group and ratified by VCRAT itself. These bodies incorporate a wide range of representatives from the enforcement authorities, industry and Government. It includes the police, the RAC, the AA and the Retail Manufacturing Industry Federation representing 7,500 number plate outlets. Informal consultation by the has been carried out over a number of years with major manufacturers and it is a long-standing police objective.

32. A postal consultation exercise was also carried out by the during August 2000 and responses were received from a range of interested parties including manufacturers, the British Number Plate Manufacturers Association (BNMA) and the British Retail Consortium. The consultation period commenced on 1 August and ended on 31 August, but the deadline was extended by one week at the request of certain consultees. Comments received after the extended deadline from the Federation of Small Businesses were also given due consideration. In addition a range of small and medium sized businesses were contacted directly for the 'small business litmus test'. While the timescale for the postal consultation was dictated by the need to meet the demands of the parliamentary timetable for the Vehicles (Crime) Bill, the five-week period was only part of a much longer process of informal consultation and information gathering.

33. There was general support in England and Wales for the introduction of a statutory scheme. The police in England and Wales and VCRAT strongly supported this option. The Association of Chief Police Officers (ACPO) stated that this measure together with other proposals contained in the Vehicles (Crime) Act 2001 would be very effective in tackling vehicle "ringing". They viewed regulating the supply of number plates as the most important part of the package because of the use of false plates in wider criminal activity.

34. The introduction of legislation was also supported by the major manufacturers (including Hills Hi Speed Plates who supply 50% of the market), Jepson's Ltd. and the British Number Plate Manufacturers Association (BNMA).

35. It was not possible for the to consult each of the 27,000 number plate outlets, but of those which were consulted on a random basis, none opposed regulation and all of them considered that the cost to their business would be insignificant. "Forecourt Watch" a partnership of local garage and filling stations, managers and proprietors observed that CCTV cameras used to identify petrol thieves are often rendered ineffective because of the use of false plates and requested that the system should be tightened up. This was typical of the public response as expressed in correspondence with and radio "phone in" interviews in which officials participated. There was a general desire to take measures to prevent the abuse of number plates to facilitate vehicle crime.

36. The Small Business Service was also consulted and a meeting was held with the Federation of Small Businesses.

Summary and Recommendations

37. In view of the extensive consultation undertaken by the of the business sector affected (much of which extends to Scotland) and others with a key interest and the introduction of provisions in the Vehicles (Crime) Act 2001 to control the supply of number plates in England and Wales, Scottish Executive Ministers now wish to extend these provisions to Scotland. Their preferred option for doing so is through amendment of the Vehicles (Crime) Act 2001 by the UK Parliament so that the relevant provisions extend to Scotland. The intention is to have the powers in place through legislation to introduce a statutory registration scheme administered by. Details of the information to be kept, the duration for which records should be kept and the evidence required from purchasers will be introduced by regulation and the issued a Consultation on the regulation of the supply of number plates in July 2001. A copy of the consultation paper is attached at Annex B. Legislation would be commenced by Order.

Enforcement, Sanctions, Monitoring and Review

38. It will be an offence to fail to comply with the statutory provisions; to supply number plates while unregistered; to supply plates or materials to an unregistered supplier and an offence to supply illegal plates i.e. plates that do not comply with regulations on registration marks. There would be powers to cancel or suspend a registration and powers of entry and inspection by the police. There would also be powers of entry and inspection for persons appointed by local authorities, but there would be no obligation to for local authorities to fulfil this function.

39. The registration authority would be in a position to monitor the level of compliance with the requirements imposed by the scheme. The police would be able to assess the effect of the scheme on the reduction of vehicle crime. The effectiveness of the scheme and the extent of the burden on small businesses will be reviewed by the in two years from the date of the commencement order.