A consortium of scrap metal dealers is pressing ahead with a legal challenge to delay the introduction of a ban on cash transactions despite strong opposition from government solicitors.
A court action is being drafted in an attempt to prevent an amendment to the Scrap Metal Dealers Act 1964 being enacted on 3 December that would make it an offence for the majority of dealers to buy scrap for cash.
The challenge is being co-ordinated by Amy Bird, director of One Stop Recycling, on behalf of hundreds of disgruntled scrap metal dealers.
The Home Office was notified of the impending action by a firm of solicitors acting for the merchants. A letter sent last week said the new law posed a “serious risk to the commercial viability” of a large number of small and medium sized businesses.
But a response from the Treasury Solicitor’s Department on behalf of the Home Office rebuffed claims that smaller dealers have not been given enough time or guidance to implement non-cash transactions.
It said legislation had been given Royal assent in May, giving the industry seven months advance notice, and that there was no requirement to give guidance on how businesses should adapt. It added: “We strongly disagree that there is any lack of clarity or any ambiguity in the provisions.”
In response to merchants’ fears that using cheques instead of cash was “not a realistic possibility” due to delays in clearance and administrative costs, government solicitors said: “In our view it is entirely normal – not to say essential – for businesses of all sizes to have banking facilities. Nor is there anything unusual in using cheques or electronic payments for small sums.”
Jon O’Brien, director of Simply Recycling Solutions and organiser of the Metal Recycling Collective (MRC) pressure group, said £35,000 had been raised to cover the initial court costs. Pledges made by MRC members total around £98,000.
He said: “No-one’s really happy and we don’t know what sort of chance we’ve got. But you’ve got to be in it to win it.
“I’m thankful to the members of MRC. They’re not messing around.”
Some itinerant collectors and motor salvage operators will continue to be able to use cash until a private member’s bill on wider reform of the scrap industry put forward by MP Richard Ottaway makes its way through Parliament.
The pressure groups claim the cash ban will “unfairly discriminate” in favour of itinerant collectors and motor salvage operators.
The law was introduced under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. As well as banning cash deals – including postal orders and gift vouchers – it introduces stricter requirements to record payments and seller details. The new rules also give greater powers to the police to enter yards.
A MRW survey recently found 15% of scrap metal dealers said they would not be fully prepared for the new rules by 3 December.
UPDATE: A previous version of this article stated that MRC and Amy Bird were officially working together, but Bird said that they had not joined forces.