Scrap metal merchants have reported gate trade down by up to 50% since cash was banned from the industry in December.
Small and independent dealers across the country have told MRW that the new law, brought in to tackle metal theft, was responsible for seriously damaging their businesses.
Merchants said tradesmen and other gate trade had deserted them and taken their business to itinerant collectors or yards that illegally pay in cash. Others were taking their scrap to larger yards which had invested in on-site cheque-cashing facilities.
The British Metals Recycling Association (BMRA) believes that any fall in the volume of legitimate trade of scrap metal could be caused by a shift to illegal collectors who continue to pay cash and some customers holding on to scrap in the hope that they will be able to sell it for cash.
There are widespread concerns in the sector that the cash ban is not being rigorously enforced, which is undermining legitimate trade.
While loopholes and exemptions continue, criminal activity will persist and legitimate businesses will potentially face a drop in trade as well as possible job losses and closures
BMRA director general Ian Hetherington
A merchant in the Midlands reported gate trade down by around 50% because of the impact of the ban, while another said he had lost 40% since December.
One told MRW he believed the police did not have the resources to tackle the problem.
A Yorkshire trader with 40 years in the business said smaller yards were having the quietest January anyone could remember.
“A lot of trade has just gone underground,” he said, adding that uneven effects of the ban “made a mockery” of small merchants trying to operate within the law.
Steven Robertson, director of John Brocklesby Metal Management in Hull, said the industry had been let down by ministers: “The vast majority of us are doing it exactly by the book, and we get everyone making out we are criminals.”
He said the ban had pushed the illegal trade further underground, making the job of the police more difficult.
Carl Stanton of AJS Metals, an aluminium end-user based in Willenhall, Wolverhampton, said there were “half-empty yards” across the Midlands, with “a lot of workers standing around”.
He predicted significant job losses during the next 12 months: “The cash ban is ruining our industry.”
BMRA director general Ian Hetherington told MRW: “While loopholes and exemptions continue, criminal activity will persist and legitimate businesses will potentially face a drop in trade as well as possible job losses and closures.
“It is vital the Scrap Metal Dealers Bill becomes law as soon as possible to bring these loopholes to an end and implement a robust regulatory framework in order to tackle metal theft.”
The bill took another step closer to becoming law on Tuesday after clearing the report stage in the House of Lords. The legislation to introduce compulsory licences for scrap dealers will be back before the Lords for its third reading on 12 February before receiving royal assent.