4. Charging Issues
4.1. This section presents the findings relating to Questions 6-8, covering charging issues as set out in the consultation document.
4.2. Question 6 asked:
If you do not agree with the charges suggested by the Scottish Government, what charges would you suggest and on what would you base these?
4.3. A total of 24 respondents (71%) addressed this question, with 23 of them using the response form to do so, and one providing comments by letter. A total of 10 respondents (29%) did not address Question 6.
4.4. This question invited those who did not agree with the charges suggested by the Scottish Government to suggest the level and basis of alternative charges. It was clear from the responses, however, that many of those who addressed this question did, in fact agree with the proposed charges, and used Question 6 either to record this, or to provide more general comments.
4.5. Overall, just under two thirds of the respondents to Question 6, and less than half of the respondents overall, made comments on the level or basis of charges (the issues explored in the question).
4.6. By type, this included most, or all of the: road haulage professional or trade bodies; vehicle recovery professional or trade bodies; and insurance companies. Just under half of the individual respondents, along with a small number of others also made comments on these issues.
4.7. From the qualitative information, three main themes were identified on which comments were made:
- The overall nature of the charges.
- The level of charges.
- The basis of charges.
4.8. A small number of respondents also made other comments.
4.9. Further details of the comments are provided below.
The overall nature of the charges
4.10. Many respondents to Question 6, as noted, commented on the overall nature of the charges, rather than (or in addition to) the level or basis of these.
4.11. Among these, the highest number of respondents expressed their general agreement with the system, or the principle of the matrix (in one case, subject to the proviso of a review every three years). One expressed the view that the proposed charges were an improvement on the matrix used in England and Wales.
4.12. A small number of respondents identified general problems with the matrix charges. One, for example, expressed the view that the proposed matrix failed to take in to consideration variations in the industry. Another stated that the freight industry looked "with some suspicion" at the level of fee proposed for larger goods vehicles as a grossed-up figure. The respondent stated that they would challenge the Government to prove the need for what they termed "highly inflated charges" on commercial vehicles, suggesting that otherwise the industry would consider their statutory recovery fee to be unfair, compared to car drivers in the same position.
4.13. In terms of suggested requirements or improvements to the matrix, one respondent simply stated that there were a number of improvements which could be made, while more specific suggestions (by a small number of respondents) included that a charging approach should be:
- Fair to the vehicle operator as well as the VRO.
- Aligned across the UK.
- Linked to insurance pay-out levels.
4.14. One respondent suggested that there should be more categories and scenarios, with a clear explanation in plain English.
The level of the charges
4.15. A number of respondents did, however, make comments relating to the level of charges.
4.16. Several made general comments on the overall level of the proposed charges. A small number suggested that these were too high (either when compared, for example, to: current or previous Scottish charges; fee arrangements; or the charges in England and Wales [even when taking account of inflation]).
4.17. One suggested that the disposal charge for motor vehicles did not reflect the true market cost, and another that scrap prices were no longer sufficient to cover the actual cost of recovery, and they could leave the VRO out of pocket.
4.18. A small number of respondents made comments on storage charges. One respondent stated, for example, that there did not appear to be storage charges listed in Annex E but that those in Annex D seemed adequate. Another respondent also expressed the view that there was no justification for the increased storage charges proposed, and they stated that these should mirror the figures adopted by England and Wales). A third respondent stated that storage charges were extremely high, and they could lead to debt and the potential for corruption and fraud.
4.19. Two respondents made comments on specific columns in the matrix.
4.20. Two respondents commented on column 2. One expressed agreement with these charges. Another suggested that, if a vehicle was off-road and not significantly damaged, it could still require a specialist to remove it, and a charge of £380 would better reflect this (the same as where a vehicle was significantly damaged and off-road).
4.21. One respondent commented on column 3, to express their agreement with these charges. The same respondent commented on columns 4 and 5, suggesting that, in their view, the costs set out in these columns seemed "light" (although they stated that they were unable to give comparative costs).
4.22. Four respondents either provided detailed charging suggestions, or they indicated that they would provide further information to the Scottish Government. These are available to the Scottish Government, and they will not be described in detail here.
The basis of the charges
4.23. Several respondents to this question also made comments on the basis of the charges.
4.24. Among these suggestions (made by small numbers of respondents in each case) were that the charges should be based on, or reflect:
- All costs.
- The charges in England and Wales (with one respondent stating that they accepted there would have been some inflationary effect; another stating that inflation costs should be demonstrated rather than assumed; and a further respondent suggesting that they could not see any justification for the Scottish Government to propose charges higher than those in England and Wales).
- The type of vehicle (with the respondent suggesting a typology).
- The complexity of the removal in relation to the level of damage to a vehicle and its situation on/off-road (with additional charges for specialist equipment, or additional time or labour).
4.25. Further comments (by one respondent in each case) included that:
- The rate must be linked to the Freight Transport Association (FTA) haulage rate index or Retail Price Index (RPI), with the respondent noting that the agreed annual inflation-linked review had not happened in England and Wales.
- The charges should not be based on a variety of weights as, in the view of the respondent, it may be impossible to find out the correct weight of, for example, a caravan.
- The storage charge should reflect the cost of renting and maintaining the land in terms of the amount of space and the cost per square metre.
4.26. A small number of respondents made other comments.
4.27. Two made comments on the operation of the scheme. One, for example, suggested that the disposal of a vehicle should be part of a separate contract with an authorised waste management company, vehicle breaker or scrap dealer and should not be left to the VRO.
4.28. Another suggested that commercial vehicle operators should be permitted to use their own agents to recover vehicles, as long as they could do it within reasonable time. They also suggested that statutory recovery should only be used as a last resort.
4.29. The same respondent stated that, while VROs should be entitled to a "fair" set of fees, the scheme must also be fairly administered for the vehicle recovery operators.
4.30. A further respondent suggested that any operator who "abused the privilege" of being part of the scheme should be removed if they were found to have grossly overcharged. This respondent suggested that any operator found to have abused the scheme should not be permitted to tender for new contracts.
4.31. Finally, one respondent provided detailed comments and suggestions relating to Annex F (a menu-type pricing example), covering a number of aspects of this. These are available to the Scottish Government and will not be described in detail here.
4.32. Question 7 asked:
If you do not think it practical to identify satisfactorily all the broad scenarios that might be encountered, would you prefer that no charge were prescribed or that there should be a charge "for all other cases"? If the latter, what do you think this should be?
4.33. Almost all respondents (33, or 97%) addressed this question. Only one respondent (3%) did not. Of these, most (24) answered the closed part of the question (either "no charge prescribed" or "charge for all other cases"), while 9 did not express a clear view.
4.34. Overall, among those who addressed the question, there was a clear preference for a charge for "all other cases", as follows:
Table 6. Responses to Q7
If you do not think it practical to identify satisfactorily all the broad scenarios that might be encountered, would you prefer that no charge were prescribed or that there should be a charge "for all other cases"?
|Charge for all other cases||21||64|
|No charge prescribed||3||9|
|Did not express a clear preference for one or other option||9||27|
4.35. By type of respondent, the majority of respondents in most categories expressed a preference for a charge for "all other cases", with the exception of road haulage professional or trade bodies (who either did not address the question or did not express a clear view) and insurance companies and their professional or trade body, most of which did not express a clear preference for one or other option.
4.36. Most respondents, whatever their overall view, provided additional comments, with three main themes emerging (and many respondents making comments on each). These themes were:
- The nature of the current list.
- The nature of a charge for "all other cases".
- Suggested requirements and views of the way forward.
4.37. A small number of respondents also made other comments.
4.38. Further details of these comments are provided below.
The nature of the current list
4.39. Many respondents commented on the nature of the current list. Among these, some mentioned positive benefits of this, including, for example, that it covered a majority of scenarios, or that it was workable or fit for purpose. One respondent noted that the scenarios, as set out, had generally worked well for many years (although requiring slight adjustments).
4.40. A few respondents (who favoured having a charge for "all other cases") gave reasons for the perceived need for this, citing, for example, the potentially broad range of scenarios that may arise, and the difficulty of articulating these in advance.
4.41. A small number of respondents (who did not express a clear view at the closed part of the question) referred to potential problems with having a charge for "all other cases". One suggested that it could be open to abuse (and may be to the detriment of motorists).
4.42. Another stated that it could leave even more scope for interpretation than was the case at present. This respondent expressed concern that the wording of the question suggested that this would be set at a higher rate, which they felt would be "dangerous" for hauliers.
4.43. A further respondent suggested that charges should be prescribed to cover all situations, as to leave scenarios without charges could leave vehicle owners open to inflated charges.
The nature of a charge for "all other cases"
4.44. Many respondents commented on aspects of the nature of a charge for "all other cases".
4.45. Among these, some made comments on the types of scenarios that might be covered by "all other cases". The examples provided (by a small number, or single respondents in each case) were where:
- A vehicle was in or under water.
- A vehicle was down a mine, in a deep culvert, or down a cliff face and had to be hauled back up to a place to facilitate removal.
- Chemical assistance was required.
- A vehicle was removed using PACE regulations.
- A terrorism alert or act of terrorism had made the vehicle problematic to remove.
- Third party costs were incurred.
- A heavy crane or other specialised services were required.
- There were serious injuries or fatalities.
- The removal was unusual and extremely difficult.
4.46. A few respondents also commented on the basis of the charge, suggesting that it should:
- Be based on the actual cost of removal, including contractors.
- Cover all recovery costs.
- Have an additional fee element to recover administration duties fully.
4.47. Two respondents suggested an approach based on a flat rate. One suggested an approach that would increase the fixed rate, allow for mileage and create a few classifications. Another suggested a flat rate no more than the lowest rate for that type of vehicle.
4.48. Three respondents suggested specific levels of charge. One suggested that this should be between £200 and £300; another suggested that it should be £250; and the third that it should be £500.
Suggested requirements, and views of the way forward
4.49. A further common theme was the identification of suggested requirements, or respondents' views of the way forward in relation to these charging issues.
4.50. These suggestions (by small numbers of respondents in each case) included, for example:
- Amendment / updating of the matrix at 3-5 yearly reviews (see also question 10).
- Consultation on further scenarios and charges between the Scottish Government and contractor trade associations.
- Making digital images of the scene available before and after recovery to provide transparency in relation to the charges.
4.51. A few respondents suggested particular approaches to charging for those scenarios not covered by the current list. Two, for example, suggested allowing for additional charges in "exceptional circumstances". One suggested that the operator should have to justify these to the customer, another that the operator would have to demonstrate that the removal was not covered by the matrix (with the charge based on the actual cost of removal and storage).
4.52. A further respondent suggested that, should a recovery operation not fit within a prescribed category, charges should be made in line with the category most closely resembling it.
4.53. Two respondents suggested that, where scenarios were "impractical" a "special agreement" with the insurer or customer should be allowed as part of the statute.
4.54. One other respondent suggested that charges in "all other cases" should be based on individual recovery charges agreed through Managing Agents.
4.55. As noted earlier some respondents submitted examples of a matrix, but which will not be described further here.
4.56. A small number of respondents made additional comments at Question 7.
4.57. Most of these related to the apparent assumption that the wording of the question implied that there should be instances in which no charge at all should be levied. Comments included that:
- There should always be a charge for the services rendered by the VRO, as per any payment system.
- There should be a charge in all circumstances, unless a veto would serve the public interest (where the removal, in those cases, would be provided as a "public service").
- A "no charge" element would be for the police and management company to agree upon, where they would be responsible for the payment of recovery charges.
4.58. The only further comment made at Question 7 was where one respondent drew attention to what they perceived to be anomalies in the price structure in operation in England and Wales.
4.59. Question 8 asked:
Do you think the prescribed charges should take into account the fees recovery operators pay to belong to management schemes, or charges that are not paid, or any special requirements made of operators by the police? Are there other factors to consider, and if so how do you feel they should be reflected in charges?
4.60. Almost all of the respondents (31, or 91%) addressed this question. Three respondents (9%) did not address the question.
4.61. It was difficult to determine respondents' overall views of these issues definitively, as Question 8 had no closed element, and made reference to several factors which the charges might potentially take into account.
4.62. In most cases, however, it was possible to discern respondents' general views of whether or not the charges should take account of at least some, or all of these factors (or other factors), based on the responses provided.
4.63. Overall, where respondents' views could be identified, they appeared to be relatively evenly split. Just over half of these respondents suggested that they did not believe the charges should take account of some, or all, of these factors, and just under half identified factors that they believed should be taken into account.
4.64. By type of respondent there was a balance among VROs and local authorities, along with the police respondent, in favour of identifying factors to take into account in the charges.
4.65. Most of the individual respondents and the insurance industry respondents did not agree that some, or all of the specified factors should be taken into account, or identified problems with this (a view shared by the insurance professional or trade body). One of the road haulage professional or trade bodies also expressed their opposition to this.
4.66. Some respondents stated specifically that they were opposed to the charging of fees for management schemes, and most of the VRO professional and trade bodies stated specifically that the recovery operator should not be required to pay for the management of schemes.
4.67. In a small number of cases, respondents' overall views could not be determined in this manner.
4.68. In terms of the detailed comments, there were three main themes:
- Problems with the inclusion of these factors in the charges.
- Factors for inclusion in the charges.
- General comments on charges.
4.69. A small number of respondents also made other comments.
4.70. Further details of the comments are provided below.
Problems with the inclusion of these factors in the charges
4.71. Most of the respondents who did not believe that charges should take account of some, or all of these factors provided comments on problems with their inclusion, or reasons why, in their view, it would not be appropriate to include them. Most, but not all of these comments focused specifically on the fees recovery operators pay to belong to a management scheme.
4.72. Several respondents stated their opposition to such schemes, or they noted that their organisation was opposed to charging fees for membership of management schemes or to the use of management companies. One, for example, stated that the current approach was not, in their view, what was intended by the government, and suggested that, if a police force wanted to outsource its management, it should be at their cost. A few stated that no part of the statutory charges should be taken by management agents, with one expressing the view that these charges were agreed and set by all to ensure that police recovery was viable. A small number of respondents also stated that administrative charges should be capped.
4.73. Some respondents made reference to commercial or contractual matters as reasons not to include such factors in the charges, including the views that:
- The arrangements between a Managing Agent and VRO are commercial agreements; have no impact on the work involved; and should not impact on the charges.
- The tariffs should not be influenced by any particular management company and associated fees, which are taken on as part of the operator's business model.
- Recovery operators are aware of the factors and requirements made of them, and they should consider this before entering a contract.
- Unrecovered charges should be regarded as any other bad debt (and hence a business risk), and should be pursued appropriately, then, if not recovered, absorbed by the contractor.
4.74. A few respondents expressed the view that the vehicle owner should not have to have to pay for the types of costs mentioned. Comments included, for example, that:
- Recovery operators join schemes by choice, and this should not be subsidised by the motorist.
- Management fees should be borne by the contractor.
- If Police Scotland choose to outsource the management of the scheme, the cost of this should not be met by road users or business.
- Only the work involved in the statutory removal should be charged to the vehicle owner.
- Charges which are not payable or cannot be recouped should not drive an increase in general matrix rates.
4.75. One respondent also expressed the specific view that other factors, such as waiting time, should also be disallowed.
Factors for inclusion in the charges
4.76. Those respondents who considered that some factors should be included in the charges identified the nature of these.
4.77. Some suggested, for example, that all of the contractor's costs should be included, while one stated that the set charge should allow the VRO to provide a rapid and competent service.
4.78. Several respondents made specific comments on the inclusion of fees for management schemes. A few provided general support for this, or specific reasons for their view that these should be included. Comments included that this would:
- Be fair and reasonable.
- Allow a sustainable level of service.
4.79. Other comments on these fees included that they should be in addition to direct costs and that the level of fees must be viable for all parties, including the administrator, VRO and vehicle owner or insurer. One respondent stated that there should be a fixed fee for each job, to prevent area variations.
4.80. It was also suggested that the charging of a management fee should be considered in the structure for regular future price reviewing. One respondent suggested a need for more transparency in the management of operators, to ensure that they did not make excessive profits from charges.
4.81. A further respondent suggested that the management scheme was not the issue, rather that, regardless of the way it was operated, the key issue for them was the percentage of the charge which was returned to the VRO.
4.82. While most comments focused on management scheme fees, one respondent expressed specific support for the inclusion of charges not paid, suggesting that this was fair and reasonable in order to sustain a viable industry.
4.83. A small number of respondents expressed support for the inclusion of special requirements by the police. Two, including the police, suggested that this would be appropriate, while particular examples were also given of services which could be covered by this, including:
- Providing forensic facilities.
- Scene investigation and reconstruction.
4.84. A small number of respondents suggested other factors for inclusion, including the following:
- Making provision to safeguard the VRO should the salvage value fall, and not allow the VRO to cover outstanding costs.
- Provision to allow contractors to viably meet the standards framework.
- Setting charges at a level to discourage abandonments.
4.85. One respondent suggested that the insurance industry should support the police and recovery industry financially, recognising that the risks posed by vehicles being driven without insurance or a license are removed.
General comments on charges
4.86. A few respondents made general comments on charges, with some identifying, for example, their views of the overall nature of the charges, including that these should be:
4.87. One respondent suggested that the scheme should be strongly controlled, with any additional fees (for exceptional incidents) being authorised by the police.
4.88. Two respondents commented on the receipt of fees. One suggested, for example, that it would be inappropriate for any organisation with the right to invoke a statutory power to benefit from a fee. Another suggested that the set charge should not be discounted to pay management fees, and that the whole amount should go to the VRO.
4.89. One respondent identified the variety of costs they had to meet from the fee they received. Another suggested that insurance companies should meet the management fees.
4.90. A small number of respondents made additional comments.
4.91. Two made further suggestions, which were that:
- Police could pay a "trade rate" for long term storage of vehicles which could not be released, incorporating a period of free storage.
- Costs associated with cleaning up should be redeemable from the local authority with responsibility for this. The respondent also expressed the view that, when a VRO cleared the roadway, it was done at the time, and was cheaper.
4.92. One respondent stated that Question 8 was ambiguous, as the term "taking into account" with reference to the fees did not specify inclusion or exclusion from the listed charges.