Removal, storage and disposal of vehicles regulations: business regulatory impact assessment

4. Section 3: Assessment of Impact on Business, Investment and the Economy

4.1 Costs to businesses

These proposals do not in themselves increase the underlying operational cost of removing a vehicle. Rather, they would alter the charges that are legally recoverable by Police Scotland and local authorities in relevant cases. The increased charges do not affect the actual costs of a vehicle removal. They increase the charges that are legally enforceable by Police Scotland and local authorities. Vehicle recovery firms are expected to benefit from the proposed measures which they would see as a more equitable means of cost recovery. Vehicle recovery activity would also be seen as a more attractive pursuit for firms in the sector that either do not carry out that kind of work or have ceased to do so as a result of rising costs.

4.2 Other potential impacts on business or the wider economy

The insurance sector has highlighted that a substantial increase could potentially lead to increased premiums for customers. As already noted, these changes may inadvertently affect individuals in island and rural areas.

While matters relating to recovery contracts and scheme operation are outside the scope of this consultation, the Scottish Government recognises that the effectiveness of the statutory charging framework can be influenced by the wider context in which vehicle recovery services are delivered. Stakeholders have identified a range of factors that can affect operating costs and business sustainability, including additional service requirements, vehicle retention arrangements and infrastructure obligations. These wider issues are important considerations in understanding the overall operating environment of the sector.

Stakeholders have also highlighted that the statutory charges prescribed within the framework do not necessarily equate to the amounts ultimately retained by vehicle recovery operators in all delivery models. In some cases, operators may be subject to contractual arrangements or intermediary structures which influence the level of remuneration received for services provided. Stakeholders have suggested that these arrangements may affect the extent to which changes to statutory charges translate into improvements in cost recovery and business sustainability. While such arrangements fall out with the scope of this review, the Scottish Government recognises that they form part of the wider operating environment and may be relevant when considering the practical impacts of any changes to the statutory charging framework.

Additionally, Stakeholders have highlighted retention periods, notice arrangements and vehicle disposal processes as factors which can affect storage costs, administrative burdens and the efficient operation of the vehicle recovery framework. Stakeholders have also drawn attention to recent Home Office proposals in relation to vehicle retention and disposal arrangements and have suggested that consistency across jurisdictions may provide operational benefits. While these issues are outside the immediate scope of the current review of statutory charges, they form part of the wider framework within which recovery operators deliver services and will be considered as part of ongoing policy development.

4.3 Benefits to business

The proposed regulations will allow Police Scotland and local authorities to recover more realistic costs incurred in keeping Scotland’s roads free from vehicles that have been illegally parked, unlawfully abandoned or are causing obstruction, danger, alarm, distress or annoyance. The sums and charges last updated in 2019 are now seen as insufficient in the vast majority of vehicle removals, meaning that private firms have been less likely to take forward this kind of activity. The practical consequence of not changing the fees is that operators across Scotland are continuing to deliver police recovery services under a charging framework that no longer reflects the real cost of providing those services. Over a prolonged period, inflationary pressure has materially increased the cost base across all key areas of operation, including wages, insurance, vehicle acquisition and maintenance, parts, energy, premises and finance. This is now having a serious impact on the sustainability of operators supporting police vehicle recovery schemes in Scotland. In addition, vehicle recovery operators have highlighted that the sector is increasingly capital-intensive. Operators are required to invest in specialist recovery assets, including heavy recovery vehicles and EV-capable units, at substantially greater upfront cost than in previous years, often supported by longer-term finance commitments. At the same time, there are increasing costs associated with compliance, technology integration, training and specialist equipment required to recover modern vehicles safely and lawfully. These pressures further demonstrate that the current fee model is fundamentally outdated and no longer aligned with the operational reality of providing police recovery services. Recovery operators have also pointed to recent fuel price increases as adding further pressure to service viability, particularly for out-of-hours provision, specialist capability and longer-distance recoveries. For recovery operators, fuel is one of the most significant cost components in the delivery of a 24/7 emergency response service. The speed and scale of recent increases place immediate pressure on service viability, particularly in relation to out-of-hours provision, specialist capability, longer-distance recoveries and maintenance of full geographic coverage. Operators have also highlighted the delay in taking forward work to increase the fees as having a detrimental effect to their businesses and ability to undertake this kind of work. An increase to the flat rate charge for ferry crossing in line with the inflation rate as set out previously (31%), bringing it to £164, and the introduction of an hourly charge to reflect time lost during ferry-related delays would also properly reflect time spent by recovery teams on an incident.

4.4 Specific Small business impacts

The majority of firms to whom these measures would apply would be seen as small businesses, therefore the points made in section 4.3 also apply.

4.5 Impact on Scottish firms’ competitiveness

New charges would apply across the sector according to the statutory framework, so the proposals are not intended to create competitive advantage between operators by reference to the charging model itself.

4.6 Impact on Scottish firms’ ability to Trade Internationally

The fees relate to domestic activity only. There is no impact on international trade.

4.7 Impact on Investment Opportunities for Scotland and Scottish Firms

The firms affected by these fees are generally small operators. There is no anticipated effect on investment opportunities.

4.8 Impact on Employees

Some operators have reported that the current vehicle recovery fees regime is not attractive to carrying out this kind of activity; the increase should provide firms with additional work thereby safeguarding job security for a number of employees across the sector.

4.9 Impact on Consumers – The Consumer Duty

As noted at 3.1, representatives of the insurance sector have indicated that increased fees could have an adverse effect on premiums for customers. At this stage, however, detailed evidence on the scale or mechanism of any such effect has not been provided.

4.10 Impact on Regulators

There is no specific regulation of this sector.