Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome Shane Doris, director of environmental resources policy division, DAERA; Tommy McNamara, policy lead, end-of-life vehicle regulations, DAERA; and Roy Kennedy, vehicle policy branch lead, DFI. Gentlemen, you are very welcome. When you are ready, you can present to the Committee.

Mr Tommy McNamara (Department of Agriculture, Environment and Rural Affairs): Thank you for the opportunity to brief the Committee on Regulation (EU) 2026/1738 on circularity requirements for vehicle design and the management of end-of-life vehicles.

The regulation aims to support a more circular economy by setting requirements for vehicle design, material reuse, the recycling of parts and the treatment of vehicles at the end of life. It also clarifies when a vehicle should be considered as waste rather than as a used vehicle. The measures reflect the increasing importance of batteries, critical raw materials, plastics and metals in the automotive sector. The regulation is wide-ranging, covering vehicle design standards, recycling content targets, digital vehicle passports, producer responsibility, end-of-life treatment, collection systems, reporting, enforcement and exports. It also replaces two existing EU directives that relate to end-of-life vehicle disposal and vehicle recyclability standards.

Under the Windsor framework, the UK Government has determined that certain provisions in the regulation will apply in Northern Ireland. However, the regulation will not apply in full. The measures expected to apply in Northern Ireland mainly concern vehicle circularity, type approval assessment, the labelling of used parts, transfers of damaged and non-MOT'd vehicles, vehicle traceability, exports, enforcement and reporting. The responsibility for implementation is shared, and not all aspects fall within DAERA's remit. Type approval and many export issues are reserved matters, customs processes are the responsibility of HMRC and market surveillance functions sit with the UK Government.

In practical terms, the areas most likely to affect everyday life are insurance, vehicle ownership transfers, auctions and the sale and reuse of vehicle parts. A key change is the requirement for authorised treatment facilities to assess and label parts removed from end-of-life vehicles according to whether they are suitable for reuse, refurbishment, re-manufacture, recycling or other treatment. The objective is to improve traceability, support legitimate reuse markets and reduce illegal activity. For larger operators, these requirements may largely reflect existing business practices. Many already use digital inventory systems, quality controls and online sales platforms. However, smaller dismantlers and authorised treatment facilities (ATFs) could face additional costs associated with training, administration, record-keeping and IT systems.

Consequently, impacts may be felt unevenly across the sector.

Another significant element is the introduction of clearer criteria distinguishing used vehicles from end-of-life vehicles. Where vehicles are transferred through commercial transactions, evidence may be required to show that they remain repairable rather than waste. In many cases, a valid MOT will provide that evidence. However, where no MOT exists or where a vehicle has been written off as a total economic loss, an independent assessment may be required before sale. Private person-to-person sales are generally exempt from that requirement. These provisions could create additional administrative obligations for vehicle dealers, auction platforms, insurers and smaller operators. The extent to which they affect costs, business practices or commercial viability remains uncertain, but the possibility of meaningful impacts cannot be ruled out. Continued engagement with small and medium-sized businesses in Northern Ireland will therefore be important.

Implementation will be phased over time and across vehicle categories, which may limit short-term disruption. Nevertheless, longer-term operational changes could have lasting effects on the affected sectors. DAERA's assessment is, accordingly, cautious. An earlier assessment undertaken while the regulation was still in draft form and before its applicability under the Windsor framework had been confirmed concluded that significant and persistent impacts on everyday life in Northern Ireland were unlikely. Having considered the final regulation and the UK Government's determination on applicability, DAERA now considers that there is potential to have a significant impact specific to everyday life in Northern Ireland that is liable to persist. That does not mean that such impacts have been demonstrated; rather, there is currently insufficient evidence to discount the possibility, particularly for smaller businesses and parts of the used vehicle and salvage sectors. That assessment is informed by engagement undertaken with the UK Government and the Department for Infrastructure, alongside representatives from insurance, vehicle salvage and car dealerships. However, engagement with smaller Northern Ireland operators has proved challenging. That is an important limitation, because the businesses most likely to feel a disproportionate administrative burden may be the least represented in the evidence so far.

It is also important to separate the regulation's objectives from its potential impacts. Its aims are broadly aligned with the circular economy, waste reduction and net zero objectives. Increased reuse of parts, improved recycling outcomes and stronger controls on illegal dismantling are legitimate policy goals. Potential impacts may be both direct and indirect. Direct effects could include additional compliance costs and administrative requirements. Indirect effects could arise through insurance premiums, repair costs, access to affordable replacement parts or pressures on smaller businesses. While those issues may not affect all households, vehicle ownership, repair and insurance are everyday concerns for many people in Northern Ireland. Conversely, if the regulation did not apply in Northern Ireland, regulatory divergence could create challenges for businesses exporting vehicle parts or used vehicles to the EU. However, the significance of such impacts remains uncertain.

In summary, while the regulation is technical, its practical implications are not. The areas most likely to affect Northern Ireland are the reuse and sale of vehicle parts, vehicle traceability, salvage operations, insurance write-offs, exports, reporting and enforcement. Some requirements may formalise existing practices, while others could create additional burdens, particularly for smaller businesses. On the evidence currently available, there is potential for significant and persistent impacts, but further evidence is needed to assess their scale, likelihood and distribution.

I hope that that provides a useful overview, and I am happy to take any questions, but I think that Roy has something to add.

Mr Roy Kennedy (Department for Infrastructure): Chair, if you like, I will cover the type approval section. I will not go over the summary again, because Tommy has covered it very well.

The proposed type approval requirements place obligations on manufacturers to increase usage of recycled plastics to at least 15% to 25% over the next six to 10 years, and that includes from end-of-life vehicles. They also want to restrict the use of lead and other heavy metals and not hinder the removal of parts that can be reused. That requirement will apply six years from the date when the regulation enters into force. Manufacturers will be required to prove compliance at type approval stage and provide circularity strategies setting out the actions each will take to follow their obligations and provide information on the safe removal and replacement of vehicle parts at the end of life.

There is a presumption in favour of type approval alignment from the UK, as it is not believed to be sensible to diverge from the general compliance for type approval in Europe. It is for the production of plastics and metals, and it just would not make sense to have two sets of approvals. The regulation will automatically be here as a reserved matter under the previous regulation that was 100% under the Windsor framework. The type approval bit of it is quite straightforward.

The Chairperson (Ms Ferguson): Thank you, Roy. If that is the end of the presentation, I will open it up to members.

Mr Brooks: Thank you for your presentation. You have been fairly frank and open about some of my concerns, so I do not feel the need to draw them all out. One of the points that you made was about something that the Committee is often nervous about, and I think that you put it very well. It is that those with the least ability to have a voice could be most impacted by the changes in the regulations, and they are often the businesses that do not have the financial wherewithal to have public affairs operations and so on to monitor these things and give feedback to us. Can you speak about the efforts to proactively reach out to the traders and small dismantlers? What challenges have been faced? What are we likely to see in terms of trying to remedy that or proactively reach out to those people?

Mr McNamara: We have proactively reached out. The engagement that we undertook was primarily led by the UK Government, but we provided a comprehensive list of stakeholders. They sent emails out to businesses across the spectrum, and very few businesses got in touch. In fact, none of the smaller-end businesses got in touch, and we recognise that as a limitation. Reminders were sent; it was not just an email sent and forgotten about.

Mr Brooks: Was it only by email? Were there any other attempts to phone the businesses to notify them of this? I have no knowledge of how those businesses operate and how likely they are to be on their emails every day. I am flying blind here. Are we looking at any other routes to proactively nudge those businesses? If they do not have an issue, they do not have an issue, but we need to make sure that that is the case.

Mr McNamara: We have not reached out using any other methods, but we were constrained by time to obtain the evidence. It is on the horizon, and we have compiled a stakeholder list. We are keen to engage with them on this.

Mr Brooks: I welcome the fact that it has been recognised. Hopefully, whoever is responsible can look at other routes to make sure that the net is cast as wide as possible. You have spoken to most of what concerned me already. The only other question that I had was whether the likes of electric wheelchairs come into this, or is it only larger vehicles?

Mr Kennedy: It includes vans, cars and, going forward, heavy commercial vehicles and motorbikes. It will not cover electric wheelchairs or bicycles.

Mr Brooks: Thank you.

The Chairperson (Ms Ferguson): Just one question, based on David's. How many stakeholders are on your list? What is the level and scale of the list of stakeholders?

Mr McNamara: I do not have the exact number with me.

The Chairperson (Ms Ferguson): Roughly.

Mr McNamara: It is in excess of 50.

The Chairperson (Ms Ferguson): And there were no responses.

Mr McNamara: No. We had engagement with certain aspects, but not from the smaller end of the sector. We did not send out emails to everybody, because we would not have had enough time to engage in face-to-face meetings if they had all replied. At the last count — I am going to guess here — somewhere between 15 and 20 emails had been sent out to the smaller businesses.

The Chairperson (Ms Ferguson): What about the face-to-face engagement with the larger stakeholders?

Mr McNamara: We met representatives from the insurance industry, several large car dealerships in Northern Ireland and one of the main auction houses in Northern Ireland. We did not get any from representatives of the car dismantlers. We got one response by email from a Northern Ireland-based business and had one face-to-face engagement with a company based in England; one of the largest companies in the whole of the UK engaged with us on that. However, again, none of the smaller ones replied. The one that did reply in Northern Ireland is a larger business and is one of the ones that feels that it is able to cope with any changes that will be required.

The Chairperson (Ms Ferguson): Thank you.

Dr Aiken: Just a couple of questions. You mentioned insurance premiums, and thank you very much indeed for engaging with the insurance industry. Northern Ireland has some of the highest insurance premiums across these islands, full stop, for domestic vehicle users. I take it that the issue with insurance premiums is that, because everything will have to be tracked and because every item of the vehicle needs to be on the EU MOVE21 hub for the purposes of data exchange, that will add significant costs for the insurance companies because we will have a different system from the rest of the UK.

Mr McNamara: Yes. We talked to the representative bodies, not individual insurers, and they could not commit specifically to this regulation. They said that, generally speaking, regulatory changes that are implemented and that place obligations on individual insurers usually result in increased premiums, but they could not talk specifically about the exact parts of the regulation. They were speaking more in general terms because they were representative bodies for a number of insurers.

Dr Aiken: It is interesting that you talked about the issue with the car dismantlers. Across South Antrim, we have several quite large operators that are involved in the car-dismantling trade and the rest of it, and they are moving on. They are already expressing concerns to us about issues with EVs, batteries, the register of dangerous materials and all the rest of it. They think that the burden is getting heavier and heavier. Are you getting indications from the industry that one of its concerns is that, if it has to itemise every item that is going to be exported, that will have a significant impact on the industry or, regrettably, push a lot of it underground?

Mr McNamara: As I said, we did not get the feed-in from that, because the two companies that responded were larger companies and they generally do that anyway under the current system. We did not get that feedback. Batteries are an ongoing issue with ATFs. That has been raised through a separate forum, and steps are being taken to look at that and mitigate it, because the problem is with the collection of batteries from the ATFs. Northern Ireland, along with the GB Governments, is looking at other ways to mitigate that and make sure that that issue can be eased for the ATFs.

Dr Aiken: During the week, we visited the Belfast Harbour Commissioners, and the people there were talking about the issue with scrap lithium batteries catching fire. One of the issues that they were concerned about is that there is more and more regulation coming in and that it is pushing more and more of the disposal of those batteries underground — literally underground in some places. One of their concerns is that, because there is more regulation and it is getting more expensive, people are becoming less likely to apply to it.

Mr McNamara: I also work in the area of batteries, and we have not heard any of those concerns. We have heard concerns, but we have not heard anything about batteries being disposed of illegally or anything like that. That is news to me, if I am totally honest.

Dr Aiken: OK. Unfortunately, I can think of one rather large place in the west of our nation, just outside Londonderry, that has had real problems with waste disposal over a period of time. We do not want to add to that.

Mr McNamara: No. That is a totally different matter, though.

Mr Martin: Thank you for your evidence today. I found your candour very refreshing. I will read out verbatim DAERA's position on the impact of applying the regulation:

Obviously, that runs concurrent with the legal advice that we have had. Today, we are going to be looking at what we do about this. However, based on your evidence today, I would certainly like to keep an eye on this one. How concerned are you that —? From your verbal evidence today, it seems to me that the firms that this is most likely to impact on are the SMEs — probably those at the micro end of that. I think that I heard the number 50 on the way through your evidence — correct me if I am wrong — with reference to the size of scale of those firms. Is it fair to say that they have not really engaged on the impacts that there are going to be on their business?

Mr McNamara: Yes, that is a fair assessment. Obviously, more evidence is required, and we will reach out to try to obtain that. However, as a general observation, where obligations are placed on businesses, the smaller ones usually have a disproportionate burden.

Mr Martin: Yes. My colleague David raised that at the start. We can see how that happens. My concern is that what we are looking at here —. We know that the smaller firms are probably most likely to be impacted on, and —. It is no fault of yours. I know that it has been challenging to ascertain their views and concerns about this. I want to draw out the point that we will want to keep an eye on this, because, from my POV, it has significant and wide-ranging impacts.

Chair, that is all that I have.

Mr Buckley: Sorry, guys. I had to drop out for part of your presentation, so forgive me if you covered this point. Roy, you mentioned to David a list of the types of vehicles that the regulation will cover. Do you want to outline them again for me?

Mr Kennedy: Cars, vans, heavy commercial vehicles, some trailers and motorcycles. Those are not covered at the minute; only cars and vans are covered by the existing regulation.

Mr Buckley: OK. For the purpose of this regulation, the definition of a vehicle covers trailers and any type of vehicle with four wheels.

Mr Kennedy: It is limited to certain vehicles at the minute. Not every vehicle has been named. It is limited to certain trailers, heavy goods vehicles, vans, cars and motorcycles.

Mr Buckley: Are we confident that the definition of a vehicle with four wheels includes only the vehicles that you have mentioned?

Mr Kennedy: Well, as we said earlier, mobility scooters have four wheels, but they do not come under it.

Mr Buckley: So it covers everything from industries such as Terex and large —.

Mr Kennedy: Heavy plant does not come under the definition of a vehicle.

Mr Buckley: Even if it has four wheels, it does not count?

Mr Kennedy: They are not classed as vehicles; they are classed as heavy plant. They are a different type of vehicle. This regulation covers mainly cars and other vehicles that are used on the road: we will call them "on-road" vehicles rather than "off-road" vehicles.

Mr Buckley: In your reading of the regulation, are you confident that "any vehicle with four wheels" means just the vehicles that you have specified as opposed to there being a wider interpretation?

Mr Kennedy: At the minute, yes.

Mr Buckley: What do you mean by "At the minute"?

Mr Kennedy: I have not read anything that would tell me other than that.

Mr Buckley: A wee bit of clarity for me on that point would be good. You may want to write with that.

Mr Kennedy: I will have a look at that.

Mr Buckley: On the point that Peter made about some of the evidence suggesting disruption between NI and GB, Tommy, you said that you had had engagement with second-hand car dealerships, for example. Was that —?

Mr McNamara: Not second-hand car dealerships; large car dealerships that sell new and used cars. Just in case that was misleading.

Mr Buckley: No, no, that is perfect. What was their overall feedback?

Mr McNamara: Their overall feedback was that they have concerns. All car dealerships will get trade-ins for vehicles that do not have a current MOT certificate. Some larger car dealerships, for example, never assess those vehicles; they send them straight to auction. If such a vehicle is sent to an auction where the end buyer is going to be a member of the public, they have to get an independent assessment to ensure that it is not an end-of-life vehicle. The dealerships' concerns are about the additional administration costs associated with that, even if the independent assessment is carried out by in-house technicians.

Mr Buckley: That leads me to one of the prevailing concerns that I have had at this Committee, which is largely about the customs bureaucracy that, in this instance, could put people in Northern Ireland at a disadvantage compared with their GB counterparts. We have watched how a lot of this model is so integrated in terms of vehicle stockpiling, whether that is second-hand, new or used. With this regulation, there are concerns regarding NI-GB movement. As things stand, it is still the presumption that the export of end-of-life vehicles would not be permitted. Is that correct?

Mr McNamara: We do not deal with exports. However, the export of end-of-life vehicles is generally restricted anyway. I do not think that there is a massive change in that. The regulations are so technical and involved that it can be very difficult to see the split between reserved and devolved matters, but exports fall to HMRC or Border Force.

Mr Buckley: Do you have any better understanding or knowledge of the export market for end-of-life vehicles that could help inform the Committee?

Mr Shane Doris (Department of Agriculture, Environment and Rural Affairs): The export of end-of-life vehicles will not necessarily be impacted by this. It is more about what happens to vehicles that are not defined as end-of-life. Therefore, the trade between Northern Ireland and GB on that will not be impacted.

Mr McNamara: It will remain unaffected.

Mr Doris: GB will not be considered as a third country in that instance, and the trade will be able to continue.

Mr Buckley: Do we have any indication of the scale or number of vehicles that are not end-of-life but will require some form of certification or further bureaucracy to enable them to be sold on and not be competitively disadvantaged?

Mr McNamara: We do not know the scale, but we can tell you the circumstances. It covers any vehicle that is sold through a commercial transaction without an MOT, or any vehicle that has been declared a total economic loss by an insurer, which is a vehicle that has been in a crash and is repairable, but the insurance company has determined that it is too expensive to fix. There are auctions that are specific to that purpose, some are of which are person and some of which are online only. That shows that there are quite a number of vehicles in that category. I cannot tell you how many vehicles or the scale, but there seem to be quite a few.

Mr Buckley: There is an industry growing in Northern Ireland around vehicles that have been written off by insurance companies. There is a market for those vehicles in some places, but it is becoming more and more a reality when it comes to dealing with insurance companies. There are a couple of big actors in the space, which you seem to have captured by means of some form of stakeholder engagement, but there are all sorts of other people doing different things across the supply chain. Thank you.

Mr Tennyson: Thank you for the evidence so far. First, from the perspective of both Departments, can you set out in more detail the impact on consumers and businesses if we go down the road of non-application?

Mr Kennedy: From the Department of Infrastructure's perspective, non-application would affect cross-border trade. Certain car dealerships in Northern Ireland have a presence in the South. If they had non-MOT cars or insurance write-offs on their premises, they would need the assessment to comply with the requirements of the regulation before the car could be sold into the South. Similarly, larger businesses in Northern Ireland that sell auto parts, if they have an online presence and sell into the South, would have to comply with the EU regulations, which they would not have to for sales involving someone up the road from them. It is primarily in respect of those things. We do not have statistics on NI to EU trade. It is not just the South; it is the whole EU. We do not have trade statistics available because of the short time that we had to scope it out. It will have to be investigated and evidenced before we can make a better determination on that.

Mr Doris: The UK Government reflected that issue in their assessment. They are considering similar controls in GB, which will remove the divergence piece. It would be equivalent, although it is not actively taking place at the moment, but it is being considered.

Mr Tennyson: From the Department of Infrastructure's perspective on the type approvals, is there any advantage or disadvantage from non-application?

Mr Kennedy: The Department already puts type approvals straight through on the Windsor Framework agreement. There is an issue about the EU/GB alignment. DFT has made clear that it is pushing towards a presumption of alignment with Europe, because the cost of going madly different does not work for them.

Mr Tennyson: Yes, that makes sense. Tommy gave an example about a car dealership with a car that goes to auction without an MOT.

Can you help me understand what the benefits are for the end consumer at that auction if an assessment has already been done as to whether that vehicle is end-of-life or not?

Mr McNamara: There are auctions that are categorically for end-of-life vehicles. They are closed auctions, and only ATFs can bid on those vehicles, because they are unsafe to put back on the road. If a car comes into some car dealerships — I will not say all; it is just their business model, and I am not criticising it — without an MOT, they send that straight to auction. They do not assess it in any shape or form. That places the risk on the consumer that they are buying a vehicle that can never be repaired. The benefit of the assessment is to make sure that the vehicle is repairable and can be put back on the road. That provides a level of consumer protection to the person who is buying the vehicle.

Mr Tennyson: OK. So it basically moves the risk, in those cases, from the end consumer to the business or the dealership that is selling the vehicle that has been traded in.

Mr McNamara: It is not just about moving the risk or about consumer protection; it is about making sure that vehicles are categorised correctly and that end-of-life vehicles are determined as such. Within the regulation and throughout the assessment, if certain criteria are hit, it must be declared an end-of-life vehicle.

Mr Tennyson: OK. That makes sense. That is really helpful.

I have two other questions from a DAERA perspective. Obviously, DAERA has responsibility locally for the environment and climate change, and a big drive around this regulation is the circular economy. Can you speak to some of the environmental benefits that arise from this regulation?

Mr McNamara: There are environmental benefits, obviously, when you are assessing parts. The assessment of removal parts means that, when you remove a part from a vehicle —. The ATFs do not have to do that, but when they voluntarily remove a part, they have to assess it to see whether it can be reused immediately, recycled, refurbished or re-manufactured, and there are other treatment options. That means that you are reusing and recycling more. On top of that, the regulation as a whole tackles the illegality of vehicles by making sure that vehicles are traceable, and the increased traceability means that fewer vehicles will be just left to rot in fields, basically. There are environmental protections in this that will help.

Mr Tennyson: This is my final question. Tommy, you mentioned the stakeholder engagement that you have undertaken and that the UK Government attempted to undertake. Am I right in saying that the UK Government got no responses?

Mr McNamara: It was joint stakeholder engagement, so it was the UK Government, DFI and DAERA, and the emails were all sent out. The engagement was through video. It was face-to-face engagement when we got it, even though it was done electronically. As I say, the UK Government led on it, but we were all involved in it.

Mr Tennyson: Given your involvement and the lack of engagement that you got, is there anything to suggest that that group of stakeholders would be any more forthcoming in engaging with an evidence-gathering exercise by this Committee, or do you anticipate that we would meet the same challenges?

Mr McNamara: I cannot honestly say.

Mr Tennyson: I am asking you to speculate, to be fair.

Mr McNamara: I cannot honestly say.

Mr Doris: There is possibly a point about online presence as well. If it is difficult to engage with them through email and they do not have a significant online presence, that would probably point to their business model. Those selling online will be impacted by this in a way that those selling physically within Northern Ireland will not. It is possibly worth drawing that point out as well. Those selling in person will not be impacted in the same way as those using that platform.

Mr Tennyson: That makes sense. That is perfect. Thank you very much.

The Chairperson (Ms Ferguson): No other members have any questions, so I thank Tommy, Roy and Shane for their presentation this morning.