Waste electrical and electronic equipment reform consultation: business and regulatory impact assessment - partial

6.0 Consumer Assessment

87. The Scottish Government definition of a consumer is "anyone who buys goods or digital content or uses goods or services either in the private or public sector, now or in the future".

88. Scottish Government specifies the following questions when determining the impact of proposed legislation on consumers:

Does the policy affect the quality, availability or price of any goods or services in a market?

89. It is expected that WEEE EPR will have a positive effect on the quality of EEE products. As set out above, the policy should drive more-circular design of products, including design for long life, repairability, energy efficiency, and other desirable attributes.

90. The proposed measures of the new WEEE EPR Regulations will alter the prices of EEE products in the market. Additional financial obligations placed on producers such as full net cost recovery and the creation of a new producer category for online marketplaces may result in additional costs being passed down to the consumer.

91. EEE is not one homogenous category of products, and therefore an attempt has been made to determine whether cost pass through pressures differ across EEE categories. Due to limitations in currently available data, EEE has been disaggregated into two categories: small mixed WEEE (SMW) and bulky WEEE.

92. It has been estimated^[64] that the average price elasticity of demand for a combination of electrical appliances (larger bulky electrical appliances and white goods, category 1,11,12) is low at -0.35. This relatively inelastic price elasticity of demand indicates that producers are able to pass through 65% of costs to consumers (in the form of price rises of new bulky electrical items), with producers bearing 35% of the costs associated with the collection and treatment of bulky WEEE.

93. There is no specific evidence on pass through rates for SMW and so a theory-based assessment has been made. The extent to which producers can pass on costs to consumers is likely to be related to the relative elasticity of demand of products. There is insufficient research to determine the degree of price elasticity for SMW products. However, SMW comprises of 9 EEE categories, and within each of those categories exists significant homogeneity across products. This means that consumers can switch to a similar product in the same category if the cost of an individual item increases. Similarly, as some of these goods are not deemed necessities, consumers could choose not to buy the product at all. This may lead to individual producers having limited power to increase prices in the event of an increase in their costs.

94. However, it could be argued that regulatory reforms are more in line with an industry wide shock than a shock to individual businesses. The Office of Fair Trading (OFT) suggests that when there are industry wide shocks there is usually some form of cost pass through in the form of price rises that can very between 100% to 50%. The EEE industry is likely to be neither a monopoly or pure competition and the true pass through is therefore likely to be somewhere between these two extremes.

95. Defra’s UK-wide modelling^[65] is based on a Central Scenario where 65% of costs are passed through resulting in higher consumer prices for EEE. It assumes that a proportion of households (Group 1) will make direct savings as they will no longer pay for collections (bulky WEEE uplifts and 1:1 retailer collections) and that a proportion of households (Group 2) did not use either of these routes before the reforms e.g. buying a new electrical item without disposing of an old one, consumers returning an item to a store or to HWRC or fly-tipping.

96. Aggregating the costs and benefits across these two consumer groups the analysis found there to be a net annual cost to all households of £27 million or £0.95 per household per year. This figure does not include savings to the taxpayer, increased convenience (and lower transport costs) to households or wider gains to society through reduced environmental disbenefits and fly-tipping disamenity.

97. Defra has noted that it is not aware of any specific differences in the profile of consumers in group 1 and 2 and that further work will be conducted for the final impact assessment on whether this causes any adverse distributional impacts.

Does the policy affect the essential services market, such as energy or water?

98. Yes. WEEE EPR will have a positive effect on waste-collection services by creating a new source of funding for local authorities to collect WEEE from households, avoiding the environmental harm and disamenity associated with WEEE being flytipped or going to landfill or Energy from Waste.

Does the policy involve storage or increased use of consumer data?

99. No.

Does the policy increase opportunities for unscrupulous suppliers to target consumers?

100. No. Effective enforcement by the regulators should minimise the opportunities for businesses to avoid compliance, but noncompliance would not directly affect consumers in any case.

Does the policy impact the information available to consumers on either goods or services, or their rights in relation to these?

101. Yes, positively. As discussed above, part of the intention of the policy is for consumers to have more accessible, free of charge routes for responsible disposal of WEEE, and better awareness of these.

Does the policy affect routes for consumers to seek advice or raise complaints on consumer issues?

102. No.