More than a million cars a year are being scrapped without having pollutants — such as oil, brake fluid and airbag gas canisters — removed because of a loophole in environmental regulations.

The End of Life Vehicle Regulations, which came into force in 2003, require cars to be stripped of all pollutants and recycled at licensed scrapyards. Owners are supposed to obtain “certificates of destruction” to prove that their cars were disposed of properly. But government figures reveal that only 900,000 certificates were issued in 2006 despite more than two million cars being taken off the road that year.

A loophole in the DVLA's licensing system allows owners, as well as unlicensed scrap merchants, to deregister a car and avoid paying any more road tax simply by ticking a box on the V5 vehicle registration form without obtaining a certificate. That means unlicensed operators can remove the metal and other valuable scrap materials and dump the pollutants as untreated waste.

Jay Nagley, a car industry analyst, said: “This is a serious — and potentially dangerous — problem. The rules were set up to ensure carmakers worked with the recycling industry to improve recovery rates, cut down on pollution and end illegal car dumping. But the reality is that DVLA records — and a system poorly policed by the Environment Agency — have become weak links in the chain.”

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: “We are very disappointed that these two government agencies [DVLA and Environment Agency] have failed to address this loophole.”

A DVLA spokesman said: “We are aware of the concerns of trade bodies and other stakeholders and are working with them to find a solution.”

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