Delegated Legislation Committee
Financial Assistance to Industry
The Committee consisted of the following Members:
Chair: Ms Karen Buck
† Afriyie, Adam (Windsor) (Con)
† Blackman, Bob (Harrow East) (Con)
† Brown, Alan (Kilmarnock and Loudoun) (SNP)
† Carden, Dan (Liverpool, Walton) (Lab)
† Cleverly, James (Braintree) (Con)
† Debbonaire, Thangam (Bristol West) (Lab)
† Djanogly, Mr Jonathan (Huntingdon) (Con)
Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
† Harris, Rebecca (Castle Point) (Con)
† McGovern, Alison (Wirral South) (Lab)
† McMorrin, Anna (Cardiff North) (Lab)
† Metcalfe, Stephen (South Basildon and East Thurrock) (Con)
† Mills, Nigel (Amber Valley) (Con)
† Peacock, Stephanie (Barnsley East) (Lab)
† Perry, Claire (Minister for Climate Change and Industry)
† Tomlinson, Michael (Mid Dorset and North Poole) (Con)
† Whitehead, Dr Alan (Southampton, Test) (Lab)
Clementine Brown, Yohanna Sallberg, Committee Clerks
† attended the Committee
Second Delegated Legislation Committee
Monday 18 December 2017
[Ms Karen Buck in the Chair]
Financial Assistance to Industry
I beg to move,
That the Committee has considered the motion, that this House authorises the Secretary of State (Greg Clark) to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, compensation to eligible energy intensive industries in respect of a proportion of the indirect costs of funding the renewable obligation (RO) and smallscale feed in tariffs (FIT) totalling more than £30 million and up to a cumulative total of £565 million maximum.
It is a pleasure to serve under your chairmanship, Ms Buck. I hope not to detain the Committee too long, but it is extremely important that we consider this substantial and necessary motion.
The motion was laid before the House on 6 December and is being made under the Industrial Development Act 1982. I draw the Committee’s attention to the very helpful explanatory memorandum that my officials circulated ahead of time to enlighten Members about the more technical aspects.
Just ahead of time.
Well, it was unusual to have it, and it was rather a helpful process.
In order to meet our climate targets, we have implemented a number of policies designed to incentivise generation of energy from renewable sources. As we know, the costs of such policies are recovered through obligations and levies on suppliers, who pass those costs to end users, usually in their electricity bills. Such costs can put the most energy intensive industries at a competitive disadvantage. Indeed, as set out in the clean growth strategy, our industrial electricity prices for large consumers in 2016 were the second highest in the EU15, after Italy. That can place some of our most important strategic and productive electricity-intensive manufacturing industries at a competitive disadvantage and increases the risk of businesses relocating due to the costs associated with meeting our climate targets, which no one wants to see.
We have taken steps to reduce the cumulative impact of these policies on industrial energy prices for sectors such as steel, paper, plastics, cement and chemicals. At the Budget in 2014, the coalition Government committed to compensate energy intensive industries for the indirect costs of the renewables obligation and feed-in tariffs. The compensation scheme was launched in January 2016. It provides for eligible energy intensive industries to receive compensation for up to 85% of the costs of funding the RO and FIT. We have now paid more than £352 million under the scheme to 147 companies. That has been estimated to have reduced industrial electricity prices by £17 per megawatt-hour in 2016, or around 15% of an eligible company’s electricity bill. The scheme has played a significant role in supporting the competitiveness of these vital industries.
We have tried to focus our resources on sectors that are most exposed to electricity price rises—those that are both electricity-intensive and exposed to international competition. Committee members will agree that those are incredibly important strategic industries that offer highly productive jobs right across the UK.
Under section 8 of the Industrial Development Act, Parliament must authorise the amount of compensation we can pay to these companies for the indirect costs of funding the RO and FIT as the amount exceeds £30 million. In March 2016, we authorised spend up to a cumulative total of £371 million. The motion seeks authorisation to pay up to a cumulative total of £565 million. That is a maximum number—it is not a target—and is intended to enable Government to continue to pay RO and FIT compensation to eligible EIIs until replacement exemption schemes are introduced. I know that many Committee members served on the various Committees in which we introduced those pieces of legislation.
The spending review and autumn statement 2015 set out our intention to provide an exemption from the policy cost, to ensure that EIIs have long-term certainty and remain competitive. Those exemptions are intended to replace the current compensation schemes. I will not go back through the arguments for why exemptions are better than the compensation method; suffice it to say that they are quicker, provide much more certainty of cash flow and are welcomed by the companies.
Sadly, it has taken longer than originally expected to secure state aid approval from the European Commission for the move from compensation to an exemption. We have received approval for the renewables obligation scheme, which we will implement from 1 April 2018. State aid considerations for the FIT scheme are more complex and will take longer to resolve, which is why we need approval to maintain the current compensation system while we deliver on the state aid requirement. The compensation scheme will continue for a little longer, until we have state aid approval, and costs will therefore arise in excess of the £371 million that was originally authorised. However, as I said, they will be capped at £565 million as a result of the motion, which I hope the Committee approves.
It is crucial that we continue to provide compensation until an exemption comes in. The sectors that are eligible for the relief employ around 230,000 workers and have gross value added of more than £30 billion—2% of the UK economy—and turnover of around £115 billion. About 60% of the businesses have exported products in the past 12 months. Crucially, many of the companies that are eligible for the compensation are located in areas of relative economic disadvantage and are a vital and strategic part of our industrial base. As Members will know, we want to work with these industries through the industrial strategy to boost workers’ earning power, improve living standards and create jobs so that everyone across the country can share the benefits of our economic success.
Energy intensive industries need to play their part in reducing emissions. Eight sectors, including steel, chemicals, glass and cement, are responsible for around two thirds of industrial energy use and two thirds of industry’s greenhouse gas emissions. They have worked effectively with the Government to produce industrial decarbonisation and energy efficiency action plans, which we look forward to bringing forward with the various players in those sectors.
I am content that the financial assistance outlined in the motion will benefit the UK’s energy intensive industries, and that section 8 of the Industrial Development Act is the appropriate means by which to make such payments. I therefore commend the motion to the Committee.
It is a pleasure to serve under your chairmanship, Ms Buck.
There is good news and bad news. The good news is that the Opposition do not intend to divide the Committee. The principle that energy intensive industries should be compensated in some way for the costs they incur in meeting green and social levies that they would not incur were they non-exempt industries is clear, and we support it. Nor do we have a quarrel in principle with the idea that, because of particular circumstances that I will come to, the ceiling for the compensation that is paid to those industries should be raised from £371 million, which was the amount originally agreed back in 2015, to £515 million.
However, we have some concerns. The first is about the principle of moving to giving back 85% of the costs incurred by energy intensive industries in paying green and social levies by means of a levy for the future rather than a compensation arrangement for the present. We know from recent secondary legislation to effect that measure on the renewables obligation and FITs that that adds substantial costs to the energy bills of non-exempt industries and general consumers, over and above what they already pay in green and social levies. There is a plus-plus effect on their bills; they pay the green and social levies in any event, and an additional one as a result of moving from a general taxpayer-funded compensation scheme to a general levy scheme. For a medium-sized business, that puts £6,700 on to an average year’s energy bill. I am not making that figure up; it is in the impact assessment for the Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017, which went through recently. It is a substantial additional burden to bring about the levy arrangement.
The bad news, I guess, from the Minister’s point of view, is that we do not support in the long term the idea that the arrangements should be transferred from a general taxation compensation to a levy-based compensation arrangement. Certainly, were we in a position to make a change, we would want to do so in the long term. However, we are where we are for now, and it is important to get the compensation arrangement right. The other bad news, then, is that I have a couple of questions for the Minister about what exactly getting it right means in the context of the transition between a compensation arrangement and a levy arrangement.
As the Minister has indicated, there is a considerable gap between the date when it was hoped there would have been transition between compensation and levy arrangements, and the actual date. It was originally supposed to be the spring of this year. It will now be April 2018 at the earliest for the RO and FITs. At the time, it was intended that in addition to a transition between compensation and levy arrangements for the RO and FITs, there should be a new levy arrangement with respect to new contracts for difference coming on stream, to be put in place when CfDs were tenable.
The RO arrangement has effectively come to an end for new entrants as of March 2017 and, although the programme will run for a further 10 years, it is effectively a ghost programme. It will continue to carry out the obligations that have been entered into for their 15-year period, but no new ROs will come on stream. Instead, for larger renewable energy concerns there will be contracts for difference.
Some of those contracts for difference were entered into in 2016 or so, but they were not in existence at the point when the arrangements for a levy for contracts for difference were first entered into. Consequently the question did not arise at that point of whether to compensate energy intensive industries for the obligations they might have to pay for organisations that had received CfDs. No CfDs had been received at that point. That is not the case for the renewables obligation, because that started in 2002 and the tail of those ROs is running through the system and will continue to do so, as I have mentioned, well after 2018.
The question arises whether the motion before the Committee includes the possible consequences of energy intensive companies actually having to pay for CfDs, bearing in mind that originally it was considered they should not pay for them. When the changeover was originally determined, those CfDs would not have existed, whereas now they will exist, because we are a year behind essentially in effecting the changeover.
The figures in the draft regulations produce, as it were, a neat increase from the original control total of £371 million to the new cumulative total of £565 million—a difference of £194 million, which is almost exactly what the impact assessment on the RO and FITs levy changes suggested would be the annual cost of the central estimate of an exemption arrangement. In the impact assessment, £196 million was stated to be roughly the same as what would have been paid per annum in compensation before the exemption scheme was considered. The suggestion is that the £194 million pays for a one-year extension of the obligations that were there as far as the renewables obligation and feed-in tariffs were concerned, and does not take account of any possible payments that might have to be made as a result of CfDs coming on stream and the scheme changeover being delayed.
My question to the Minister therefore is: has that been taken into account? If it has not been taken into account, should it be? If it should be taken into account, is there any sort of cost implication involved in making those calculations? My next question to the Minister is about the way in which the payments have been calculated for energy intensive industries under the compensation scheme. In the response to the consultation in 2016, on the idea of a new levy for ROs, FITs and CfDs as far as energy intensive industries were concerned, the Government stated:
“We are also considering options for a statutory mechanism to recover and redistribute any over-exemption that EIIs have received in error.”
The suggestion in the consultation was that a number of payments had been made to energy intensive industries under the compensation scheme that might well not have been accurate, might have well been paid in error and might have been overpaid. I have seen nothing yet, as far as I know, whereby a statutory mechanism can be introduced to recover those costs, if indeed they are still outstanding.
In the context of asking the Committee to agree a further £194 million in compensation payments, it would be prudent to make it clear what is being done to ensure that the first lot of compensation payments were accurate. If they were not, schemes could be set up to recover what had been taken—possibly in error—so that the original amount of compensation was right and that any new compensation should not be strewn with those errors as well.
If the Minister has any information on either of those points, I would be grateful, because they are important in any discussion of whether we have a complete solution to the problems of, as it were, the overrun of the period for changing from the compensation scheme to the levy scheme, and indeed whether we have a complete solution that allows us to leave the Committee Room happy that we have done all we can to ensure that the compensation scheme ran its course in the best possible way and translated to the levy scheme in the best possible way.
I cannot resist reminding the Minister of the response she gave to my written question the other day. I asked whether the changeover from the compensation scheme to the levy scheme meant that, as far as ROs and FITs were concerned, there would be a new levy. The answer she gave was that it was not a new levy, because there had been a previous arrangement in existence. My understanding of our discussion this afternoon is that there had been no previous arrangement in existence. In those circumstances, it might be a good idea for the Minister to provide me with an answer to my written question that reflects that.
It is a pleasure to serve under your chairmanship, Ms Buck. I will be brief.
In terms of where energy policy is just now, I fully agree with the motion. I agree with the Minister that exemption rather than compensation is beneficial to the companies in terms of cash flow and managing the process. I share the shadow Minister’s concerns about levies being added in future to consumers’ bills and, in particular, bills for medium-sized businesses. The Minister mentioned the industrial strategy and creating jobs, including higher-paid jobs, which clearly I agree with. She also highlighted the fact that energy intensive industries account for two thirds of greenhouse gas emissions.
We need a coherent energy policy. As the industrial strategy develops further and has more meat on its bones, we need to see a clear pathway, with research and development money that aligns with energy intensive industries, so that they can cut down their energy usage, and the wider development of schemes such as carbon capture and storage, which I have long argued for. In the bigger picture, in terms of managing bills for businesses and consumers, we need to have onshore wind companies being able to bid for CfDs again. The Government need to end their nuclear obsession. There is no doubt that Hinkley is adding costs for consumers and businesses. We need a more rounded policy.
I am grateful to the hon. Members for Southampton, Test and for Kilmarnock and Loudoun for their typically thoughtful comments about what we are trying to do.
I will try to answer all the points that were raised. I know that if I do not, the hon. Member for Southampton, Test will write to me. I want to pick up his point about his parliamentary question, rather than asking him to resubmit it. It is not a new levy. These exemptions are adjustments to the existing scheme, so I do not think they are classified as a new levy, but if he wants to put that question to me again, I am happy to ask the Department to respond.
We are not debating the idea of a switch from compensation to a levy. Businesses absolutely appreciate the fact that this is much more cash-flow positive for them and much less hassle. It reduces the risk of potential overpayments, which the hon. Gentleman raised. It is about smoothing cash flow for them and giving them certainty. As we know, whether the money is coming out of consumers’ pockets as taxes or in energy bills, ultimately we are all investing in this renewable transition together.
I want to pick up the point about the maximum amount of burden being put on businesses and slightly correct the hon. Gentleman’s statement about medium-sized businesses. It is actually medium energy-using businesses. All sizes of business, from small and medium-sized enterprises to large businesses, are eligible to bid into the scheme. The test is whether the energy cost is 20% of their profits plus something—I should know that. Essentially, any size of business can bid into this scheme. That is important. In the round, this is a cost increase of less than 1% of energy bills.
If I did not put my point carefully enough, I apologise. I was seeking to suggest that the effect of non-exempt industries and companies being liable for the costs of green and social levies and this new levy would add £6,700 a year to the bill of a medium-sized non-exempt company.
To clarify, a medium-energy user could be any size company. It might be a very large company with a very small energy footprint. As I said, on average, because we do not know by what revenue the £6,700 is divisible, it is about 1% of the total cost for consumer bills.
The point is about who we get to pay for the investment in the renewables of the future, for which we have pretty much cross-party support; we know that we need to make that transition. The good news is that thanks to the policy frameworks put in place by the coalition and Conservative Governments, we are reaching a point where renewable energy is being delivered subsidy-free. I opened the country’s first subsidy-free solar farm a few months ago, and we purchased offshore wind at £57 per MWh in the latest auction. Renewable companies, having been subsidised to get to this point, do not now require subsidy going forward.
It is important that we communicate why we are doing this. To address the point about overpayments made by the hon. Member for Southampton, Test, it is obviously right and indeed required under state aid laws that we recover any overpayments, which are infrequent. That process is continuing. Of course, if there is an exemption scheme, it is far less likely that the Government will effectively overpay on that basis.
I also want to point out that given the critical nature of many energy-intensive industries, there is an extremely long supply chain of different-sized businesses that depend on the health and wellbeing of those industries. The key test for the sector deals that we are putting together with those industries is by how much they can drive up the UK content in their supply chain. By making them more cost-competitive, we are boosting the whole UK supply chain, which is extremely important.
It was asked how we had got to the numbers. Effectively, the increase that we are debating in the motion covers renewables obligation compensation for the final two quarters of 2017-18 and FIT compensation for the final two quarters of this year and all of 2018-19. That is how those numbers stack up. I was asked how the measures relate to the CfD point. Because that is an exemption scheme of its own, this will not combine the two. They are completely separate schemes.
I wanted to pick up the point about research and development, which is crucial. In both the clean growth strategy and the industrial strategy, we have committed to the biggest spending increase on R and D that any Government have ever made, with £2.6 billion going into innovation in the clean space. The hon. Member for Kilmarnock and Loudoun and I have had many conversations about carbon capture and storage technology in which we agreed that it was vital to bring it forward. I look forward to getting those projects moving.
In conclusion, we know that businesses want us to do this, and it is extremely relevant now. It appears that we have consensus on making the changes. On that basis, I commend the motion to the Committee.
Question put and agreed to.
Draft Environmental Protection (Microbeads) (England) Regulations 2017
The Committee consisted of the following Members:
Chair: Ian Austin
† Allan, Lucy (Telford) (Con)
† Andrew, Stuart (Pudsey) (Con)
Bryant, Chris (Rhondda) (Lab)
† Coaker, Vernon (Gedling) (Lab)
† Coffey, Dr Thérèse (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)
† Debbonaire, Thangam (Bristol West) (Lab)
† Henderson, Gordon (Sittingbourne and Sheppey) (Con)
† Jayawardena, Mr Ranil (North East Hampshire) (Con)
† Lewer, Andrew (Northampton South) (Con)
† Lynch, Holly (Halifax) (Lab)
† McCarthy, Kerry (Bristol East) (Lab)
† O'Brien, Neil (Harborough) (Con)
† Pollard, Luke (Plymouth, Sutton and Devonport) (Lab/Co-op)
† Pow, Rebecca (Taunton Deane) (Con)
† Shah, Naz (Bradford West) (Lab)
† Smith, Henry (Crawley) (Con)
† West, Catherine (Hornsey and Wood Green) (Lab)
Sean Kinsey, Nina Foster, Committee Clerks
† attended the Committee
First Delegated Legislation Committee
Monday 18 December 2017
[Ian Austin in the Chair]
Draft Environmental Protection (Microbeads) (England) Regulations 2017
I beg to move,
That the Committee has considered the draft Environmental Protection (Microbeads) (England) Regulations 2017.
It is a pleasure to serve under your chairmanship, Mr Austin. We will be debating legislation to tackle microbeads in the use of rinse-off personal care products. “Blue Planet II” has shone a spotlight on our seas, and it is clear that they are in danger from many issues, including plastic waste. Plastic has become integral to our modern-day lifestyles, but millions of tonnes of plastic enter the global ocean every year, which is why we must take greater care and action to reduce if not eliminate pollution of our marine environment.
The draft regulations will ban the manufacture and sale of rinse-off personal care products containing plastic microbeads. Significantly, the ban is twofold. First, it will ensure that products containing microbeads may no longer be produced in England. Secondly, it will ensure that such products may not be sold or exported from the country. That will reduce the unnecessary release of plastic into the marine environment and lessen the harm to marine organisms caused by that form of microplastic. The ban has been worked on in conjunction with the devolved Administrations, and they too will introduce similar bans on manufacture and sale, likely in July.
Microbeads are small plastic particles. For the purposes of the draft regulations, “microbead” means
“any water-insoluble solid plastic particle of less than or equal to 5 mm in any dimension”.
Microbeads are added to many personal care products for their exfoliating effect. It has been suggested that one shower alone can send 100,000 microbeads into the water system and, subsequently, into our seas and the marine animals that live there. Personal care products containing microbeads are calculated to add 35,000 tonnes of plastic a year to the marine environment. Once released, those microbeads are impossible to recover.
The impact assessment talks about “other products”, which will not be covered by the regulations. Will the Minister tell us, now or later in her remarks, what the other products containing microbeads that will not be covered by the regulations are?
I shall certainly endeavour to do so. I have at least one example, and I am sure the hon. Gentleman will prompt me again if I do not cover the extent of the regulations.
It is extraordinarily difficult to directly measure the effect of microbeads per se on the marine environment. However, as microbeads are a form of microplastic, evidence concerning microplastics can be used to inform our view of the environmental impacts of microbeads. It is thought that ingestion of microplastics by some marine organisms can reduce digestion of food, affect reproduction adversely and be passed along marine food chains. Evidence indicates that chemical pollutants can leach from and attach to microplastics, risking increased exposure to toxins when ingested by marine organisms.
I want to recognise the efforts that the industry has made to address the problem of microbeads. A number of manufacturers and retailers have already stopped using microbeads in their products or have committed to do so. We want to ensure, however, that all companies follow that approach. The draft regulations will also create a level playing field for industry and certainty for consumers. Natural alternatives to microbeads do exist. They are readily available and, indeed, were used successfully in personal care products before plastic microbeads were introduced.
We considered whether the ban should extend to other products, including leave-on toiletries and cleaning products. Our initial assessment is that leave-on toiletries tend to be wiped off and the material discarded via normal waste streams, but we have asked the Hazardous Substances Advisory Committee to review the evidence on that. As for cleaning products, the trade bodies have shown that no such products for sale in this country include microbeads. Some countries have opted to ban only those plastic particles added for exfoliating and cleansing purposes, but our objective is to minimise marine microplastic pollution. Therefore, our ban covers all microplastic particles in those rinse-off cosmetics and personal care products. That is what makes it one of the toughest bans in the world.
The approach we have taken is based on clear evidence and, as a result, has support from a wide range of stakeholders. Only by working together can we be the first generation ever to leave the environment in a better state than we inherited it. I would like to think that that approach is another strong example of the proud and continuing leadership role that the United Kingdom has played in protecting the marine environment, not just around our coastline but throughout the world, including our overseas territories. With this legislation we will deliver one of the strongest bans—if not the strongest—on microbeads in the world. I commend the draft regulations to the Committee.
May I join the Minister in saying what a pleasure it is to serve under your chairmanship this afternoon, Mr Austin? I am grateful to the Minister for her introduction to the new measures. The Labour party welcomes this statutory instrument and agrees that it takes positive steps towards tackling the growing problem of plastic pollution in our seas and oceans.
A recent poll suggests that there is real appetite for such measures, with 85% of the public wanting action to stop plastics polluting our seas. I would imagine that that figure is in no small part due to David Attenborough’s visually stunning yet desperately alarming series, “Blue Planet II”, which has meant that marine degradation is being discussed in living rooms all over the country. We welcome much of the content of the SI and will be supporting it today, but there are some omissions from the proposals before us, so I will take this opportunity to seek clarification and reassurance from the Minister on elements of them.
It would be remiss of me not to pay tribute to the members and Chair of the Environmental Audit Committee for their influential report published last year that thrust the issue on to the parliamentary agenda. It brought to our attention the fact that up to 219,000 tonnes of microplastics are entering the European marine environment every year. Microplastics are not simply pollutants in our oceans and waterways. Recent research found that 83% of drinking water samples collected across the world were polluted with plastic particles. The United States had the highest contamination rate, at 94%. European nations, including the UK, Germany and France, had the lowest contamination rate, yet plastic fibres were still detected in 72% of the samples tested.
The small size of microplastics means that they are easily ingested by marine life, with plastics found in fish and sea creatures living as far as 7 miles beneath the surface of the sea. Consumers are rightly concerned that these plastics are entering the food chain, so we must explore any and all measures to keep plastic waste from being ingested by the fish eaten in homes all over the UK.
I was pleased to see that the Government have changed some of the language around the definition of microbeads. In the consultation document from February, microbeads were described as being less than
“5 mm in size in every dimension”.
I welcome the amendment of that description to
“less than or equal to 5 mm in any dimension”.
That will assist us in going further and delivering a more comprehensive solution.
Getting into the detail of the SI, there are a number of areas where we would appreciate some clarification. Will the Minister provide further detail on the definition of “plastic” in the regulations? Does she understand the definition to include a full range of the different types of polymers, biodegradable plastic alternatives and any combinations of those materials? There are concerns about the different types of plastic, which I will address in turn if the Committee will bear with me. Semi-synthetic polymers are mostly derived from naturally occurring polymers by chemical modifications, but despite that they still have the same detrimental effect when they enter our seas and oceans. Will they be covered by the ban?
Combinations of synthetic and natural polymers are produced when blended plastics have been created from mixtures of synthetic polymers and naturally occurring polymers, such as starch, cellulose or wood. These blended products can still be expected to become plastic litter in marine environments, so will the Minister say whether they are covered by the regulations? Not producing a list of specific synthetic polymers is the right call. Environmental groups share my concern that any attempt to do so would risk allowing those who do not appreciate the spirit of the law to seek like-for-like replacements, which would allow the problem to continue.
Will the Minister also clarify whether the proposed definition of microbead covers semi-solid particles, such as synthetic waxes used in personal care products? I am aware of concerns among environmental groups that these substances, such as polyethylene waxes, are equally non-degradable and could continue to pose a threat to the marine environment even after the ban we are discussing today.
My greatest reservation about the regulations not closing off enough loopholes concerns the decision to restrict the measures to rinse-off cosmetics and personal care products. I am disappointed that the regulations do not take the totality of substances containing microplastics that have the potential to be washed down the drain and work back from there to deliver a truly comprehensive ban. I am sure the Minister will be aware of the polling conducted by YouGov on behalf of environmental groups, which found that many products classified as leave-on under cosmetics regulations are routinely washed down the drain. It found that 60% of people who use such products as sun lotion wash it off directly down the drain. When the evidence base is there, why are such products not in the scope of the regulations?
Cleaning products are not covered by the partial ban either. Although UK-manufactured cleaning products may not contain significant quantities of microplastics, I am concerned that imported products often do. Again, environmental groups have expressed concern about the availability of such products on the UK market. A coalition of environmental groups outlined that point earlier this year in a letter to the Secretary of State for Environment, Food and Rural Affairs. They stated:
“Based on the available scientific evidence, there is no justification for limiting a ban…to just one industry and not others in light of the stated intention to reduce the risk and severity of impacts of microplastics and to provide a level playing field for industry.”
They argued that the Government should go further, stating that
“extending the ban to cover cleaning products would ensure that microplastic ingredients are not used in current or future formulations and would ensure a level playing field.”
It is vital that the Minister addresses those concerns.
I would like to take the opportunity to probe further on the enforcement of this measure. We all know that new environmental protections are only as good as the enforcement measures that are put in place. It is envisaged that the regulations will be enforced by local authorities and their trading standards officers. What training and guidance will be given to those officers? At the moment, I am not satisfied that they will have the resources to police the microbead ban, given the existing pressures on that service and the cuts it has endured.
I am uneasy about the assertion that non-compliance rates are expected to be so low that, after the initial £38,000 cost of the familiarisation year, enforcement will cost only £660 a year. Although I was pleased to read in the impact assessment that
“72% of major cosmetics companies are expected to have ceased to sell cosmetic products containing microbeads by 2017,”
I am of course concerned about the remaining 28%.
The Environmental Audit Committee specifically drew attention to the problem of labelling. It is currently not possible to tell from packaging whether a product contains microbeads. If the ban is to be upheld, enforcement bodies will need greater clarity about what cosmetic products contain without having to resort to chemical analysis, which I imagine would cost significantly more than £660 per annum. Can the Minister clarify whether further thought is being given to product labelling? That would help both consumers and enforcement agencies to make informed decisions.
Although I welcome the SI and we will not object to it, it is a shame that the Government are satisfied with being able to say that it is the first piece of legislation of its kind, rather than that it is the best and most comprehensive ban it can be. More broadly, I read the fairly scant detail on the BBC today about the Secretary of State’s anticipated four-point plan to tackle plastic pollution. I hope that, following the plastics consultation announced in the Budget last month, there may be opportunities to go further in dealing with what is undoubtedly one of the biggest environmental challenges of our time.
It is a pleasure to see you in the Chair for what I believe is your first outing, Mr Austin. I hope you will find it a rewarding experience that you will want to repeat.
I, too, support the SI, although a little reluctantly. As my hon. Friend the Member for Halifax said from the Front Bench, it is not ambitious enough. As part of our debates in the Chamber last week about the European Union (Withdrawal) Bill, we discussed whether the House should have the ability to amend statutory instruments. If that had been possible, I would have tabled amendments to the draft regulations. Given the scale of the microplastics problem, we need to be ambitious and radical, and we need to be ahead of everyone else.
Other countries are introducing similar bans. The USA has the Microbead-Free Waters Act of 2015, which covers only rinse-off products. New Zealand is bringing in a ban on the sale of personal care products containing microbeads from July next year, and Taiwan is doing the same. Canada plans to ban microbeads in shower gels, toothpaste and face wash by 1 July 2018, and in natural health products and non-prescription drugs from 1 July 2019. My first question to the Minister is: have we looked at what Canada is trying to do to see whether we can replicate that here?
It is almost obligatory to mention “Blue Planet” in such discussions. I point out on behalf of my hon. Friend the Member for Bristol West, who is a Whip and cannot speak in the debate, that the BBC’s natural history unit is in her constituency. We both have many constituents who take great pride in being involved in that unit, which is truly the jewel in the BBC’s crown. While I am in self-congratulatory mode, I will also say that the report of the Environmental Audit Committee—of which I am a member—on microbeads was trailblazing and important. I will now get on to the less self-congratulatory and more depressing stuff.
Our starting point should be to look not at what is easy to ban but at the harm done by microbeads and all microplastics. I have no idea how these things are calculated, but it is estimated that there are 5.25 trillion plastic particles weighing nearly 269,000 tonnes in the ocean, and we have heard that 100,000 microbeads can be washed down the sink in a single application of a rinse-off product. For example, Neutrogena’s Deep Clean, which is an exfoliating scrub, has 300,000 microplastic ingredients in just one tub. That is the scale of the situation.
When microplastic gets into the ocean, small animals mistake it for food and risk starvation either because they believe their stomachs are full—instead their stomachs are full of plastic—and they starve as a result, or because of blockages in their intestines, causing death. Microplastic can also be ingested by filter feeders such as bristle worms, sea stars, sea urchins, sea slugs and many other things that my researcher listed for me but that I cannot pronounce so will not read out. They become prey for larger marine creatures, so the microplastic accumulates further up the food chain and eventually ends up in the human food chain too.
Microplastic also starves coral species by clogging their digestive systems—in essence, starving the coral reduces its growth and spread. We know about the plight of coral reefs because of ocean acidification and ocean warming, but microplastic is another factor that causes great harm. As has been said, over time microplastics will accumulate toxins attracted to their surface—pesticides, flame retardants, motor oil and other industrial chemicals —so they too are entering the food chain.
The scale of the problem is immense. As my hon. Friend the Member for Halifax and organisations such as Greenpeace have said, the ban should not be limited only to rinse-off products. It should also include products such as sunscreens and deodorants. The Minister said that there is not much evidence that they enter the water—she said that they are wiped off—but clearly, if people go for a swim wearing sunscreen and deodorant, that will get into the water pretty quickly or when they have a shower back in their hotel room.
There are plenty of products that people can use that do not contain harmful microbeads. I find this frustrating. There is a ban on animal testing of cosmetic products. It is easy to find alternatives to such products and the same is true of products containing microbeads. Why do we let the market simply lead the way and say that consumers are able to choose? Labelling is an issue and consumers may not necessarily know what they are really buying. Why do we not take the example of the best companies, which have phased out such products, and say that everyone else has to follow suit?
Following the ban on testing cosmetics on animals, people are now pushing for a ban on such testing with household products, and I think that the same should apply to products containing microplastics. Although the UK cleaning products industry says that it does not use microplastic ingredients in any product, that is not true of products of non-UK manufacturers that can be sold and used here. I do not see why the ban cannot be extended to them.
The Plastic Soup Foundation, which campaigns for plastic-free oceans, also supports a ban on microbeads in leave-on as well as rinse-off products. It has called for reconsideration of the exemption of polymers from REACH—the registration, evaluation and authorisation of chemicals scheme. The Minister has appeared before the Environmental Audit Committee to talk about what happens to REACH post-Brexit, which is a whole other can of worms that we could open. Does she think that polymers should be included under REACH or whatever the British equivalent will be once we leave? The foundation is calling for the European Union to impose and enforce a ban on all polymer ingredients that are persistent, bioaccumulative and toxic to ecosystems.
I have used the term “microplastics” rather than “microbeads” throughout because, if we look at the harm they can cause to our aquatic environment, we will see that it is pretty meaningless to separate the two. Only a very small percentage of microplastics in our oceans are made up of microbeads. A 2016 Japanese study put the figure at 9.7% and European studies have put it as low as 0.1% or, at the most, 4.1%.
Most microplastics in our oceans are larger plastics that have broken down from bottles, packaging, old fishing nets and so on—in other words, anything that has not been recycled or disposed of correctly—so a ban on microbeads is clearly not enough to make significant inroads into reducing plastic pollution in the ocean. We must look at the bigger picture, tackle the amount of single-use plastics used and produced, introduce a deposit return scheme for plastic bottles and so on.
The Environment Secretary announced a four-point plan today, but the slowness with which the Government are approaching this agenda is frustrating. I have asked questions in the Chamber about what they are doing about plastics pollution, and they have very proudly said, “We put the tax on plastic bags and are introducing a ban on microbeads,” but that is simply a drop in the ocean. We must go much further, much more quickly.
It is a pleasure to follow the hon. Member for Bristol East, whose passion is beyond question. It is also a pleasure to follow not only the Minister but the hon. Member for Halifax, and to hear the consensus in this arena. I must confess that I have been watching “Blue Planet II” delayed, having recorded it, but I watched the final episode yesterday. People want us to tackle this issue in this place, and I am pleased that the Government are taking clear action to do just that.
I want to make three brief points. I note that the industry has taken voluntary action to deliver much change already. Why? Because consumers have acted. Consumer power is absolutely critical in this sphere. We all know that, as we seek their support at the ballot box, and we must demonstrate to them through action such as this that we are listening to their views. That is what we are trying to do with these regulations. It is great news that more than 70% of producers have already removed microbeads. The Government have engaged with the industry and consumers have made their views known to it, but we must do more. These regulations are a great next step.
We do not want overburden business and consumers. We want to ensure that consumers can afford the products they need and that businesses are able to adapt, which is why it is great that there are so many alternatives that can be used instead of microbeads. The Government have analysed the issue and I am pleased that they do not expect additional costs as a result of any product reformulation to be any more than zero. It is important that the net impact on suppliers is zero, as we do not want to overburden consumers or put up barriers that prevent people from buying the things they need. The alternatives will therefore be used.
It is positive that the offences created by the regulations are crystal clear. It will be an offence not only to manufacture but to supply. The clarity that the Government have instituted is most welcome not only to consumers across the country but, most importantly in my case, to people across North East Hampshire. I commend the Minister, the Secretary of State and the Government on taking this action.
The hon. Member for North East Hampshire is absolutely right to say that the Committee is unanimous in welcoming these regulations, but clearly we are all impatient. We all want more to be done yesterday. Nobody is being churlish about welcoming these regulations, but it is incumbent on the Committee to challenge the Government to do even more. With that in mind, I welcome the action the Government are taking and their attempts to make progress.
The various notes about the regulations mention protecting the environment, and people have talked about “Blue Planet II” and so on, but this is not about protecting the environment; it is about saving the environment. We are at a crossroads as a country and globally, and we have to make some clear decisions. Unlike the hon. Gentleman, I have not watched the last episode of “Blue Planet II”, which deals with some of the major environmental consequences. One can watch it and feel that the situation is absolutely terrible and unbelievable and that we have to do something about it, but that is not enough. We are all shocked and horrified, which is why it is good that the Government have introduced these regulations.
The Minister was right, as was my hon. Friend the Member for Halifax, about encouraging consumer confidence. Consumers can make a huge difference, but they need information, so labelling is important, as it is in many areas, in enabling people to make particular choices when they go into a shop.
The Minister talked about our setting an example to other countries, which is absolutely right. Will she say a little more about how we intend to do that? We can do it through the various international bodies we belong to, notwithstanding Brexit. We can do it through the United Nations. However, the Government need a plan for how they intend to set the example. The regulations apply to England. I understand the devolved nature of these matters but if we are talking about a UK-wide approach, will the Minister explain how our actions relate to those being taken by Scotland, Wales and Northern Ireland?
I want to say something to the hon. Member for North East Hampshire: is it not disappointing that, given the outrage in this country and the way in which everybody speaks about the need to protect the environment, not every single major cosmetic company has already taken voluntary action? That is not only disappointing; it is absolutely incredible. There are major cosmetic companies on the list. There is no secret about which have signed and which have not, because the information is on the impact assessment. It is brilliant that 70% have done so, but why not the other 28% or 30%? It is astonishing. The managing directors and shareholders will have stood up at their board meetings and talked about their social conscience and the need for companies to reflect on their social responsibilities. I bet many of them have watched “Blue Planet”, but that is not enough. That is why I welcome the regulations: they say to the small number of companies—just over a quarter of them—that have not voluntarily moved that we are going to legislate.
I hope this resonates loud and clear: it is not good enough in 2017—nearly 2018—for major companies that make large sums of money to ignore their social responsibilities when it comes to something that every single person in this country demands that we do more about. The Minister should name those companies—I will not do it, unless she wants me to do so—that are listed in the public information available to the Committee in the impact assessment. Big companies have not acted and they should be held to account.
Does my hon. Friend agree that ordinary citizens feel a real sense of urgency when they watch those programmes and become educated about the environment? However, there is a real lack of ambition in the extent of this proposal and in the industry’s willingness to match how passionately people feel about this.
My hon. Friend is absolutely right, and that was the major contribution I wanted to make. We can talk about that passion for reform and say that it is a good thing. The 70% of the major cosmetics companies that have already taken action should be complimented and held up as examples of what can be done. They obviously have to make a profit and do all the things we expect in the market economy we live in. However, as I say—I cannot labour this point enough—big companies have a social responsibility. It is good that the Government are bringing the regulations forward, but in a sense it is not only disappointing but makes one deeply ashamed of some of the ways in which people operate. They watch these environmental programmes, see animals tangled up or being poisoned and feel as affected by it as we all are, yet they take decisions in those companies that fail to recognise those consequences.
I will make a couple of other points, which were also raised by my hon. Friend the Member for Halifax. Will the Minister say a little more about the plastic microbeads not included in the scope of the regulations? Will she also say a little more about the further work that will be done by the Hazardous Substances Advisory Committee to see what action can be taken on other categories of products that might contain microbeads? I think all of us want to see that done as quickly as possible.
As the Minister will know, the impact assessment talks of 680 tonnes of microbeads used each year in the UK. If each microbead is less than 0.5 mm in size, goodness only knows how many microbeads must be needed to make 680 tonnes; I do not even know how they would measure that. Anyway, it must be an incomprehensible number, and that is just for usage in the UK each year. Has the Minister made any assessment of how much the regulations before the Committee will reduce that 680 tonnes? I am one for concrete examples, and it would be interesting, if that amount has somehow been measured as 680 tonnes, to know whether there is a scientific estimate of what the reduction in that amount will be.
As I understand it, some major retailers have said that they will not sell their own brands from now on. In the time between now and when the regulations come into effect, will they still be able to sell brands other than those they have manufactured? In other words, can they stop selling their own brands but sell products made by somebody else?
I see it will be 21 days from when the regulations are made before many of them come into effect, and 60 days for the other bits. Will the Minister say a little more about how quickly, after the regulations come into force, we can expect trading standards to actually use the powers and take action against people who might not be adhering to the legislation? In other words, it is clearly 21 days—or 60 days for some—until the regulations come into force. How long does the Minister think the transition phase will be, between day one when the regulations come into force and every single one of those other 28% of companies complying with the legislation and not selling products containing microbeads?
The regulations make one think about the consequences for human health if sea creatures are eating these things. That point is beyond the scope of the regulations, but it is worth making. I will finish where I started. I hope that my remarks are in no way seen as my saying that the regulations are not important, because they really are. As my hon. Friend the Member for Halifax said, the Opposition support the regulations; I and other Committee members clearly support what the Government are doing on this, and there is clearly more work to be done on what is not included in the regulations.
The Government and Parliament need to use the regulations as an example of the sort of legislation that Parliament will pass if industry and others fail to put their own house in order. It should act as a wake-up call. It is not good enough to be horrified; people need to act. They need to act now.
I will try to restrict my reply to the regulations. I could wax lyrical about marine litter and microplastics for a long time, but I assure the hon. Member for Halifax that if the particles in wax are less than 5 mm, they are included in the scope of the ban.
With regard to the definition of plastic, REACH does not define what plastics are but defines individual products. We felt that was not an effective way to achieve our aim, so the broader, well-known definition of plastic is used to ensure that we cover every single product. With regard to what products microbeads are used in and looking at other countries, as I articulated earlier, the very fact that we are banning any plastic particle less than or equal to 5 mm—we are not saying that it is only those microbeads that have a particular effect that are banned—is going further than the other countries mentioned. For the sake of doubt, nor have we limited the scope of what a rinse-off product is; it includes, but is not limited to, shower gels, body washes, intimate washes, liquid soaps, solid soaps and beaded hand cleaners. That will include things such as the Neutrogena product but also industrial products. Our farmers use Swarfega and similar, and the same will happen there. I could go on with a variety of things, including toothpaste, mouthwash, depilatory creams and gels, and similar elements.
We have asked the Hazardous Substances Advisory Committee to review the issue—the hon. Lady referred to this—of leave-on toiletries that can be absorbed or shed and are not designed to be washed off. I do not have a specific timeline for that at the moment, because the other thing we asked for in the consultation was a wider view on other products. The challenge with microplastics is that they extend to many sources. For example, the recycling of a lot of our plastic bottles goes to create things such as synthetic fleeces, which are popular with vegans because they are a way of keeping warm without using wool. Of course, they are also used extensively by people who are not vegans.
Will the Minister give way?
No. That is another example of products that have become part of everyday life. However, when they go through a washing machine, microfibres and microplastics are released. The regulations also extend to things such as tyres, because in tyre wear we see microplastics generated, washed on to the road, then into our water courses and so on. It is a challenge across a wide range of products. In particular, we focused on this because we know the evidence is already there. We know that our existing sewage treatments cover particles from about 6 mm upwards, so this is a specific way to try to address the problem by stopping at source the very generation of microbeads in products that are widely used. We wanted to tackle that.
If the hon. Member for Halifax has evidence that cleaning products with microbeads are available, she should please let me know and we can look at that. So far, the evidence we have seen is that no such cleaning products are available for sale. We need to ensure that, dare I say it, we regulate to address the problem in hand and not just create regulations for their own sake.
With regard to the devolved nations, yes, the consultation was UK-wide between the four Governments. We cannot dictate the processes by which they bring the ban into effect, but we are working with them to try to ensure that we coincide the ban that will come in due course.
As the hon. Member for Gedling knows, the 21 days will kick in from when the regulations are voted through the House—I think they have gone through the House of Lords today. Then, in essence, manufacture will become an offence, and then sale will become an offence. I suggest to the Committee that it will become more difficult for people to buy such products for resale in their shops. Of course, today the products are legal, so people can choose to sell them but, as we have seen, many companies have already taken action.
I point out that the regulations also cover the import of products, so if they are imported they still cannot be sold—that deals with that challenge. In terms of international actions, it might surprise the Committee to know that we had to get permission from the European Union and the World Trade Organisation. We initiated that on 28 July. We had to have a three-month process for objections, and there were none. We also have to go through other regulatory processes where we make the case, which is one of the reasons it takes so long. I think it was my hon. Friend the Member for Camborne and Redruth (George Eustice) who brought the issue to the attention of the Environmental Audit Committee when giving evidence some time ago. Members are right to pay tribute to that Committee, but that is an explanation of why it takes quite so long to reach the point we have got to today.
I do not think the regulations are necessarily the end of the process. I am sure that the Committee will want to be assured that we are taking appropriate action. We are addressing wider issues of microplastics getting into the environment. We need to continue to work with industry to ensure that it has time to develop alternatives.
The 680 tonnes is the amount used in cosmetics, and we recognise that not all of it ends up in the marine environment. I would not want to throw out a figure just to satisfy the hon. Member for Gedling. The point is that we are removing these microbeads at source so that there is at least a reduction from what we have today.
Will the Minister give way?
I think I have covered all the questions that I have been asked so far, and I recognise that the hon. Gentleman did not want to be churlish. We are going to press on and try to pass the regulations today, and I hope that they will then go through the House.
We have considered the regulations at considerable length. They are a good step and they are the toughest ban announced in the world so far, to the best of my knowledge. Enforcement will be down to local councils, but we believe clearly and strongly that manufacturers will know that it is an offence to create microbeads. Individual large stores and our wholesalers, from which smaller stores often buy their products, will also know that it is an offence to sell these products. I am confident that the supply chain for these products will collapse. I commend the regulations to the Committee.
Question put and agreed to.
That the Committee has considered the draft Environmental Protection (Microbeads) (England) Regulations 2017.