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General Committees

Debated on Wednesday 13 March 2019

Delegated Legislation Committee

Draft Criminal Justice (Amendment etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: James Gray

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Frazer, Lucy (Parliamentary Under-Secretary of State for Justice)

† Hair, Kirstene (Angus) (Con)

† Hall, Luke (Thornbury and Yate) (Con)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Huddleston, Nigel (Mid Worcestershire) (Con)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

McFadden, Mr Pat (Wolverhampton South East) (Lab)

† McDonald, Stuart C. (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)

Mahmood, Shabana (Birmingham, Ladywood) (Lab)

† Milling, Amanda (Cannock Chase) (Con)

† Pawsey, Mark (Rugby) (Con)

† Philp, Chris (Croydon South) (Con)

† Qureshi, Yasmin (Bolton South East) (Lab)

† Shelbrooke, Alec (Elmet and Rothwell) (Con)

Sobel, Alex (Leeds North West) (Lab/Co-op)

† West, Catherine (Hornsey and Wood Green) (Lab)

Laura-Jane Tiley, Hannah Wentworth, Committee Clerks

† attended the Committee

Eleventh Delegated Legislation Committee

Wednesday 13 March 2019

[James Gray in the Chair]

Draft Criminal Justice (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Criminal Justice (Amendment etc.) (EU Exit) Regulations 2019.

It is, as always, a pleasure to serve under your chairmanship, Mr Gray. The draft regulations for m part of the Government’s continuing work to ensure that there are functioning domestic laws in the event that the UK leaves the EU without a deal. The regulations relate solely to the Government’s no-deal exit preparations in respect of five measures dealing with criminal justice.

First, the victims of crime compensation directive established that each EU member state should have a national scheme to provide compensation to victims of violent intentional crime. It also provided for liaison between the relevant authorities in each member state to facilitate the compensation of victims. The Criminal Injuries Compensation Authority manages the compensation scheme for England, Wales and Scotland. Northern Ireland has a separate scheme, but the Criminal Injuries Compensation Authority is the assisting authority for the whole UK, and it liaises with other member states to help victims to apply for compensation from them. The regulations will revoke the implementing legislation, because the system relies on mutual co-operation between member states, and we will no longer be a member state. However, our national schemes will continue.

Secondly, the directive on European protection orders provides a framework to allow certain kinds of protection order made in criminal proceedings in one member state to be transferred to another member state, where they can be recognised and enforced. This measure too operates only between EU member states. To protect people who are currently using the system, we will make a transitional provision to ensure that any order made prior to exit will continue to be enforceable until its conclusion, whenever that may be. I should mention that the system is seldom used: the courts of England and Wales received only four orders from EU member states in the three years of its operation.

Thirdly, European supervision orders make it possible to transfer certain supervision measures between EU member states: for example, bail granted subject to conditions issued in criminal proceedings in one member state can be transferred to another EU member state to be recognised and supervised there. Like the previous two measures, the system can operate only between EU member states. The scheme is seldom used, as noted in the explanatory memorandum and provisional impact assessment. I can update the figures today as some more requests for recognition were received recently. The latest figures show that the courts of England and Wales have issued three requests and received nine in the four years since the framework decision was implemented. As the numbers remain small, we expect the impact of the changes made under the SI to be minimal.

The fourth measure concerns mutual recognition of financial penalties. Under the framework provided, certain financial penalties imposed in criminal proceedings in one member state may be forwarded to another EU member state for enforcement. Again, the provision allows for mutual recognition and enforcement between member states, so a transitional provision is being made, to allow domestic enforcement to continue finalising any request received prior to exit.

Finally, there is a measure that relates to taking account of convictions in EU member states in the course of new criminal proceedings in the UK. It requires known prior convictions in another EU member state to be taken into account—for example, when sentence is passed—to the extent that national law requires national convictions to be taken into account. That means that, on sentencing, the courts in any given member state treat convictions from another member state exactly as they would prior domestic convictions. After EU exit in a no-deal scenario, the SI will revoke the regulations to amend the implementing legislation to provide that, for proceedings that commence post-exit, individuals with prior convictions from EU member states will be treated in the same way as individuals with any other non-UK prior conviction. There are transitional provisions in place, which provide that for cases that are going on at the time of exit, the current rules will apply.

I will not go into the detail of what the SI does in respect of each EU measure or tool—I hope the regulations, the explanatory memorandum and the provisional impact assessment are clear about that—but I will deal briefly with several main points. If we leave without a deal for victims of crime, we will revoke the legislation relating to mutual assistance as it provides a system of intra-EU member state co-operation that will not be present in a no-deal scenario. As I mentioned, the regulations do not have an impact on our national compensation schemes, which will continue. Several of the other measures also rely on member state co-operation, so we will revoke them. The impact of the changes on citizens, businesses, public and voluntary sectors will be minimal. A provisional impact assessment was placed in the Libraries of both Houses before the debate.

We are taking these steps because we will no longer be a member state and will therefore not benefit from any reciprocity. Four of the five measures addressed by the regulations require reciprocity between the UK as a member state and another member state to operate. We cannot compel remaining EU member states to co-operate with us. The purpose of the regulations is to promote as orderly a withdrawal as possible in the circumstances. They aim to provide certainty for those who need to navigate the criminal justice landscape in a no-deal scenario. Importantly, they also provide clarity for those who are involved in action related to some of the EU measures covered by the regulations at the point of a no-deal exit, where that action is ongoing.

It is a pleasure to serve under your chairmanship, Mr Gray. We will not divide the Committee on the regulations. We understand the purpose behind them and the need for them. I will not go into the detail of what is being proposed—the Minister has adequately dealt with that—but I will draw the attention of the Minister and perhaps the Ministry of Justice to the fact that so far we have had no information regarding what the Government’s proposal is in relation to the European arrest warrant, Europol and Eurojust. What will the agreements be in relation to them? They are important to ensure that our criminal justice system works efficiently and smoothly.

I absolutely agree, which is why I am taking the opportunity to raise these important issues. The outline of the political declaration is vague on security and justice co-operation, which almost suggests that the Government have given up on trying to deal with key European Union security arrangements, such as the European arrest warrant.

The declaration talks about negotiating “swift and effective arrangements” on extradition, but not about remaining within the European arrest warrant. As everybody knows, that facilitates the extradition of wanted people across European Union borders and stops us having to go through the long and detailed extradition process that applies to countries that are not part of the EU. Hon. Members familiar with the workings of extradition know that, when it is applied to non-EU state members, our Government can be stuck for years trying to get people brought to this country or get people from this country extradited back for serious criminal offences.

Having access to Europol assists massively, in the sense that Europol police officers co-operate on many issues across the criminal justice system, as does having access to the European criminal records information system. I am told that at the last estimate, we used the information on that system about 500 million times in one year. That extensive database system exists across the European Union and has been of enormous help to police and security agencies throughout the European Union and in our country. It would be helpful if the Minister or the Ministry were able to tell us what their proposals are in relation to those matters, whether any discussions have taken place, and whether any statutory instrument is in process. Essentially, we do not know what is happening.

Ironically, those issues have been raised in at least two Westminster Hall debates, to which I responded on behalf of the Opposition. We have raised those issues time and again. We are now two weeks away from 29 March, and we are no further forward in dealing with those important issues, which will ensure that the criminal justice system and the security and safety of our citizens are being dealt with properly and efficiently.

I am grateful for the constructive approach that the hon. Member for Bolton South East has taken in not dividing the Committee on these important regulations. To deal with her points regarding the European arrest warrant and Europol, as she will be aware, the criminal justice measures before the Committee today are within the responsibility of the Ministry of Justice, so we lead on them. As I hope she is aware, the EAW and Europol are matters that the Home Office leads on, and therefore not within the primary responsibility of the Ministry of Justice. A separate SI has been laid before the House and debated in relation to no-deal arrangements, including the EAW. However, we would have had more certainty about these matters if a deal had been approved yesterday. That deal would have allowed for an implementation period and for continued arrangements regarding these important security matters, and would have continued to respect the importance of co-operation on those matters.

This SI deals, as I mentioned, with five matters relating to the criminal justice system. I commend them to the Committee.

Question put and agreed to.

Committee rose.

Draft Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Ian Austin

† Efford, Clive (Eltham) (Lab)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Frazer, Lucy (Parliamentary Under-Secretary of State for Justice)

† Hair, Kirstene (Angus) (Con)

† Jenkyns, Andrea (Morley and Outwood) (Con)

† Lopez, Julia (Hornchurch and Upminster) (Con)

† Menzies, Mark (Fylde) (Con)

† Milling, Amanda (Cannock Chase) (Con)

Nandy, Lisa (Wigan) (Lab)

† Newlands, Gavin (Paisley and Renfrewshire North) (SNP)

† Percy, Andrew (Brigg and Goole) (Con)

† Pow, Rebecca (Taunton Deane) (Con)

† Qureshi, Yasmin (Bolton South East) (Lab)

† Reynolds, Emma (Wolverhampton North East) (Lab)

† Sheerman, Mr Barry (Huddersfield) (Lab/Co-op)

† Smith, Royston (Southampton, Itchen) (Con)

† Stevens, Jo (Cardiff Central) (Lab)

Claire Cozens, Committee Clerk

† attended the Committee

Thirteenth Delegated Legislation Committee

Wednesday 13 March 2019

[Ian Austin in the Chair]

Draft Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Austin.

The draft statutory instrument forms part of the Government’s ongoing work to ensure functioning domestic laws on civil judicial co-operation in the event that the UK leaves the European Union without a deal. The instrument relates to EU rules that determine which country’s laws apply when citizens have cross-border obligations, such as when they are buying or selling goods.

The rules apply to contractual and non-contractual matters. An example of a cross-border contractual matter is a contract for the sale of goods by a company in France to a company in England. An example of a non-contractual matter is a duty of care owed by an accountant practising in Germany to a client company based in Scotland not to give negligent advice that causes financial loss. The rules—the Rome conventions—are to do with what country’s laws apply in any particular case.

I ask the Minister this because I hope to learn, but is she saying that the rules are “who sues who for what”? If there is a contractual obligation and something goes wrong, who sues who and under whose law—is that what they are about?

I am always happy to help Members learn about such very technical legal matters. The rules cover which country’s laws apply to a case, so not who sues who, but if people sue each other, whether they will be sued under English law, French law and so on. Countries all have different laws that apply in different circumstances. The question is which law applies.

Pushing the Minister a little further, what will be different from now? We are in the European Union, so under whose law do we sue now? Is it European law? Will that be replaced by two different domestic ones?

May I develop my submission? I am explaining what we are dealing with—the question of whose laws apply—and am coming to what happens at the moment. I will then let the Committee know how the system will apply in future—in essence, it will be very similar.

The rules that determine the question of whose laws apply are an important part of the EU’s civil judicial co-operative framework. They ensure legal certainty, which underpins trade and commerce between member states and the rest of the world.

As I said, I will set out the existing laws, what they do and what will happen in future. The EU applicable laws are set out in two main instruments, Rome I and Rome II. Rome I regulates contractual obligations and applies to contracts formed on or after 17 December 2009. It is the current law in all EU member states other than Denmark, which has opted out of the regulation. Rome I was preceded by the 1980 Rome convention on the law applicable to contractual obligations. That is a treaty to which the UK and a number of now EU member states are still contracting parties. It will continue to apply to any contracts entered into between April 1991 and 16 December 2009 that might still be in force today. It still applies to all contracts entered into by Denmark.

The Rome II regulation applies to non-contractual obligations. It commenced on 11 January 2009 and, like Rome I, it is the law in all EU member states other than Denmark. I will refer to all those together as the Rome rules.

In each case, the Rome rules start from the premise that the parties, subject to certain limitations, are entitled to choose the law that will apply to their contractual and non-contractual obligations. They operate so that, provided the requirements of the rules are complied with, that choice of law is valid, will be respected by the courts of a participating EU member state and will be applied to determine any dispute.

The Minister is being very generous. I have a big exporting constituency, especially of textiles and fashion. Businesses in my constituency do a lot of work across Europe. When a contract is made in future between, say, an Italian firm and a British firm, will that contract say: “If anything goes wrong, we agree to abide by Italian law,” or, “by British law”? Will that be decided at the contractual stage?

Yes. Parties enter into written contracts, which can be standard contracts or, if the companies are quite knowledgeable, they often have terms and conditions. As part of that agreement, the companies will often decide which law will apply in the event of a dispute. The Rome conventions determine that courts across the EU will respect that determination. Even if, for example, the case is heard in France, they might respect the contract law chosen by the parties.

Sometimes parties do not choose a law. In those instances, the Rome rules lay down a set of default rules to enable parties and courts to determine which country’s laws will apply—so there are both general and specific default rules. For contractual matters, the general default rule in Rome I is that the applicable law should be the law of the country with which the contract is most closely connected. For non-contractual matters under Rome II, it is the law of the country in which the damage occurred. Special rules apply to particular types of contractual and non-contractual matters.

As Mr Austin knows, I am not very bright. I am trying to find out for my exporting firms in Huddersfield what the real difference will be. What will they notice in terms of their ability to trade and to have legal agreements? What is the difference between now and what is coming?

I will come on to that. I am just trying to set out the existing framework. At the moment, the Rome regulations apply to contracts where parties have or have not determined. I will come on to what we will do when—if—we leave on 29 March. I dispute that the hon. Gentleman is not very intelligent, because he is showing a significant amount of intelligence—and interest, which is most important.

That is not what I think at all. You were a distinguished academic before you came here—a professor, I think.

With bated breath. The answer is that we are retaining the regulations as a matter of UK law, so very little will change for the hon. Gentleman’s constituents as a result.

There are some specific rules that relate to insurance contracts, consumer contracts and employment contracts. Rome rules do not, for the most part, rely on reciprocity. Any Members who have sat on previous Committees regarding justice matters will have seen that we have taken the approach that where we rely on reciprocity, we are revoking those instruments, but the Rome rules do not rely on reciprocity. Participating EU member state courts must apply the applicable laws determined by the rules, irrespective of whether that law is the law of an EU member state or of a non-EU country.

The statutory instrument implements the Government’s no-deal policy on the Rome rules, which is to retain them as domestic law post exit. That will ensure that UK citizens, businesses and consumers continue to have clear and workable rules regarding which laws apply to cross-border situations in which they may find themselves. When the UK leaves the EU, Rome I and Rome II will be retained as domestic law under the provisions of the European Union (Withdrawal) Act 2018. However, amendments are required to ensure that they, and the relevant domestic legislation that originally implemented them, will work effectively once the UK ceases to be a member state.

The amendments will not, for the most part, lead to any differences between how the Rome rules are applied by courts in the UK and courts in EU member states post exit. However, due to the way the EU rules are constructed, the EU may treat UK cases slightly differently in some instances; that is, where Rome I and Rome II refer specifically to member states or the European Community. We have had to amend those references in the retained version of the rules so that they continue to include the UK, which will not be the case for the rules as applied by national courts in the EU after exit day.

I know that the hon. Member for Brigg and Goole is impatient to get away, but these are important issues. I come to these Committees to exercise parliamentary scrutiny over these SIs. Perhaps no one in Brigg and Goole is an exporter, and the people there are not worried about the very complex area that we are discussing, but I am trying to press the Minister and give this SI proper scrutiny so that I can go back to my constituency and say, “The Minister said to me that this is a nice little change through the SI. It will not change your life at all, and you can be happy that there will be no barriers to exporting to Italy or any other part of the European Union.”

To clarify, we are retaining the rules. The only question we are asking today is what law will be applied to various contracts, and the answer is that there will be very limited change in that area. Other matters might affect the hon. Gentleman’s constituents who export goods, but the specific matter that we are discussing is what law will be applied if they have a dispute about the purchase or sale of their goods. In that case, our laws will be similar going forward.

As I have mentioned, our position in relation to the Rome convention, which predates Rome I and Rome II, is different. The UK’s status as a contracting party to that convention will terminate as a matter of international law once the UK has left the EU, and it will no longer be binding on the UK. The approach taken in this statutory instrument is that the substantive rules of the convention, which continue to apply only to contracts entered into between 1 April 1991 and 16 December 2009, are retained. However, the statutory instrument also removes the provisions dealing with the ability of the UK courts under the 1980 Rome convention to refer questions of interpretation to the Court of Justice of the European Union.

We have done an impact assessment, which I am sorry to say is not yet published. That assessment has concluded that the impact on businesses, charities, voluntary bodies and the public sector will be negligible. The amendments to retained EU law and domestic legislation in this instrument merely correct EU-related deficiencies, so that Rome I, Rome II, and—for the purposes of certain old contracts—the Rome convention rules will continue to apply in the UK as domestic law post exit, largely as they do now.

I apologise; it was intended to have been published, and we thought that it was going to be. It was news to me this morning that it had not yet been published, and I apologise for that, but it will be published. As I mentioned, the effects are minimal.

We think it will be published today. If the hon. Lady or any other Members have any questions after that impact assessment is published, we will be happy to answer them.

Turning to consultation in respect of this measure, the Government’s policy approach has a large measure of support from both the Law Society and the Bar Council, as well as Committees in this place and in the other place.

What the Minister just said is reassuring, but has she consulted the people who really are responsible for international trade, such as the Confederation of British Industry or the Engineering Employers’ Federation? The raison d’être of those organisations is to have good, frictionless trade across Europe.

The hon. Gentleman makes a very important point. We at the Ministry of Justice recognise that we deal with laws, which are there to serve consumers, private individuals, members of the public and businesses. We have set up a Brexit Law Committee, which includes members of the Law Society, the Bar Council and the judiciary. There are also representatives of the City and a number of other members who represent businesses. They are part of the committee, and we have consulted them and discussed all the statutory instruments that we are putting forward to the House. My officials engage heavily with members of the committee. I have met them and discussed a number of matters, and the Lord Chancellor has met them as well.

These are matters to which we have not determined our approach single-handedly; we have discussed them broadly. We have also discussed them with the devolved Administrations. We published our approach to this SI very early on in the process—in March 2018—and we had very positive feedback. We might have tweaked a few things following the feedback we received, but the SI and our approach to it have been around for some time and have received favourable comments.

I am grateful for the answer that the Minister gave to my hon. Friend the Member for Huddersfield. Could she just enlighten me? Paragraph 10.1 of the explanatory memorandum states:

“This instrument has not been the subject of consultation.”

Could the Minister explain what that means?

Yes, I am very happy to explain that. Like all our SIs, it has not been subject to formal consultation; we have informally consulted widely. As I said, this SI has been around for some time. We at the Ministry of Justice have taken the approach that we must be guided by experts. I have held a number of roundtable discussions on various matters, and my officials have engaged widely with the sector.

I am sorry to pursue the point, but the draft instrument was published only on 8 March 2018. Is the Minister sure that there has been sufficient time for a response to that? There does not seem to be much detail on what has come back from the consultation or the period that was allowed for comments on this instrument.

I beg to differ. The SI was published a year ago. We have engaged actively with the sector and we have had comments back. The instrument has been in the Library, so hon. Members could have seen it. We deposited a draft in the Library on 8 March 2018. If hon. Members had any concerns, we have had a year in which to hear them. A small number of comments were received in response to the SI’s publication, focusing on those areas where the retained version of the rules in the UK will diverge from the rules applied in EU member states. The comments we received, and the follow-up conversations that were held with relevant stakeholders, have been taken into account in the drafting of this instrument.

Our basic approach to retaining the Rome rules was also discussed with members of the legal profession in the context of the overall approach to a no-deal exit from the EU, as outlined in the civil judicial co-operation technical notice that we published on 13 September 2018. No concerns about the Government’s approach were raised at that stage.

The Minister, as ever, is charming and helpful, but I get suspicious when a Minister says, “Well, this has been around for a long time.” It might have been gathering dust in the Library or somewhere in her Department. The people who will be affected by these changes should have been consulted proactively, which is why I asked whether we could have a list of people whom she has talked to—the chambers of commerce, the Institute of Directors and particularly small business organisations. How much has the Minister talked to them? We are discovering from Minister after Minister—on SI after SI—that crucial people such as chief executives of airlines, or the chairmen and chief executives of shipping companies, were not consulted. It is about proactive, proper consultation with the people who will be affected. I am always suspicious when the Minister says, “We have had an awful lot of lawyers around the table.” I am not ashamed to say that I have a daughter who is a lawyer; we all have skeletons in our cupboards. The fact of the matter is that I do not trust things that have been consulted on but only on a lawyer-to-lawyer basis.

I am grateful to the hon. Gentleman for taking this process seriously, and I welcome the scrutiny. First, as I mentioned, this statutory instrument offers very little change. He may have sat in a number of Committees where significant changes are made and it is appropriate to take on board criticism and feedback. We must do that for this statutory instrument, but it will not have the consequences that he fears. As I highlighted, the impact of this SI is extremely limited.

Secondly, I dispute the position that lawyers are not of any worth to the consultation. I say that not because I am a lawyer or because the hon. Member for Bolton South East is a lawyer. I have spoken to lawyers who practise in Brussels, and I have held roundtables with lawyers in this country and those representing the industry. The interest of the lawyers is to serve their clients, and I reassure the hon. Gentleman that, in those discussions, they feed back to us what their clients want. I assure him that on the Brexit Law Committee we have various representatives from law firms, the Law Society and the City.

I hope I have answered the hon. Gentleman’s question. I will bring the matter to a close, although I am happy to take any further interventions from anyone else if they would like to participate in the debate.

The Minister is very kind. Could we have a list, not of lawyers representing real people but of the hard-working, wealth-creating large, small and medium companies in this country that she has consulted on the impact? It is not good enough for her to say, “It might not be important.” This legislation looks pretty damned important to me.

If I have suggested at any stage in the debate that the statutory instrument is not important, I retract that suggestion, but I do not believe I have said that. This is an extremely important matter. As someone who has practised law, I think it is incredibly important to determine and have clarity about which laws govern our contracts, as well which courts determine them. I would like certainty for business; after all, it is business that lawyers serve. At the Ministry of Justice we serve consumers and professionals. I am happy to take the hon. Gentleman’s request away with me.

If no other Member would like to raise any further points, I commend this statutory instrument to the Committee.

I reassure my hon. Friend the Member for Huddersfield, in the light of his questions to the Minister, that I have had the chance to go through this statutory instrument as a barrister and shadow Justice Minister, and that we have consulted the Law Society and the Bar Council. My hon. Friend has put his views about lawyers on the record, but I take no offence.

I do not wish my hon. Friend to think that somehow we are succumbing to what the Government want us to do. We have been doing our homework and have scrutinised this statutory instrument. My hon. Friend may be aware of the legal concepts of public international law, which is treaty based, and private international law, which is also known as conflicts of law. Conflicts of law are general provisions that set out the laws to be applied in the event of a dispute, such as a dispute over a transaction that has taken place, a custody dispute or any kind of dispute between people from two different jurisdictions.

Let me give an example of countries outside the EU, because these regulations will apply after we have left the European Union. The current position is that if the matter is a private, personal or family law issue, such as custody or divorce, the accepted norm is that the domestic domicile laws of the individuals will apply. If the issue is to do with business, the laws that apply could be to do with where the business took place or where the companies are based. There are already set rules determining different types of conflicts of law that arise outside the European Union.

The benefit of being part of the European Union was that we did not have to have any of these arguments about which law applied to which situation, or about how to get a judgment given in one country executed in another; these arguments do happen when countries are outside the European Union. Just as with goods and services, the European Union gave a seamless transfer of rights and contracts.

All the issues that my hon. Friend the Member for Huddersfield outlined are clear. When we are part of the European Union, the process is seamless. However, if and when we come out—depending on what happens —we will need to deal with such problems. The purpose of this statutory instrument is to address that lacuna—the gap that will be left if we leave without a deal.

As the Minister said, Rome I and Rome II regulations are the two basic treaties that currently cover this statutory instrument. If we leave the EU, Rome I and Rome II will not operate and that would cause all sorts of chaos.

My hon. Friend is confusing me a bit. I am having an Alice in Wonderland moment. As far as I can see, the Minister and the shadow Minister are saying that this is such a little change that it does not really matter. Why are we here? Why are the Government producing this SI and why, once again, does the person representing the Opposition seem to be agreeing? A very small number of these Committees ever divide. I do not know what the purpose of having an Opposition is, if we are always going to agree with the ministerial position. The Back Benchers have to pick up the cudgels. I do not want this to be described as discrimination; to get the balance right, I do not like lawyers or accountants.

I am grateful to my hon. Friend, but what I am saying—and what the Minister was also saying—is that there are issues that need to be addressed. The statutory instrument will address the gaps that will be left if we leave without a deal. Let me provide some examples, which I hope will reassure my hon. Friend that this statutory instrument is needed. If we Brexit without a deal, we need to have these provisions in place.

The Rome I and Rome II regulations set out the rules by which the law is to be applied to a case with a cross-border dimension. For example, the parties to a contract can choose to apply English law to the dispute, even though the case would be heard in France, and the French court must apply the English law to the dispute. Under Rome I, if the parties agree on English and Welsh law—or any other—as the governing law of the contract, this has to be respected by the courts of the EU member states. Given that it applies to third countries and there is no need for reciprocity, recognition of the choice of English laws should not be affected, as long as Rome I remains unchanged.

Rome I states that consumer contracts will be governed by the law of the country where the consumer lives if the business operates or undertakes marketing in the consumer’s country. As many consumers undertake cross-border transactions, Rome I will ensure that any dispute undertaken can be dealt with using the laws with which they are familiar. That is why it is important to keep Rome I, which is one of the things that this statutory instrument will do.

Rome II outlines rules for determining which law governs non-contractual obligations, for example in relation to a tort, where the general rule is that the national court must apply the law of the country in which damage was done. There is no need to secure reciprocity or mutuality of the arrangements, because the Rome II rules apply automatically to third countries, and the courts of European Union member states will continue to apply English and Welsh law when the rules dictate so.

In essence, the draft regulations are giving effect to the two Rome convention treaties. They are needed, so the Labour party will not press the Committee to a Division or oppose the introduction of the statutory instrument. It is required.

It is a pleasure to see you in the Chair, Mr Austin. I start by declaring my pride in not being a lawyer, lest I draw the ire of the hon. Member for Huddersfield. This is another no-deal Committee to allow for the Government’s catastrophic Brexit but, given that we are so far behind in the number of statutory instruments that we need to pass before Brexit, I suspect that the civil servants will be making a small prayer tomorrow for at least a small extension to article 50, to allow for some of those SIs.

The Justice Secretary in the Scottish Government and the Justice Committee of the Scottish Parliament have both indicated their assent to the draft regulations, so I will not break concord by seeking to divide the Committee. I will detain it no longer.

I will make just two short points. First, I thank Opposition Members for their constructive approach. If we do leave the EU without a deal, it is helpful to ensure that our statutes work, and I am grateful for their efforts to ensure that. Secondly, by way of clarification, I reiterate what I think I said during the thrust and course of my submission—

I will finish my point, if I may. It is important to ensure that we have statutes that work and that businesses have certainty. The draft regulations are part of that package. They are an important SI and I am pleased to commend them to the Committee.

Question put.

Resolved,

That the Committee has considered the draft Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019.

Committee rose.

Draft Environment, Food and Rural Affairs (Amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Siobhain McDonagh

† Blackman, Bob (Harrow East) (Con)

† Creasy, Stella (Walthamstow) (Lab/Co-op)

† Daby, Janet (Lewisham East) (Lab)

† Debbonaire, Thangam (Bristol West) (Lab)

Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)

† Drew, Dr David (Stroud) (Lab/Co-op)

† Hayes, Sir John (South Holland and The Deepings) (Con)

† Morris, Grahame (Easington) (Lab)

† Morris, James (Halesowen and Rowley Regis) (Con)

† Rutley, David (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

† Seely, Mr Bob (Isle of Wight) (Con)

† Stewart, Iain (Milton Keynes South) (Con)

† Swire, Sir Hugo (East Devon) (Con)

† Timms, Stephen (East Ham) (Lab)

† Vara, Mr Shailesh (North West Cambridgeshire) (Con)

† Villiers, Theresa (Chipping Barnet) (Con)

† Zeichner, Daniel (Cambridge) (Lab)

Nina Foster, Committee Clerk

† attended the Committee

Twenty-first Delegated Legislation Committee

Wednesday 13 March 2019

[Siobhain McDonagh in the Chair]

Draft Environment, Food and Rural Affairs (Amendment) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Environment, Food and Rural Affairs (Amendment) (EU Exit) Regulations 2019.

Once again, it is an honour to serve with you in the Chair, Ms McDonagh. The regulations group elements of six policy regimes for natural mineral waters, spirit drinks, food labelling, wines, genetically modified organisms and animal imports. The Department for Environment, Food and Rural Affairs sought agreement to group the regulations on a thematic basis to ensure that each policy regime would be subject to the required scrutiny. That is particularly valuable when regulations are inter-related, as in this instrument, where each regime includes a transfer of functions, which is the key element to all these regulations. The purpose of the statutory instrument is to make purely technical or operability corrections to ensure that the regimes continue to function as intended. The corrections remove or amend references to EU directives, remove or amend EU references, convert EU procedures to UK procedures, and transfer EU functions to the UK.

The instrument also allows existing recognition of natural mineral waters from the EU, Iceland and Norway to continue on a transitional provision for at least six months, thereby maintaining the status quo immediately before exit day. It provides the Secretary of State with the power to withdraw recognition of EU natural mineral waters after a period of notice if certain conditions are not met. That relates to EU directive 2009/54 on the marketing of natural mineral waters.

With the exception of the Secretary of State’s powers over the recognition of natural mineral waters, the instrument makes no further substantive changes. Although it represents a change of policy with respect to natural mineral waters, that change is only to retain the status quo, so that EU natural mineral waters are recognised in England. Without that provision, the natural mineral waters that obtained recognition in or by a member state in the European economic area would not have the right to be legally sold in England, irrespective of the Secretary of State’s power to regulate the field. That would lead both to restricted consumer choice in the UK, where one in three bottles of natural mineral water are of EU origin, and to changes in the price of the products because of market forces.

The SI will also ensure that we have a fully functioning scheme for the geographical indications of spirit drinks that allows us to register and amend indications. That is particularly important for Scotch whisky, which in 2018, accounted for a record £4.7 billion in exports. Although those exports would not be directly threatened without the SI, the industry would lose the ability to amend the Scotch whisky technical file to better reflect industry practice. That document provides the technical specifications for products that use the Scotch whisky GI name—production process, geographical area, specific labelling rules and so on. In that respect, the SI amends EU regulation 110/2008 to transfer functions from the European Commission to the Secretary of State.

On food labelling, the SI will transfer a series of legislative functions that are currently conferred on the European Commission so that they will instead be exercisable by public authorities in the UK. Those functions will allow the appropriate authorities to make important changes relating to how certain pieces of information can be presented to the consumer. Currently, those powers sit with the EU Commission and their transfer will ensure that we would not require new primary legislation to update, for example, the list of allergens that must be labelled on pre-packed food, or to change the way that nutritional values are presented.

On wine and aromatised wine, the SI will transfer the power to make rules on the production processes used to make aromatised wines, as well as rules on methods of analysis and administrative and physical checks, and transfer powers on wine relating to GI applications from the EU to the Secretary of State. That will enable us to consider applications for new wine GIs and deal with applications to amend and cancel wine GIs on the UK wines GI register. Without doing that, key aspects of our wine quality policy would become inoperable, which would put us in breach of World Trade Organisation provisions. The SI will roll over the framework for producers to protect geographical indications for aromatised wines, as well as the mechanisms to control their production and use.

In respect of the regime for genetically modified organisms, the SI will make operability changes to transfer existing powers from the EU to the Secretary of State, allowing the Secretary of State to develop technical statutory guidance on sampling and testing for the presence of GMOs, amend the threshold above which products must comply with traceability and labelling requirements, and apply unique identifying codes to GMOs. That will ensure that we can continue to enforce the rules on releasing genetically modified organisms into the environment, although it is important to state that no GM crops are grown in the UK, nor is it anticipated that any will be.

Finally, the SI includes animal health provisions to make operable European decisions on the import of cattle semen, pig semen, horse semen, ova and embryos. They also retain an historic health certificate and inspection report that remains in use when certain disease restrictions are in place.

The Department for Environment, Food and Rural Affairs has consulted with the devolved Administrations on the amendments that the SI will make, and they have consented to its coming into force. Its territorial extent is the United Kingdom, except as regards natural mineral waters and decisions to release GMOs. As the natural mineral waters amendments apply only to England, each devolved Administration would have to make equivalent amendments to its own natural mineral waters regulations to mirror that policy position; the devolved Administrations are currently deciding whether to follow England in that policy option. The amendments made to EC regulation 1830/2003 on the traceability and labelling of genetically modified organisms will apply to the UK, but the amendments to reflect and respect decisions on their release and marketing are a devolved matter in Scotland and Wales and a transferred matter in Northern Ireland.

We have consulted extensively, listened to stakeholders and reflected their views in the SI. Policy decisions on natural mineral waters were subject to a public consultation, which ran from 16 October to 13 November last year. DEFRA engaged all major stakeholders in the process throughout 2018, from individual companies to industry bodies. We have also written to the main stakeholders to explain the instrument’s implications.

With respect to spirit drinks, DEFRA maintains ongoing engagement with key stakeholders such as the Scotch Whisky Association and the Wine and Spirit Trade Association. A four-week public consultation on geographical indications, including for spirit drinks, ran from 4 October to 1 November last year. DEFRA has raised stakeholder awareness of the food labelling technical notice published on 24 September 2018 and has undertaken a consultation on amending food labelling laws. We have also consulted on new GI scheme rules, including for wine.

In January, DEFRA engaged with parties with an interest in genetically modified organisms on the amendments contained in the instrument. We have carried out extensive engagement on animal trade and pet travel. To date, the Department has engaged with more than 300 importers, covering 50 events; it will continue that engagement in the coming weeks.

These measures are essential to ensuring that the six policy regimes I have set out remain able to operate once the UK leaves the EU. For all regimes except natural mineral waters, the instrument will make technical or operability corrections to ensure that those regimes continue to function as intended. I commend the draft regulations to the Committee.

I am delighted to serve under your chairmanship, Ms McDonagh. It is a pity that you have to be here rather than in Cheltenham, but we all have to make our sacrifices. It might be a bit wild and windy there anyway.

I welcome the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Macclesfield. I thought we might get the new farming Minister, the right hon. Member for Scarborough and Whitby (Mr Goodwill); I have not yet had the opportunity for any exchanges with him, but I am sure that that will save for another day. I have just a few points to make—the Minister will be relieved to hear that the Opposition will not vote against the draft regulations.

I know that we are bundling up statutory instruments. Because of the time constraints we are under, that is something that we have to face, for good or bad, but we are now bundling up SIs within an SI. With the best will in the world, I do not understand what natural mineral water, spirit drinks, food labelling, aromatised wine, GMOs and animal health have got to do with each other. It is quite interesting how the civil service has come up with these portmanteau SIs, where we try to look at a range of different issues, which may not in themselves appear to be very important but are in totality.

I will dwell for a minute on animal health, looking at the explanatory memorandum. The bits on animal health are largely about the transference or transmission of equidae—I hope everyone knows what they are—and their semen, ova and embryos. As for animal health, at the end of the memorandum it says that no consultation was undertaken

“given that no change to policy is being made”.

My ears pricked up when the Minister said there were three weeks of consultation overall. That is not a great deal of time for some of the changes that are implied here. Does that matter? Those of us who were around at the time of the bovine spongiform encephalopathy outbreak will remember that we had to ban the export of semen because that was one of the products that was caught up in the beef on the bone ban. It matters when it matters. That did matter because it cost us billions of pounds in lost exports.

We have to be very wary about what we put through here today. We put down our usual caveat that we are doing this at an enormous rush. No one really knows the implications of what we are doing because none of us—certainly in the Opposition—has had the opportunity to delve in depth into some of the changes. I know the Government say that there are no changes, that this is a cut and paste job, but we have to rely on the cut and paste being right and work on the presumption that, as time moves on, we are going to vary from the EU, enhance the process or, dare I say, do less. That is a concern.

I have a number of questions to put to the Minister. The one we usually start with is that there is no costing in the SI, so we do not know the implications or the impact, not just on Government, which must oversee this, but on the industry. With regard to changes to labelling, we are going to be faced by variability in the labelling regime. I am interested to know how the Government intend to approach that with regard to information for consumers. We know that labels differ at the moment but there is some commonality through our membership of the EU. If we leave on 29 March, that will have to change.

We could spend the whole hour and a half on GMOs, although colleagues will be pleased to hear that I will not. This is a very controversial area. My starting point is that we have four constituent parts of the UK. It is a pity there is no Scottish representative here but I think Scotland has gone as far as a GM ban for the nation. Will that happen again in future or will we have to accept that the UK Government are now sovereign on that matter?

That will make a difference because the French in particular will never allow any genetically modified product into their country. We are more lax—we have allowed animal feed to come in, particularly from north America. That does not mean we can feel satisfied that that will be accepted, because the French will ban our exports or re-exports if we are not careful.

The regulations will almost certainly demand additional bureaucratic observance, scrutiny and investigation. It would be interesting to know what additional work the Government have done on the GM issue. That matters, because any attempt to sign a free trade deal with the United States will bring it to the fore in the public’s perception. Those of us who were around at the time know that, whatever one’s views on the science, the public had a very clear view on GM. They did not want it and they made that very clear through their representatives. Our policy, which we have kept to, is that we do not grow GM crops in this country.

It would be interesting to know what environmental impacts the Government think these changes will have. The Minister rightly said that nothing will change at the moment, but it would be interesting to know what “at the moment” means, because clearly there can be changes in the future. That will be very important, in terms of reporting procedures and our capacity to assess.

Several issues were raised by the bodies that are most concerned about this statutory instrument. I declare my usual interest: I am one of the British Veterinary Association’s advocates. It is a non-paying role, but I welcome that relationship. The BVA is looking at the wider issues relating to the e-petition on pre-slaughter stunning that is doing the rounds at the moment. That is a very controversial issue. The BVA asked me, “How does this relate to some of the changes we are making?” Not very much, it could be argued, but we will have a new regime. That is important, because one of the things that we are looking at today is clarity of labelling. Whether there was stunning will have to be spelled out very clearly. Is that something that the British Government are ready for? Will they condone it and encourage it in what will be brought forward? How does that relate to our export markets, which depend on commonalities between regimes? It may be that we are very different.

The BVA’s final point is that the UK Government should legislate to ensure that imported goods have the same clarity of labelling as home-produced goods. What resources are the British Government putting in place to ensure that is the case? That relates to the matter of border inspection posts. It is not clear from the SI or the explanatory memorandum what additional checks the Government intend to put in place to ensure that what they are told is coming into the country is actually what comes into the country. For animal products, that is the biggest threat we face. Anyone who has been to New Zealand will know that they basically strip-search people to make sure they do not bring in anything that could have any kind of pathogenic impact, because they know that that could wipe out their livestock industry. They are incredibly careful about who comes in and what they bring, and if people do things they should not do, they deal with them pretty savagely. What additional resources are the Government putting into border inspection posts to ensure those things do not happen? At the very least, we must do everything we can to prevent them from happening.

The biggest problem of the lot, of course, is the Northern Ireland border—not just the backstop, but the mechanism by which we ensure the movement of food back and forth. I have used the example of Baileys many times before, for which milk goes back and forth seven times. At least some additional checking will be involved.

Finally, let me look a bit more intensively at the GM issue. It would be helpful if the Government stated today that they will not alter their policy on GM. Regardless of the position after 29 March, it would be helpful if we had a clear statement that we do not grow GMOs in this country and that we do not import GMOs, other than because they happen to be in animal feed—for all sorts of reasons, there is not a lot we can do about that.

I have touched already on the fact that the drafting of the SI could allow for considerable differences between the four nations of the UK. The Minister said he had consulted the other Administrations, bar Northern Ireland, with which interaction is at official level. It would be interesting to know whether there is any divergence on GMO policy. As I said, from memory, Scotland had a very clearly negative position on GM. Is that the message that came back from the Minister’s discussions?

Let me make a final couple of points on standards and regulations. Somebody has to ensure not only that we have a clear statement of official controls between us and any single market we may work through, but that we are very clear about the relationship between the four constituent parts of the United Kingdom. It would be interesting to know what additional regime will have to be put in place to ensure that border inspection posts take cognisance of what is happening in the different parts of the United Kingdom. That will be crucial, because the last thing we want is a disease outbreak shortly after 29 March. If that happened, the finger would be pointed very clearly at its being Brexit related. It may be completely unrelated, but that accusation would be made.

I accept that the Minister may have to write to me about one or two of those points, but this is a quite important piece of secondary legislation. It is a hotch-potch of different things, and some parts of it will have an ongoing impact. I hope the Minister realises that, although we will not vote against the instrument, issues such as the environmental liability directive, which I have mentioned before, will come back in one form or another. We need to look not just at individual SIs but at the totality of the way we protect the country from disease outbreaks. Obviously, if we get that wrong, we will not just be the poorer but face repercussions in the wider world, because other countries will take action against us, as they did over BSE.

I am grateful to the hon. Member for Stroud for his characteristically thoughtful contribution. I mentioned that the SI is purely technical and operability correction oriented, and it is important to recognise that. Although he raised concerns about bundling, I think he appreciates the sheer weight of SIs we need to get through. Certainly, both Opposition and Government Members have very kindly helped to facilitate that. The good news is that we are making good progress.

The Minister says we have to get through these SIs. We had some time to get through them. They were all utterly predictable, but the Government have left them all until the very last minute. We are trying to get through 27 in the next 14 days, which in my view is utterly reprehensible.

I thank the hon. Lady for setting out her views so clearly. I just wish she would speak a bit more clearly so we could understand her views completely. Her concerns are understood, but we are in challenging circumstances. All I can do is commend, as I have before, the incredibly hard work of officials in the devolved Administrations and the Department for Environment, Food and Rural Affairs. I know she does not suggest this is not the case, but they have been working at pace. I have been working with them—sometimes trying to encourage greater speed and sometimes trying to keep up with them. The good news is that we are definitely through the vast majority of the SIs. There are several more to do, as she says, over the next few weeks, but when you are having this much fun, you just want to carry on, surely?

Given the concern that we could see statutory instruments referring to, as my hon. Friend the shadow Minister said, issues as broad as the production of wine and of horse semen, and the import and export of both, does the Minister not recognise that sometimes “more haste, less speed” is a worthwhile principle in making good legislation, even on something as difficult as this, and therefore that the problem with trying to push through so many statutory instruments at short notice is that we could miss things that are important to vital industries in this country, including equine and vinery services?

I thank the hon. Lady for her point. I understand we are covering a lot today, but—perhaps I need to do better at communicating this; I will try once more—the draft regulations are about transferring powers. There is a clear theme. The regulations are about technical operations, and I hope that has come through at least to some degree in the comments that have been made.

With the Committee’s permission, I will move on to some of the more detailed points that the hon. Member for Stroud raised. On animal imports in relation to the effect of leaving the EU on the animal trade and pet travel more generally, I want to reassure him that DEFRA has carried out extensive engagement on imports of animals and animal products. Even where consultation has not been required, there has been extensive engagement: the Department has engaged with over 300 stakeholders to date, with 50 events on this, so there has been close co-operation.

The hon. Gentleman also talked about impact assessments. As he knows, because we have been through this many times before—I am getting a glare from the hon. Member for Bristol West—

No, it was a glare. Yesterday we had an SI Committee and were able to set out clearly what the costs were—very minimal, in that situation—regarding veterinary medicines. In this situation, these changes are minimal.

On food labelling, there will be changes, but through representation and our engagement with the food and drink sector it was clear that we needed to find a sensible transition to the new arrangements, where there would be at least 21 months and, with GI, three years to transition. As a result, the costs involved are very minor.

Based on guidelines, there was no need to conduct a formal impact assessments, but once again I can assure the hon. Gentleman that there was maximum engagement with those bodies. Indeed, I meet the Food and Drink Federation, the British Retail Consortium, UKHospitality and the National Farmers Union every week to ensure that I am fully aware of their concerns about issues such as this and many others.

I have been listening to the Minister with interest and concentration, but the truth is that cathartic change always brings about challenge, and it is a cathartic change that we are going through. He is right to say that in the particular case of this SI, the change is minimal, and the future will look much like the past. On the issue of cost, however, it may be that the reconcentration on what we do allows us to think through the cost-effectiveness of that. Over time, we may be able to do all kinds of things, in my hon. Friend’s Department and others, that will be more cost-effective and efficient and will save money. All this discussion about costing money must be balanced against the advantage of that re-examination of how to do things best and most efficiently.

I completely agree that there are opportunities to see how we can do things better and in a more cost-effective way. We will have that opportunity once we leave the EU. At the moment, this is very much about continuity; we can look forward to those opportunities, but I wanted to reassure colleagues that for now, this is about continuity and keeping things as they are. In future there will be opportunities to review, obviously with parliamentary scrutiny.

A number of concerns were raised about GM crops, but again, all we are talking about here is transferring powers. No GM crops are grown in the UK, as I said in my remarks at the beginning. I want to ensure my words are on record clearly: no GM crops are grown in the UK at the moment and none is anticipated. Decisions to approve the commercial cultivation of GM crops are based on a robust and independent science-based assessment, with the planting of GM crops agreed to only when it is clear that people and the environment will not be harmed. We do not have any intention to relax the regulations after we have left the EU. As I said before, no future GM crop is anticipated in the UK. I hope the hon. Member for Stroud is reassured on that. The good news is that we have the scientific expertise to ensure that all the required analysis can be conducted.

With regard to border inspection posts and the concerns raised by the British Veterinary Association, with whom the hon. Member for Stroud has a clear and trusted relationship, we are working closely with BVA, seeking its feedback, input and support to ensure it is ready for the extra volume of export health certificates and preparations for the border inspection posts. There will be no import controls or checks at the border for live animals and animal products directly from the EU on the day the UK leaves the EU. The exception to that rule is animals, animal products and high-risk food and feed not of animal origin coming from third countries that travel through the EU before arrival in the UK.

Clearly, we will continue to monitor the situation, but on day one the risks do not change because we trust the EU regime. We have been part of it for many years, which is why I believe we are in good shape. By transferring these powers, we will be in the right position come EU exit day. Overall, the six regimes will continue to function in a similar way to before and, for the reasons I have set out, I trust the Committee will support the regulations.

I just wanted to raise a point with my hon. Friend. I fully understand that the aim is to replicate existing EU legislation and he is right to say this is a transition period. I do not want to delay matters but I want to put on record, drawing attention to my entry in the Register of Members’ Financial Interests, some of the tricks we are missing and should consider at the end of the transition period with regard to food labelling.

Many of us have thought for some time that food labelling is woefully inadequate, not least that with which we must comply under existing EU legislation. We want it to be much improved and genuinely to reflect country of origin, regional quotas and so forth within the United Kingdom. I draw the Minister’s attention specifically to something for his future consideration. Forty-three tonnes of honey are consumed in this country every year but 95% of that is imported. The current EU and UK labelling says,

“This honey is a blend of EU and non-EU honey.”

That is extraordinarily vague and disguises the countries of origin. It is well known that the majority of supermarket honey sold as pure honey in this country is not pure honey at all. It is often adulterated honey, cut with corn syrup or fructose syrup from China.

When we look at a new regime of food labelling, rather than emulate food labelling under existing EU legislation, there is an opportunity to do something much better and more honest, to expose some of the practice of recent years.

I thank my right hon. Friend for his late, but powerful, intervention. I know he feels passionately about such issues. I agree that we do need a wider review of food labelling and we are committed to doing that once we have left the EU. He will know, because he follows these issues with interest, that we are already looking to reassert and strengthen our approach with allergen labelling, following the recent tragic cases. That will help during the period we are entering, whether that is no deal or a transitional implementation period. There is a commitment once we leave the EU to a much wider review of labelling, which will focus on food safety, sustainability and welfare standards, and will address many of the issues that concern him. I welcome the chance to talk to him further on that. With that, I again commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Environment, Food and Rural Affairs (Amendment) (EU Exit) Regulations 2019.

Committee rose.

Draft Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment Etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: † David Hanson

† Amesbury, Mike (Weaver Vale) (Lab)

† Antoniazzi, Tonia (Gower) (Lab)

† Cadbury, Ruth (Brentford and Isleworth) (Lab)

† Charalambous, Bambos (Enfield, Southgate) (Lab)

† Clark, Colin (Gordon) (Con)

Cooper, Rosie (West Lancashire) (Lab)

† Fabricant, Michael (Lichfield) (Con)

† Glindon, Mary (North Tyneside) (Lab)

† Hughes, Eddie (Walsall North) (Con)

† Linden, David (Glasgow East) (SNP)

† McCarthy, Kerry (Bristol East) (Lab)

† Morris, David (Morecambe and Lunesdale) (Con)

† Newton, Sarah (Minister for Disabled People, Health and Work)

† Paterson, Mr Owen (North Shropshire) (Con)

† Prisk, Mr Mark (Hertford and Stortford) (Con)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

Yohanna Sallberg, Committee Clerk

† attended the Committee

Twelfth Delegated Legislation Committee

Wednesday 13 March 2019

[David Hanson in the Chair]

Draft Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment etc.) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Hanson, and I thank all colleagues for coming along to this important statutory instrument Committee this morning.

It is really important that we reach a negotiated settlement with the EU, but it is our duty, as a responsible Government, to prepare for all eventualities, including leaving with no deal. This SI is one such contingency measure and will ensure that regulations governing chemicals and genetically modified organisms for contained use continue to be operable in a no-deal scenario.

I shall take this opportunity to reiterate that this instrument will deliver on our commitments to protect workers’ rights as the UK leaves the EU by ensuring that health and safety regulation continues to provide a high level of protection in the workplace and for those affected by workplace activities. It will also deliver on the Government’s commitment that as the UK leaves the EU standards of protection for people and the environment will remain at least as high as they are at present.

Together with ministerial colleagues in the Department for Environment, Food and Rural Affairs, we oversee a number of key regulatory regimes that affect the chemicals sector. Since the referendum, our joint programme has conducted particularly intensive work to ensure that there will continue to be a functioning regulatory regime for chemicals, with associated enforcement activity, in any exit scenario.

These draft regulations form part of the work being done to adjust our legislative framework in readiness for leaving the EU. I appreciate the technical nature of the regulations and that this instrument, as a composite of several different regulatory regimes, makes things particularly complex. The decision to present the proposals as a single instrument was for the benefit of the House—to reduce pressure on parliamentary time and to ensure that we can deliver an orderly exit. I ask hon. Members to please be assured that the proposals are sensible, proportionate and necessary.

If approved, the regulations will make necessary amendments to three retained EU regulations as well as EU-derived domestic legislation affecting the whole of the United Kingdom, including Northern Ireland. As stated, their purpose is to amend the relevant legislation to ensure that there is provision for an independent UK regulatory regime that maintains existing standards and protections. The Government’s priority will be to maintain a legal framework to ensure the continued effective and safe management of chemicals to safeguard human health and the environment. That framework needs to be flexible enough to respond to emerging risks, while still allowing trade with the EU that is as frictionless as possible.

The first of the three retained EU regulations to be amended is the biocidal products regulation, which governs the placing on the market and use of products that contain chemicals that protect humans, animals, materials or articles against harmful organisms such as pests or bacteria. It is in place to ensure that those chemicals are safe for humans, animals and the environment, while improving the functioning of the biocidal products market. That market covers a wide range of products, such as wood preservatives, insecticides—for example, wasp spray—and anti-fouling paint to remove barnacles from boats.

Secondly, the classification, labelling and packaging of substances and mixtures regulation ensures that the hazardous intrinsic properties of chemicals are properly identified and effectively communicated to those throughout the supply chain, including at the point of use. That is done partly through standardised hazard pictograms and warning phrases associated with specific hazards, such as explosivity, acute toxicity and carcinogenicity.

I would be delighted to. As I will go on to explain, the regimes will be administered by the Health and Safety Executive, so the draft instrument will protect workers’ rights by ensuring that we continue to have some of the safest workplaces in the world—we have a proud tradition of that. I am delighted that the team from the HSE that worked so hard on the draft regulations, and the lawyers that helped us to introduce them, are here today. They have done a fantastic job. I am sure we all agree that the HSE does a very good job, day in, day out, of promoting the wellbeing and safety of people in the workplace. The draft instrument will protect workers’ rights by protecting workers from exposure to harmful chemicals.

Lastly, the export and import of hazardous chemicals regulation implements the Rotterdam convention and requires exports of listed chemicals to be notified to the importing country. For some chemicals, the consent of the importing country must be obtained before export can proceed. These regimes rely on EU processes to take and implement collective decisions. However, much of this business already operates at national level. Decisions at EU level are taken on the basis of evaluations and assessments undertaken by member states, or following consideration of scientific opinions reached by relevant expert committees. Under a no-deal scenario, the instrument will provide for these evaluations or opinions to inform a national decision, rather than informing UK input into an EU decision.

The HSE acts as a UK competent authority within the EU regimes for chemicals regulations, and therefore has capability and capacity that can be built on to enable it to take full UK regulatory authority responsibility. For example, across the whole of the EU, the HSE processes about an eighth of the biocidal active substance approvals and about a third of the biocidal product authorisations.

It is necessary to put in place arrangements for the HSE to recover its costs for work across the wider chemicals regimes, including on plant protection products. That is currently done by EU institutions, and a fee is charged. This approach to cost recovery is in line with HM Treasury policy and is a well-established procedure for charging industry for the various work and advice provided by the HSE—for example, on applications for approval of first aid training on offshore installations and pipelines, or the evaluation of safety cases made under the control of major accident hazards regulations.

The instrument also contains a small number of technical operability amendments to the Genetically Modified Organisms (Contained Use) Regulations 2014, which affect the use of GMOs in contained sites, such as laboratories, and currently refer to a number of European directives and regulations. These references, some of which are the responsibility of other Government Departments, will be updated to the corresponding repatriated UK domestic law. There are no policy changes or updates to duties, and all existing protections covering human health and the environment will be maintained and will continue to work in the same way post EU exit.

The UK chemical sector is our second biggest manufacturing industry and second largest exporter. It is also integral to the provision of essential products and technologies on which society relies. The draft instrument will provide clarity for the chemical industry and regulators, ensuring that the legal requirements for chemicals regulations are clear immediately after exit, and that certainty for consumers that the use of chemicals in the UK will continue to be desirable and safe.

Before closing, I stress that the devolved Administrations have provided consent for the elements of the draft instrument that are considered to be devolved. I hope that colleagues of all parties will join me in supporting the draft regulations and I commend them to the Committee.

Before I call the Opposition spokesperson, let me say that the Minister ably presented the SI accompanied by four pings of a telephone. I am unable to identify which hon. Member had the phone, but I would be grateful if everyone would check and accordingly turn off the phone, so that the Opposition spokesperson is not also accompanied by pings.

I thank the Minister, and you, Mr Hanson; it is a pleasure to serve under your chairmanship. I sincerely hope there are no further pings. Hon. Members will be pleased to hear that I do not intend to offer a line-by-line commentary on the SI. It is vital that the regulation of UK chemicals and genetically modified organisms continues to operate effectively at the point at which the UK leaves the EU. Her Majesty’s Official Opposition will not oppose the instrument, as the intent is to ensure the operability of the relevant legislation.

The chemical and pharmaceutical industry adds £18 billion of value to the UK economy every year from a total annual turnover of £50 billion. It employs 500,000 people directly and through supply chains, and has annual exports of £50 billion, with 63% of companies in the sector exporting what they make to the world. That is the highest proportion of any goods manufacturing sector in the UK economy.

Sixty per cent. of the exports go to the European Union, and 75% of the imports and raw materials come from the European Union; that is a vital point. The chemicals industry has been and remains a major presence in my constituency of Weaver Vale and the surrounding area, so the regulations are of particular interest to my constituents and many major employers including Ineos-Inovyn and Tata Chemicals.

The regulation and labelling of chemicals is an issue not only for those who manufacture, produce and sell them, but for all of us who use them on a day-to-day basis, whether directly in the form of household goods or medical products, or indirectly in relation to the food we eat and the environment we enjoy. As the Minister said, that means it is vitally important that we get the regulations right.

Although we welcome the general commitment to ensure that chemicals and GMO legislation continues to operate effectively after Brexit and the apparent intent to avoid any deregulatory impact, we have a number of questions about how that will work in practice. We also believe that the instruments cannot properly be considered in isolation, without recognising a wider problem of the uncertainty and instability of Brexit for the chemicals industry.

There is a lack of clarity regarding the Government’s policy on genetically modified foods and what that policy will be in the future. The SI would give the Secretary of State for Environment the power to regulate genetically modified organisms within a research laboratory or biotechnological production facility that are not released into the environment. The Secretary of State has already said that the Government might take a positive attitude to gene editing to develop higher-yielding crops or more valuable livestock. The Opposition want to see guarantees that post-Brexit there will not be a more relaxed policy on GM than the one that the EU currently operates.

Crucially, the instrument is being laid at a time when the Health and Safety Executive—the body being tasked with picking up much of the work and responsibilities required to regulate the safety of chemicals and the workers’ rights mentioned by the Minister—is dealing with budget cuts of 40% from 2010 to 2017, and when the Government have yet to respond to the most recent tailored review.

In short, we recognise the need for this statutory instrument, but we have concerns about the mechanisms to be used for delivery. We believe that the context in which they are being taken—one of cuts and potential chaos—has made the situation much more difficult and even more risky than it might otherwise have been. As such, we have a number of questions about today’s proposals that need to be clarified. I intend to go through them in turn in the hope that the Minister may be able to answer some of them.

Paragraph 3.5 of the explanatory memorandum states:

“After Exit, the same UK regulatory scientists will recommend updates to ensure the continued protection of people, the environment, and the interests of UK business for the UK only, not as part of the EU system. Where ministers agree with the recommendation, they will issue a decision to this effect and the Health and Safety Executive (HSE) will then ensure that the updates are given effect from an agreed date, and alert duty-holders to changes.”

What processes are in place for any scrutiny and to challenge the Secretary of State about decisions on recommendations, particularly if there is a scenario where the Minister does not agree with the scientific recommendation?

At present, there is scrutiny of regulation by the European Parliament and by member states through the Council of Ministers, as well as supporting committees at EU level. The existing system allows for industry, trade unions, non-governmental organisations and technical experts to contribute to shaping regulation, and it is vital that there is no reduction in scrutiny, challenge or consultation. These regulations do not provide for any equivalent means by which stakeholders and experts in the field can help to ensure that regulation is robust and fit for purpose. Can the Minister confirm that the Health and Safety Executive will be given all the necessary funding and support to carry out its new responsibilities?

Paragraph 3.7 refers to the

“well-established policy of HSE to set fees to recover the full costs of its regulatory activities”.

What guarantees are in place to ensure that the HSE fee cost is considered proportionate and fair by all concerned, and that it accurately reflects the full cost of intervening? The tailored review of the HSE made clear the importance of the tripartite partnership for the HSE; indeed, assessing fair and reasonable costs can only be done on that basis. In the absence of a formal response to the report, it would be welcome to hear the Minister recognise the importance of the tripartite partnership for the Health and Safety Executive in ensuring good governance and effective health and safety.

Paragraphs 7.26 and 7.32 of the explanatory note refer to devolution. Given that we have no functional Assembly in Northern Ireland, how does the Minister intend to future-proof these arrangements with that and other devolved authorities? Paragraph 7.4 refers to the European Chemicals Agency’s IT system being replaced with a UK system. Has sufficient progress been made in developing that system, and have additional staff been put in place to carry out this function?

The current regulations set out arrangements whereby evaluations of active substances are distributed between all 28 member states, and deadlines set for their completion —currently 31 December 2024 for completion of the review programme as a whole. In paragraph 7.8, it is proposed that that be replaced by a UK stand-alone review of 488 active substances, and the regulations give the Secretary of State powers to make regulations, extend deadlines and specify other matters.

We are told that details of how such a programme would operate are currently under development; a progress report from the Minister would be greatly appreciated. There are other major questions and consequences. We welcome the Minister’s commitment that any reviews would be done to the same standards in protecting human and animal health and the environment, but might it mean some level of regulatory divergence, even for a short period of time, when some substances have been reviewed and passed fit or rejected in the EU, but not in the UK?

Since 2006, REACH—the European regulation on the registration, evaluation, authorisation and restriction of chemicals—has built up a comprehensive database on the safety of chemicals. The Government are now walking away from that vital source of data. Their current position appears to be that companies will provide all the data, but a survey by the Chemical Industries Association found that 75% of the companies taking part did not own the data that they would be required to register under a separate UK system. What assessment have the Government made of the ability of companies to provide the necessary data in the future?

We appreciate that fee recovery is suggested to cover costs in some cases, and that fees were payable to the European Chemicals Agency for some services, but in others—such as managing requests by suppliers for the use of alternative chemical names—fee charging was not planned. What guarantees are in place that the Health and Safety Executive has the capacity to undertake all the new functions and responsibilities assigned to it, given the scale of cuts that it has faced?

Is this new landscape not further evidence that the Government must urgently and constructively respond to the recommendations of the tailored review? The Opposition believe that the UK should continue to participate in REACH so that there is no reduction in scientific and technical collaboration with the European Union. More than 50 chemicals companies have already applied to use EU regulators for safety authorisations, to enable them to continue to do business legally in the event of a no-deal Brexit, as REACH authorisations held by UK companies would no longer be valid. That involves transferring registrations with REACH to EU-based companies, or asking customers to act as agents on their behalf.

Paragraph 10 of the explanatory memorandum sets out engagement with the chemicals industry in a no-deal scenario. A couple of roundtables, a few stakeholder meetings and a question and answer session are nowhere near sufficient to prepare for the massive major challenge that leaving the EU without a deal would present to a sector worth nearly £13 billion to the UK economy. That sector directly employs 100,000 people, many of them in my constituency, and it deserves better.

The Government appear unable even to respond adequately to the findings of those meetings. Paragraph 10.6 states:

“Consultations with stakeholders emphasised that they would welcome an approach that allows technical and scientific updates to the regulations be made in a flexible and timely way that will offer businesses sufficient time to make adjustments”.

Minister, we are two weeks away from exit day. Earlier this week, I received a letter from Inovyn that states that

“any disruption will adversely affect the competitiveness of our business and the potential for future trade and investment.”

It further states that UK businesses have invested in REACH to the tune of £0.5 billion and highlights concerns that that investment would be wasted in the case of a no-deal outcome. It also notes that contingency planning throughout the UK for a REACH alternative is already costing significant time and money. Those concerns are reflected by Tata and other chemicals organisations throughout the country.

The Government have not delivered updates in a flexible and timely way, or responded effectively to the industry’s concerns. The proposals are necessary given the situation that we are in, but the situation is not acceptable to the chemicals industry, those who work in it, or those who are tasked with enforcing it under a cloud of uncertainty, cuts and concerns. The Government must urgently deliver the clarity that the industry needs, and the funding and support that the Health and Safety Executive requires and deserves. The Opposition will continue to demand that they do so.

It is always a great pleasure to serve under your chairmanship, Mr Hanson, and I rise to respond on behalf of the Scottish National party. Although we want to remain part of the EU because of the widespread damage and disruption that Brexit would cause, we understand that we must be pragmatic and respond to the UK Government’s haphazard preparations.

Yesterday, I had a very productive meeting with the Minister about other policy matters. Speaking for myself, and perhaps for the Minister, too, she would probably prefer to get on with her day job than have to respond to the absolute chaos of a no-deal Brexit and all the regulations that have to be passed. That chaos means that we are running out of time to ensure continuity in whatever scenario we find ourselves in. That is why we have ended up in the perverse situation of having to pack several regulatory regimes together, to reduce the pressure on parliamentary time. That is absolutely chaotic and goes against the democratic principles of this House. During the Brexit referendum we were told that we would be taking back control. However, with just 16 days until Brexit, rushing through an SI on a Wednesday morning, it does not feel like we are in control.

The Minister rightly touched on devolution. We continue to push for devolved matters not to be legislated on without consent. Our work in that area has ensured that changes within this SI cannot be made without devolved consent. The Minister has put that on the record. Although the financial implications for leaving without a deal are relatively minor in this SI, there are still additional costs that organisations would not have had to meet had the UK remained a member of the single market and the customs union.

Like the Labour party, we will not oppose the regulations. I wanted to place on record the chaos we find ourselves in, whether that is last night or later tonight. It certainly does not feel like Parliament is taking back control at the moment.

I very much appreciate the spirit of the debate and the support from the Opposition parties for these really important regulations, which will provide the clarity and certainty that we know the industry needs. I will respond to as many of the questions that have been raised as possible.

First, for the benefit of Committee members who are not quite so familiar with the chemical industry as others, many of the questions directed to me were about the REACH regime, which is not the subject of these particular regulations. Today, in the House of Lords, they are considering the REACH regulations, which is the major set of regulations that control the chemical industry more broadly. This SI deals with a related sub-set that sits alongside that regime.

The REACH regulations are the policy responsibility of DEFRA. I work closely with the Department on that, because the HSE will be the operational side of delivering that regulatory environment. I assure all colleagues that the HSE has taken its responsibilities to consult with the industry seriously and thoroughly. Those consultations started in February last year and the HSE has met with about 1,000 chemical businesses and held many stakeholder events.

I know from the feedback that I have seen that the HSE’s consultations and engagements with the industry, as it developed these regulations, have been welcomed. The thinking behind both these and the REACH regulations has been about minimising any disruption. They will grandfather a lot of the registrations over to make this as seamless as possible.

I was asked about our preparedness as regards computer systems. Of course, the words “Government” and “computer systems” sat next to each other fill most people with horror, but the computer system has been built and has undergone user testing. As far as I can see, we are well on track to be able to deliver the operational aspects of what we need to do.

I was offering some reassurance about the REACH regulations. Although they are not what we are here to talk about today, I was addressing those concerns.

On a point of order, Mr Hanson. With the air conditioning going and the Minister’s unusually quiet voice, although I heard the hon. Member for Weaver Vale clearly, it is really very difficult to hear the Minister.

I have noted the air conditioning, and I will ensure that it is turned down for future meetings. Minister, if you could speak up, please.

Thank you, Mr Hanson. I will speak up; I would not want my hon. Friend to miss a word of what I have to say.

The computer systems and the capacity of the HSE are there, and I reassure all colleagues that, for this work in chemicals, the HSE has not had any cuts at all. This part of the HSE is all based on cost recovery, not only from industry but from other Government Departments. The HSE is the operations division, if you like, for a number of Government Departments, particularly DEFRA, and those resources have not been cut. I reassure people that the HSE will of course have all the resources that it needs to undertake its vital work, not only in the areas that we have talked about today but in all the areas that it works in to keep us all safe in the workplace.

I have regular meetings with the HSE’s chairman and its chief executive, who assure me that they have the resources they need. They have done a marvellous job, coping with cuts to some parts of their business by innovating and working in new ways. They have responded to those challenges and we should look at the results; they will show that we have some of the safest workplaces in the world, and that will remain the case. I can absolutely assure hon. Members that the HSE will continue to have the resources that it needs.

There has been some discussion of the processes and decision making, so let me provide some clarity for those who are not quite as familiar with the HSE as others are. The HSE board includes representatives of trade unions and workers, and of employers. It has an excellent reputation for engaging with stakeholders and ensuring that we develop appropriate health and safety regulations and legislation, and really effective enforcement. That will continue.

The HSE has a huge amount of expertise, enabling it to make the right decisions about what we should be importing into this country, including chemicals that are safe to use for both our environment and human health. That work will all continue. The HSE is already a leading competent authority in the EU, so it will be more than able to continue to provide guidance to Ministers.

The ultimate accountability for the new regimes will be this Parliament. Ministers in this Parliament will be accountable to Select Committees, which do such a great job of scrutiny, and to Members of this House, so that they can scrutinise the decisions that Ministers take. From the HSE, through its scientific advice and into Parliament, we will be able to make decisions in this place to keep our citizens safe.

So as not to delay the Committee too much longer, if I have failed to address any specific points, I will of course write to follow up. In this House, we often have the opportunity to ask questions of the Minister responsible for the HSE and I am sure that Opposition Members will use those opportunities to seek the further clarity that they want.

What is so important about today is that whatever happens whenever we leave the European Union, and by whatever method we choose to use the European Union, we can be certain that these regulations will deliver the certainty and the safety for our citizens that we all want to see. I commend them to the House.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Chemicals (Health and Safety) and Genetically Modified Organisms (Contained Use) (Amendment etc.) (EU Exit) Regulations 2019.

Committee rose.