Considered in Grand Committee
My Lords, as the talks progress, we have now agreed in principle the terms of the UK’s orderly exit from the EU, as set out in the withdrawal agreement. We have also agreed the broad terms of our future relationship, as set out in the outline political declaration. This puts us close to a Brexit deal that takes back control of our borders, our laws and our money while protecting jobs, security and the integrity of the UK. However, it is our duty as a responsible Government to prepare for all eventualities, including no deal. This instrument is part of that contingency planning.
It is essential to ensure that our consumer legislation continues to function effectively after exit day. Maintaining a comprehensive framework of consumer rights is crucial for prosperity. Household expenditure accounts for around 60% of the UK’s economy. In 2016, retail sales stood at £800 million for textiles stores and £40 billion for clothing stores. Confident consumers help to raise productivity and deliver an economy that works for everyone.
These regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018 and were laid in draft before the House on 10 October. They amend EU regulation 1007/2011 on textile fibre names and related labelling and marking. The EU regulation prescribes the labelling or marking that must be applied to textile products to inform consumers of the products’ textile fibre composition and the presence of non-textile parts of animal origin, such as fur. It also empowers the EU Commission to approve new textile fibre names and modify technical provisions, such as testing methods. The EU regulation also modifies the textile product regulations 2012, which set out enforcement provisions for the EU regulation in the UK.
The EU withdrawal Act will retain in UK law EU regulation 1007/2011 in its entirety on exit day. However, once the UK leaves the EU, the EU regulation will no longer apply to textile products placed or made available on the UK market. To maintain high consumer protections, these regulations make essential changes to ensure that the requirements to indicate the fibre content of textile products and,
“non-textile parts of animal origin”,
continue to apply in the UK after EU exit.
The regulations remove provisions that will no longer be relevant, such as requiring the label to be in an official language of the EU. After exit, the label must be in English. The regulations also transfer the powers currently exercised by the European Commission to take account of innovation and technical progress by approving new fibre names, tolerances—the difference between the fibre composition on the product label and the actual composition demonstrated through testing—and testing procedures to a UK Secretary of State. This is necessary because, after the UK leaves the EU, it will no longer be appropriate for the European Commission to approve new textile fibres for the UK market.
To maintain high consumer protections, the powers and penalties applicable to breaches of the EU regulation will be retained after EU exit. Only minor amendments are made to the UK textile products regulations, such as removing the need for the Secretary of State to have regard to the penalties for breaching the EU regulation in EU member states when carrying out a review of the regulation.
These regulations are needed to deliver certainty and stability for consumers and business. Consumers will experience no practical change as a result of them since textile products will continue to be labelled after EU exit as they are now. Businesses sourcing textile products from UK manufacturers or importing these products from outside the EU will experience very little change in the labelling regulations that they must comply with. This will also be the case for UK manufacturers. Businesses importing textile products from within the EU will become responsible for ensuring the accuracy of the labelling or marking of textile products. However, as the UK and EU textile labelling regimes will be very similar at the point of exit, EU suppliers will already understand the shared requirements of the regulations.
To support innovation, businesses wishing to have a new fibre name approved for the UK market will be able to apply to the UK Secretary of State. To enable consumers and business to plan and prepare for these changes, a consumer technical note has already been published. Further guidance to help business understand how to comply with the requirements of the regulations will be published in due course.
The regulations are a sensible and necessary use of the powers of the EU withdrawal Act that will ensure that our consumer law continues to function effectively on exit day. I commend the regulations to the Committee.
My Lords, I am grateful to the Minister for his introduction and for explaining the regulations so well. In light of the fact that the Secondary Legislation Scrutiny Committee has not drawn attention to any matter relating to these regulations for the House to give them special attention, I agree that it is appropriate to consider them in Grand Committee.
My Lords, I support my noble friend in his introduction of this important legislation. As someone whose family was in the textile business for many years, I know that the definition of what makes up the product is hugely important. Labelling is key for people when they want to buy, particularly those with allergies. With modern technology, such a cross-section of mixtures is used in clothing, and so I welcome the statutory instrument. In the old days, there was botany wool, lamb’s wool, Angora and cashmere and that was it. Today, a multiplicity of ingredients is used in textile production.
I thank the Minister for introducing the instrument. I understand that it does not create extra responsibilities or burdens for the industry, but will allow us to move forward. In future, labelling will be in English, which is an additional bonus to those of us who used to export 50% of what we produced. I have great pleasure in supporting this statutory instrument.
My Lords, the noble Lord, Lord Foulkes, is right to point out what he did. When giving us his blessing to consider this, he said that it seems relatively uncontroversial, and I have only one comment and one detailed question.
The comment is about labelling. The Minister rightly pointed out that there will be great similarities at the point of exit between regulation on this side and regulation in the EU 27. However, that will not remain the case for long. Divergence of regulation will start to change the labelling needs on this side versus that side. I point out that, whether we crash out or leave with a deal, that divergence will happen, suddenly or over time. It will mean that the label of a garment here and a similar garment in, say, France, will inevitably diverge. That is a cost, and one that over time will be borne by consumers in this country. It should be remembered clearly that, like many other measures we will see in SIs, in this Room and others, we are putting the cost on consumers.
My question relates to paragraph 7.10 and the approval of fibres. I should perhaps know the answer to this question, but clearly the Secretary of State is a busy person and will not personally deal with a new generic fibre name. Therefore, which agency in BEIS will deal with this? Is that agency being prepared for the arrival of this new process? What will happen to existing fibres that have been accepted within the European context? Will they be transferred to this agency overnight in the event of a crash, or will they be somehow left over the water and administered still by the European Union? What is the process by which these fibres are recognised and administered, and how are the tests validated? Who will do that and where will it happen? What is the scale of this operation? Is it three people in an office somewhere, 300 people or 3,000 people? I have no sense of the scale.
With those reservations, I should like to hear what the Minister says.
My Lords, it has been an informative little debate, blessed as we are by the noble Lord, Lord Foulkes, to proceed in a relatively calm and considered way. I hope we can move smoothly to a conclusion.
The other two speakers have been supportive of the statutory instrument and I am not going to object to it either. The trouble with these things is that, however simple they appear on the surface, they raise questions in your mind. We have already heard examples of a couple of things that need to be responded to. I do not think that was done in any way to negate what is proposed, but it raises wider questions that we perhaps might return to at some future date.
I want to ask three or four questions of the Minister, and I am happy to receive the answers in writing if they are not available today. Most relate to the Explanatory Memorandum, which I thought was clear and good, and I congratulate the department on the way it has been produced.
I should just say that this is the first time I have dealt with an EU exit regulation. I think it might be sensible to lay down a few ground rules so that we can do it better as we go forward. There are several hundred still to come, or more, and, as others have said, if the department is at any point ready to define the total, that would be helpful for overall planning. For instance, I do not think it is necessary to circulate the annexe statements under the European Union (Withdrawal) Act 2018 Part 1 table of statements—a reference to that could perfectly easily be put somewhere and we could look it up for ourselves. That would save paper, complications and reading time.
Secondly, the department started—I do not know whether it is continuing—to write to Front-Bench spokespersons with details of certain SIs that were due to come forward, perhaps if there was something a bit more tricky or interesting about them. The trouble is, the letters became scattergun. I have had four. My noble friend Lord Grantchester has had six. Others may have had other numbers—I have not had time to ask round. If they are going to come at all, it would be helpful if they came to me as the leader of the group and I could disperse them. If they are not going to come, fine; that was a nice little flurry and it was very nice to get them, but the moment has passed.
My detailed points mainly concern the memorandum. Paragraph 7.6 says:
“The Textile Products Regulations provide sanctions and enforcement powers for UK market surveillance authorities (local authorities’ Trading Standards departments) to ensure compliance with the EU regulation”.
Of course, the burden here falls on trading standards departments, which, as we all know, have been suffering because of reductions in funding from local authorities. While the department, which has allocated additional responsibilities to trading standards departments, has also notionally allocated money to them, I worry that trading standards as a group is being asked to carry the burden of a lot of things which nobody has really costed or understood whether it is able to carry out the work. Have any discussions taken place with local authorities on this? For example, has a lead local authority taken responsibility for this, as is the case in some areas? Has it been discussed with the Trading Standards Institute? What is the rough estimate of the additional cost that might be involved?
The noble Lord, Lord Foulkes, mentioned paragraph 7.10 and issues around that. I have a similar point in relation to the functions of the Secretary of State. There are agencies currently in play which do work on the testing of products and related issues. Will the Office for Product Safety and Standards, which has responsibility for some of these issues, be involved in this process? The idea that the department is just going to absorb all this work seems slightly odd. Could a bit more clarity be provided on that?
The question of cost flows into the question of whether an impact statement is to be prepared. There is a general statement that if the costs are less than £5 million annually it will not be done. Changing over the whole system for all clothing manufacture in this country from one which was taking a template organised by the EU to a new one that takes its template from the UK will involve transitional costs. I would be very surprised if those were not close to £5 million. There is no particular point that I want to make here. I just wondered, as the department would have had to make a rough calculation of what the costs would be to invoke the de minimis threshold, whether the Minister might share it with us just so that we can have confidence that it is being done properly.
My other points are more generic. First, this is being done as a UK instrument and applies from its implementation date to the United Kingdom, yet there are within the United Kingdom a number of very specialist manufacturers of various textiles—I think of Harris tweed and things that relate to the particular wool that comes from Welsh sheep; Northern Ireland has its own distinctive history in linen. Why is this a reserved issue? If it is to be a reserved issue, what arrangements have been put in place to ensure that the devolved Administrations are involved in the process? The question is probably easily answered but raises a bigger point about how we might think about this in future, particularly as the Government have conceded on geographical indicators—GIs—and that therefore there will be quite a number of these, not necessarily related to textiles.
Secondly, the Explanatory Memorandum says that although no formal consultation was undertaken prior to the instrument being laid,
“discussions were held with industry experts and business representative groups”.
A little note about who was consulted and roughly on what areas would be helpful. I look forward to that confirmation from the Minister in due course.
My Lords, like other speakers, I offer thanks to the noble Lord, Lord Foulkes, for his blessing of this statutory instrument. We are grateful for that. I will deal with most of the points, but it might be that on one or two I need to write to noble Lords with further detail.
Like my noble friend Lady Byford, I understand the extreme importance of labelling, particularly for those with allergies but also those who have other concerns. My noble friend will be aware that, only recently, my noble friend Lord Gardiner and I gave evidence to the EFRA Committee in another place on fake fur and real fur. Some older Members of the Committee may remember a time when people would try to sell fake fur as real fur, whereas it is now the other way round. Given how animals are farmed in other parts of the world, real fur can often be a lot cheaper than fake fur, and in trying to buy fake fur a lot of people do not want to buy real fur. The point I was coming to is that we are currently bound by EU rules on labelling. Both my noble friend Lord Gardiner and I felt that the existing labelling of fur and fake fur was not necessarily quite as clear for the consumer as it should be, which sometimes led to individuals buying real fur or objects with a tiny portion of real fur in the trimming when they did not wish so to do. I agree with my noble friend that labelling is important but I also emphasise that these regulations are there only for a no-deal scenario, so that should there be no deal—I am confident that there will be—we can be in a position to make sure that we have the right arrangements in place.
The noble Lord, Lord Fox, asked who would exercise the Secretary of State’s powers when it came to enforcement. It is an important matter for local authorities and trading standards, but I can give an assurance that we provide funding to National Trading Standards of around £13 million a year, with £1.2 million a year for Trading Standards Scotland, for the co-ordination of regional and national trading standards in England, Wales and Scotland. I will have to write to him on why this is not a devolved matter. I still find it, as no doubt will the noble Lord, Lord Foulkes, extraordinarily confusing as to which matters are devolved and which are not, as was the case when we recently debated the changing of clocks, which seems to be devolved in Northern Ireland but not in Scotland or Wales.
I am slightly confused. For example, if I have invented a fabulous new fibre and wish to start using it in one of the Minister’s sweaters, do I pop into Hereford Town Hall and look for the trading standards person there? How do I know where to go? Who is the agent or person that I go to?
I was trying to make it clear that local authorities deal with the enforcement. The noble Lord is asking about the labelling of his product. Perhaps I may write to him in great detail to make sure that I get exactly right who is exercising the powers of the Secretary of State and that he has the answer he seeks.
While the Minister is writing, will he also explain what happens to existing fibres that are currently on a European ticket, so to speak? If they come in on your labels and have been improved in the European context, is jurisdiction over those fibres passed en bloc to that agency? What is the process, since the transfer of existing fibres to a new UK agency for their management does not appear to be allowed for in this SI?
I will write in greater detail to the noble Lord, just to make sure that he is absolutely clear. In passing, on the question of correspondence, I give an assurance that from now on I will send all letters from my department on matters relating to SIs to the noble Lords, Lord Stevenson and Lord Fox: I will copy letters to one and the other. I am sorry if he has been confused: on some occasions I have written to the noble Lord and on others to the noble Lord, Lord Grantchester. I shall inform my office that in future it will be entirely himself. If the noble Lord, Lord Lennie, would like to receive those letters, I will send them to him too.
In no sense was any blame to attach to the Minister personally: in fact, several of the ones that went to my noble friend Lord Grantchester were from his colleague Kelly Tolhurst. I got a couple from the Minister himself and my poor noble friend Lord McNicol got none.
The poor noble Lord, Lord McNicol, got none, but I think I wrote to the noble Lord, Lord Lennie, on something. Anyway, between myself and my honourable friend Kelly Tolhurst we will look at our entire system and make sure that there is one recipient of all letters on the Official Opposition Front Bench and that similarly, the noble Lord, Lord Fox, will be a recipient of all other letters.
I move on to the question of the impact—the cost, as the noble Lord, Lord Stevenson, put it. After exit, the responsibilities for UK manufacturers or a business sourcing textile products from UK manufacturers, or importing them from outside, will remain the same; it will be the same for manufacturers. Anyone importing products from manufacturers in the UK would be putting a textile product on the market and so would become responsible for ensuring that it contains the appropriate label or marking and that it is accurate according to the retained EU regulation. The practical impact of this will be limited. I think any impact on business will fall far below £5 million annually and, as a result, we do not believe that a full impact assessment is necessary.
On exit day, UK and EU labelling laws will remain highly aligned. Textile products imported from the EU will therefore be compliant with the shared requirements and the saved EU regulation does not mandate any costly technical testing or the production of documentation as proof of compliance. Similarly, there would be no administrative costs at the border to demonstrate compliance. Many businesses already undertake compliance activities as part of their due diligence programmes. That includes asking for proof of fibre composition or procuring their own fibre composition test. As a result, it is unlikely that businesses would need to put in place additional checks to demonstrate compliance with the saved EU regulation. The Government will, in due course, provide further guidance to businesses to ensure that they have understood the requirements of the saved EU regulation.
The noble Lord, Lord Fox, asked about applications for new fibres. Businesses wishing to introduce a new textile fibre name or manufacturing tolerance will be able to make this application to the Secretary of State. The Government will, in due course, publish further guidance, including the process by which the Secretary of State will assess the various applications. Lastly, I was asked: will businesses have to apply to both the United Kingdom and the European Commission to have a new fibre name approved for both UK and EU markets? Yes, in a no-deal scenario, it will no longer be appropriate for the European Commission to approve new textile fibres which can be made available on the EU market and therefore they will have to apply to both. I hope that will not be an onerous burden.
As I said, I remain optimistic, as always, that we will reach an agreement with the European Union, but it is important and prudent to have a regulatory and legislative framework in place should we leave without a deal. That is entirely what this instrument ensures.