Considered in Grand Committee
My Lords, I beg to move that these regulations, which were laid before the House on 10 June 2021, be approved.
The Regulation on Accreditation and Market Surveillance, 765/2008, known as RAMS, is the current market surveillance legislation for the UK and is included under the Northern Ireland protocol. It is worth noting that RAMS continues to apply in Great Britain, as it now forms part of our domestic law. The EU Market Surveillance and Compliance of Products Regulation, EU 2019/1020, which I will refer to as MSC, will replace RAMS and therefore, under the protocol obligation, MSC will apply in Northern Ireland. However, the enforcement system for both regulations will be similar, with both based on risk and proportionality.
The SI we are here to debate sets out to implement a uniform set of regulatory powers to avoid gaps and inconsistencies when the RAMS provisions are repealed in Northern Ireland on 16 July. These powers will be available to market surveillance authorities that operate within Northern Ireland. It results in some minor operational changes and a number of new traceability requirements for businesses placing products on the Northern Ireland market. The SI will ensure that consumers in Northern Ireland continue to be protected from potentially unsafe and non-compliant products, whether that is gas appliances, radio equipment, lifts or PPE, via the UK’s robust product safety framework.
Within the UK, market surveillance authorities have the vital role of ensuring that products are safe and compliant. They can also take action as needed when unsafe and non-compliant products are discovered. This reduces the risk to consumers. Noble Lords will agree that the protection of UK consumers is a vital role for government. This SI applies to Northern Ireland. It will provide market surveillance authorities with the necessary regulatory powers to carry out this invaluable work. It will also provide effective, appropriate and proportionate sanctions for breaches of the regulations. Market surveillance authorities will continue to monitor and, where appropriate, enforce in Northern Ireland all the requirements of product safety law outlined in this SI. I will now consider areas covered by the SI in more detail.
A key objective of the SI is to provide a consistent set of regulatory powers to market surveillance authorities with respect to Northern Ireland. Although most of these powers already exist across the current suite of product legislation, they are not consistent. This is not in the interests of the consumer, so we need to take action. Therefore, we will introduce a uniform set of regulatory powers. These will consolidate the powers already available to market surveillance authorities. The SI will make these powers expressly available in respect of a range of products to the extent they are needed. We have set out powers in this SI which are drawn from existing goods legislation such as the Health and Safety at Work (Northern Ireland) Order, the Consumer Rights Act and the Consumer Protection Act. Market surveillance authorities will therefore have consistent access to the regulatory tools they are familiar with in other goods legislation. These tools include compliance, recall and withdrawal notices.
Turning now to offences, the inclusion of criminal offences within this legislation is again consistent with the existing UK-wide sanctions regime for products, and therefore illustrates that market surveillance sanctions are not new. I confirm that the penalties for such offences within this SI are at the lower end of the range of penalties within the existing regime, and that this SI ensures that offences remain available to market surveillance authorities. It contains offences in respect of withdrawal and recall notices, offences relating to obstructing an investigation and offences for breaches of MSC. The offences under this statutory instrument will give rise to a maximum fine of up to level 5, which is currently £5,000, or up to level 3, which is currently £1,000, on the standard scale, depending on the offence. These will not have provision for imprisonment and will be heard in a magistrates’ court. The offences are expected to be prosecuted only in rare circumstances and when necessary, primarily to protect consumers from unsafe products and to address deliberate or persistent non-compliance.
There is a new requirement in MSC: Article 4, which requires a business supplying certain goods to have a responsible person based in the EU or Northern Ireland. This can be a manufacturer, importer, authorised representative or a fulfilment service, and they must undertake certain compliance responsibilities to be able to place certain goods on the EU or Northern Ireland market. The requirement in Article 4 is directly applicable, and this SI provides for enforcement mechanisms for a breach of that requirement. Many businesses supplying customers in Northern Ireland or the EU already have the necessary arrangements in place.
On 11 June, my department published Article 4 guidance for businesses and market surveillance authorities, answering many of the questions that businesses may have. We have actively engaged with a wide range of organisations to ensure that businesses engage with the guidance. We have a comprehensive plan to work further with trade associations and businesses to ensure that they understand the requirements and support available. My officials will continue assisting business organisations to ensure that MSC does not place a disproportionate burden on trade into Northern Ireland for businesses that do not already have a person responsible for compliance, while ensuring that the product safety framework itself remains robust and effective. Additionally, my department is offering MSC-specific training to all market surveillance authorities to support consistent understanding of its application across the regulatory landscape.
This SI is required under the withdrawal agreement, which is given effect in domestic law by the European Union (Withdrawal) Act 2018 and the subsequent protocol. MSC itself is directly applicable, as an EU regulation, meaning that no action is needed on the part of EU member states, and as such, it applies in Northern Ireland under the protocol. It is important to emphasise that while MSC requires businesses in some product sectors to have a person responsible for compliance, established in the EU or Northern Ireland, it does not create new burdens on the movement of goods from Great Britain to Northern Ireland.
As set out following the last withdrawal agreement Joint Committee in June 2021, the UK has taken extensive steps already to operate the protocol, both by the UK Government and the Northern Ireland Executive, and by businesses across the United Kingdom. This reflects that we will continue to operate the protocol in a pragmatic and proportionate way, focused at all times on minimising its impact on day-to-day lives in Northern Ireland. I must emphasise that the MSC regulation and our implementation of it will not create checks on goods from Great Britain.
In summary, this SI ensures that Northern Ireland consumers remain protected from potentially unsafe and non-compliant products and will implement the legislative requirement of the protocol, which will bring a new aspect to market surveillance and ensure that there are no regulatory gaps within the area of product safety. This will result in the maintenance across the UK of a cohesive and effective regulatory regime for manufactured products which will protect all UK consumers, including those in Northern Ireland. The Government will of course ensure that they monitor the implementation of the new regulation and that they continue to work with businesses and market surveillance authorities to help them adapt, providing the necessary guidance and support where needed.
I therefore commend this statutory instrument to the House.
My Lords, I am grateful to the Minister for his usual comprehensive introduction. I know that when the Government speak to any business in your Lordships’ House, they always speak with one voice, and I am sure that we heard only the voice we were meant to hear. However, it was striking that quite a lot of the paragraphs he read out perhaps did not come originally from his pen or that of his department. He does not need to comment on that if he does not want to, but I felt there were messages in what he said that were intended for a wider audience than the rather small one that, perhaps unfortunately, has gathered here today.
I have a couple of questions about the Explanatory Memorandum and a couple of points to make relating to what the Minister said. Paragraph 7.10 states:
“The Government is currently undertaking a wider review of the UK product safety system, including approaches to securing compliance and the role of criminal sanctions in product safety regulation, and the scope for greater use of civil sanctions.”
There is not much detail on that—perhaps the Minister could give a sense of the timescale for that work. Given that, in a sense, it will probably overtake this SI, will it have an immediate or a medium-term effect?
Despite having looked at many SIs in my time as a Front-Bencher, including ones which stem from the original legislation, I was caught out towards the end of paragraph 7.11 by the reference to the fact that
“the SI works on a lex specialis principle”,
in other words,
“where there is a more specific provision in the sectorial legislation, this will take priority.”
That rather shades some of what the Minister was saying about trying to achieve a commonality of approach between GB and Northern Ireland. Without more detail, it is difficult to judge exactly how that will operate. Perhaps when he responds he can give us some examples of how the lex specialis principle might affect the SI. I should also be grateful to know where I might find the original legislation on that. If he does not have the information to hand, I should of course be happy to have a letter from him.
I turn to some more general points that the Minister may like to pick up on, and which I am sure my noble friend Lord Bassam will also refer to. The Minister said that this is effectively a levelling-up SI, in the sense of trying to ensure continuity and minimal change, but there is obviously an issue here about the need to establish an economic operator in Northern Ireland for compliance activities or, as he said, in the EU, if companies want to sell goods into Northern Ireland. We should not gloss over the fact that companies will be affected by that. That is a change that I do not think was anticipated—I have never seen reference to it before—but we have it before us now. It is certainly something to reflect on.
I see no references in the SI or the Explanatory Memorandum to reviewing the impact of this measure. Indeed, because it is a process that flows from the EU withdrawal Act, no review is specifically required. The Minister said that this will not have an impact on British businesses and will not affect businesses that bring products from GB to the EU through Northern Ireland, or just to Northern Ireland itself. Given the current heated situation and the concern about sausages, for example, it would be helpful to have a review. Will the Minister commit to indicating how this is playing out in practice further down the line, even if not to a formal review?
Secondly, what will the situation on the ground be like when the regulations are enforced? The Minister said that the approach is proportionate, risk-based and intelligence-led, which suggests that a fairly extensive set of procedures are in place. Assessing proportionality is not always easy; knowing what the risks are is not always possible; and “intelligence-led” suggests that this will be a joint activity involving the security services and others.
What does that mean in practice? I travel regularly between the UK and Ireland, and I have observed substantial changes in procedures and practices at the Irish ports I travel through. Of course, this is ad hominem and I am not trying to make a general point, but it is clear to me that the amount of paperwork and interrogation that takes place now compared to a few months’ ago is significant. Again, this is not going to be subject to any review, but perhaps the Minister will commit to giving us further information on how this is actually playing out in practice. I think that, following the recent Act, there will be more activity and disruption than he suggested.
On a related point, the language used in the SI and in the discussion led by the Minister has largely been about physical goods, but presumably, this also applies to electronic trade—trade through the internet—and other services delivered online. Has any particular aspect of that been brought into this? My recollection of the previous legislation is that, although it was very much about goods and not very much about services, it also impacted on electronic trade. This might be worthy of further consideration, and I would like to hear the Minister’s thoughts when he responds.
Finally, the application of the market surveillance regulation in Northern Ireland was, as the Minister said, a critical commitment and the Government support it. But of course, we are not unaware of the fact that the protocol itself is a matter of contention, and indeed, further discussions are continuing even as we speak. Is the Minister able to opine on whether he thinks this a relatively settled operation that does not require further debate or opening up in relation to the Northern Ireland protocol? If so, can he explain the thinking behind that? Clearly, it deals with the sort of goods and services that the Government said would not be interrupted because of the special status of Northern Ireland in both the UK and the EU customs area. It would be useful to know whether that is a serious issue of concern to the Government that is likely be raised again, or whether it is now settled.
My Lords, I too am grateful to the Minister for carefully explaining the regulations and offer particular thanks to my noble friend Lord Stevenson of Balmacara for his forensic examination of the detail.
There is an irony to this discussion, is there not? As my noble friend said, the Northern Ireland protocol is the subject of hot and contentious discussion, and yet, listening to the Minister one would sense that this is all agreed and straightforward and a regular instance of legislative implementation without any back story, but of course, that is far from the case. My friends in Northern Ireland tell me that they would quite like there to be a bit more market surveillance, in the sense that they would like to see some more goods on the shelves in the shops they use. But sadly, things that we take for granted they can no longer do.
However, as the memorandum says, these regulations do provide for an effective and proportionate penalty regime for breaches of the regulations, and the EU’s new market surveillance regulation, which comes into effect on 16 July, is designed to provide greater protection for consumers in the face of the challenges posed by e-commerce, to which my noble friend referred. As I understand it, the intention is that, through the extension of compliance checks for products sold online, consumers can be assured that products they order online meet EU harmonised standards for both health and safety. However, how and where will these checks be carried out, and by whom?
By virtue of the Northern Ireland protocol and the EU-UK trade and co-operation agreement, the market surveillance regulation is directly applicable to Northern Ireland, although further provisions of the regulations require implementation in our domestic legislation, which is what the regulations are designed to do. It is clear that the regulations are designed to protect consumers and are required to meet our legal commitments under the trade and co-operation agreement and the protocol, so for that reason, we obviously would not want to oppose them.
However, I do have a few more questions for the Minister. First, the implementation of the market surveillance regulation in Northern Ireland will of course have an impact on British businesses, particularly those that sell their products online from Great Britain directly to consumers in Northern Ireland—hence my earlier question. As the Minister said, GB businesses will need an economic operator to be established in Northern Ireland for compliance activities if they want to sell goods there. Given the additional obligations on British businesses that want to continue to sell their goods across the United Kingdom, will the Minister assure us that the Government will continue to provide the advice and guidance necessary to ensure that British businesses are prepared and geared up for this?
Secondly, the Government suggest in guidance that the enforcement of the market surveillance regulation in Northern Ireland will be proportionate, risk-based and intelligence led, minimising disruption to businesses. How will that be guaranteed? Have there not been lots of complaints that it is none of those things and that it is an overweening burden that speaks to the whole issue of division down the Irish Sea? The regulations before us suggest that regulatory checks on goods entering Northern Ireland will continue to take place by exception and only where there is a high level of risk. How is that judgment made and by whom? BEIS has said that goods going into Northern Ireland from Great Britain have a low-risk profile and therefore will not be routinely subject to inspection. Given the current tensions over the Northern Ireland protocol and uncertainty about its implementation, will the Minister clarify the extent to which that approach has been agreed with the EU and at what level that agreement has been reached? Is there an agreement that goods arriving into Great Britain will not be routinely subject to regulatory checks?
The Explanatory Memorandum states:
“Authorities will now carry out market surveillance activity and enforce product safety and compliance through the powers conferred under this SI.”
What training will authorities receive to use these powers effectively, and how will we know or be assured that such training means that the powers are used in a proportionate way?
The Explanatory Memorandum further states:
“The Government is currently undertaking a wider review of the UK product safety system, including approaches to securing compliance and the role of criminal sanctions in product safety regulation, and the scope for greater use of civil sanctions.”
I echo the questions asked by my noble friend Lord Stevenson. What is the consultation process for that review? When will it be published? When will the outcome of the review be made known to us? Those issues are important and play into the wider debate about the protocol, the need for it, how it operates and works, and its impact on businesses both in Northern Ireland and more widely across the UK.
I am sorry to appear to be nitpicking, but these are important issues and they come at a difficult time in relations in Northern Ireland. We look forward to some clarity from the Minister, because both businesses and consumers certainly require it, and across the UK at large.
I thank both noble Lords for their valuable contributions to this short debate. For reasons that I will summarise, it is vital for the product safety regime that this SI comes into force in Northern Ireland on 16 July 2021.
First, the SI will provide continued robust protection for consumers. It will ensure that safe and compliant products can be placed on the market in Northern Ireland as part of a cohesive and modern product safety framework across the whole United Kingdom. The SI builds on the powers set out in the existing product safety regime in a way that regulators and businesses will be familiar with.
To achieve this, the SI provides a uniform set of powers for regulators, designed to fit with the existing products legislation across the United Kingdom. This includes powers in respect of criminal offences that can be used by market surveillance authorities on the occasions where they are required, which we expect to be rare. The Regulators’ Code will continue to apply across the United Kingdom. It provides powers that can be relied on if needed by all market surveillance authorities, irrespective of product. It also protects consumers from potentially unsafe products sold online by setting out a mechanism that market surveillance authorities can use to request co-operation from an online service provider. Without this SI, there would be gaps in the enforcement of product safety within Northern Ireland when the existing market surveillance chapter of the prior regulation is repealed. The powers in RAMS would otherwise fall away, risking disruption and confusion for businesses and enforcement authorities.
The Government have been engaging closely with businesses and regulators on the introduction of these new market surveillance regulations; we have published guidance for both and will continue to provide support to them in the coming months.
In response to the questions raised by the noble Lord, Lord Stevenson, there are a range of administrative and civil sanctions—for example, compliance, recall and withdrawal notices—available in MSC which can be used by market surveillance authorities. These enforcement tools are backed by criminal offences, which are in line with other legislation in the goods sphere. While civil penalties such as fines are not included, the Government are reviewing the product safety framework for the whole United Kingdom to ensure that it is fit for purpose, protects consumers and supports businesses to innovate and grow.
The call for evidence has concluded, closing on 17 June, and a government response on its findings will be published in due course. In terms of any changes that might be seen in activities on the ground, neither MSC nor our implementation of it will increase checks on goods. In Northern Ireland, as in Great Britain, market surveillance checks will follow an intelligence-led and risk-based approach.
The noble Lord also asked why there is no enforcement provision or penalty for online services. While services are not included in the protocol, the primary aim of these provisions is not to create an enforcement power to regulate online service providers; instead, it creates a power for the MSA to request co-operation from an online service provider to assist it in mitigating the risks presented by unsafe products, in order to protect consumers in Northern Ireland.
The noble Lord, Lord Bassam, raised concerns about how the implementation of the regulation will impact on British businesses, particularly those that sell online. As I pointed out to the noble Lord, Lord Stevenson, GB businesses will need economic operators, for compliance, to sell within Northern Ireland and the EU single market. My department will continue with a targeted, sector-specific engagement approach up to and beyond the date the regulation comes into force, 16 July, so that they are aware that the legal obligations remain unchanged in terms of the controls and targeted, risk-based approach to goods entering the market.
Consumers in Northern Ireland who are concerned that a product is unsafe or believe it may not comply with UK regulations can contact their district council environmental health service trading standards, which is responsible for enforcement of product safety legislation in Northern Ireland, or they can contact Consumerline. The relevant enforcement body will then decide whether an investigation should take place and what action should be taken regarding instances of compliance. Unsafe products, by presenting a serious risk, are notified to the product safety database. Unsafe product reports are publicly available to consumers.
In response to the noble Lord’s concerns about whether our approach is proportionate, risk-based and intelligence-led, enforcement of this regulation has been agreed with the EU. Market surveillance activity under the MSC regulation is risk-based and targeted. This is set out in legislation. We explained our approach to the EU last year; we have always been open with the EU that we have never envisaged many checks taking place at points of entry.
As I noted in my opening speech, my officials will of course continue to assist business organisations to ensure that MSC does not place a disproportionate burden on trade in Northern Ireland. We will continue to update the guidance. I hope I have dealt with the queries raised by both noble Lords. I therefore commend these draft regulations to the Committee.
The Grand Committee stands adjourned until 3.05 pm. I remind Members to sanitise their desks and chairs before leaving the Room.