Monday 12 July 2021
The Grand Committee met in a hybrid proceeding.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Medical Devices (Northern Ireland Protocol) Regulations 2021
Considered in Grand Committee
My Lords, the statutory instrument that we are discussing today relates to the regulations for medical devices within Northern Ireland. It reflects the application of EU regulation 2017/745 on medical devices, which I will hereafter refer to as the EU medical devices regulation, under the terms of the Northern Ireland protocol. As noble Lords will be aware, the protocol agrees to continue applying certain EU rules in Northern Ireland to recognise the unique status of Northern Ireland within the UK and to uphold the Belfast/Good Friday agreement. It is important to remember that this instrument does not apply the EU medical devices regulation within Northern Ireland. That legislation took automatic effect in Northern Ireland from 26 May this year, under the terms of the Northern Ireland protocol.
The EU medical devices regulation contains some flexibility areas, where states have the discretion to make policy decisions and adjustments. This instrument therefore makes provisions to apply in Northern Ireland where it serves to align Northern Ireland policy with Great Britain. This is to deliver the Government’s commitment to the pragmatic implementation of the Northern Ireland protocol. In creating the provisions in this instrument, we are minimising the impact on economic operators and the public in Northern Ireland, as the Northern Ireland protocol pledges.
The Medical Devices Regulations 2002, hereafter referred to as the 2002 regulations, will continue to be the relevant regulations for in vitro diagnostics in Northern Ireland, and will operate alongside the EU medical devices regulation and this instrument on the regulation of medical devices and active implantable medical devices.
I shall give some background. This instrument achieves the Government’s commitment to align Northern Ireland with Great Britain, where permitted, in four areas. First, it implements national adjustments for Northern Ireland in areas where the EU medical devices regulation grants member states the ability to make national policy decisions. This has been done in a way that will align with policies in place in Great Britain. Secondly, it sets out the fee structures that keep fees aligned with those applied in Great Britain. Thirdly, it sets out the enforcement regime for activity and violations under the EU medical devices regulation in Northern Ireland. Lastly, it makes amendments to existing regulations, to take account of the application of the EU medical devices regulation in Northern Ireland.
I will first describe areas of national flexibility where this instrument makes provision to change default positions under the EU medical devices regulation to maintain Northern Ireland policy with that of Great Britain. The Government currently permit the remanufacturing of single-use devices, which the EU refers to as reprocessing, so long as the remanufacturer adheres to strict requirements. The default position of the EU medical devices regulation is not to permit remanufacturing unless there is national legislation in place to support it. This instrument does just that. This means that the remanufacturing of single-use devices can continue to take place in Northern Ireland, as well as in Great Britain, so long as requirements under the relevant legislation are followed.
The instrument also introduces provisions so that the MHRA can continue requiring custom-made devices, ranging from dental appliances to orthopaedic moulds, to be registered before being placed on the Northern Ireland market. Provisions are also contained in this instrument that uphold our national requirements for clinical investigations, which are crucial for ensuring that the safety of participants is protected. They do so by maintaining the MHRA’s ability to authorise clinical investigations for all risk classes of medical devices before they can commence. Furthermore, it upholds the requirement for all clinical investigations for custom-made devices to be subject to MHRA assessment. The Government remain committed to delivering improvements to patient safety, and this instrument means that we can respond proactively to any concerns.
By amending the Consumer Rights Act 2015 and the Medicines and Medical Devices Act 2021, this instrument provides the MHRA and district councils in Northern Ireland with inspection powers and powers to serve enforcement notices for breaches of the EU medical devices regulation within Northern Ireland. This will ensure that the MHRA has the enforcement powers it needs to ensure patient safety is prioritised and high standards are maintained for the people of Northern Ireland.
The MHRA charges fees to cover the costs associated with certain aspects of the regulation of medical devices. This instrument details fees which may be charged for activity under the EU medical devices regulation in Northern Ireland, keeping them identical to those charged in Great Britain under the 2002 regulations for similar services. This upholds the Government’s commitment to ensure that there are no disadvantages to economic operators in Northern Ireland as a result of the Northern Ireland protocol. This instrument does not introduce any fees for new requirements under the EU medical devices regulation.
Finally, this instrument makes technical amendments to other legislation, including the 2002 regulations, to reflect the application of the EU medical devices regulation within Northern Ireland. This will ensure the regulatory landscape operates effectively in Northern Ireland. Officials in the Northern Ireland Executive have been kept informed of the progress of this instrument and I am hugely grateful for their continued collaborative approach. As the nature of the changes in this instrument are technical in many instances, the impacts of the instrument do not meet the threshold for impact assessments, hence these are not provided.
In conclusion, this instrument upholds the Prime Minister’s commitment to the Northern Ireland protocol and to minimise the impact on the activities of economic operators and the public in Northern Ireland. The significance of our public healthcare system has never been clearer than during the Covid-19 outbreak, and this instrument will ensure that the UK’s exceptional standards of safety are maintained within Northern Ireland. This is something we must support. I commend the regulations to the Committee.
The noble Lord, Lord Hunt of Kings Heath, has withdrawn, so I call the next speaker, the noble Lord, Lord McColl of Dulwich.
My Lords, as there are more than half a million of these devices on the market, it is understandable that effective regulation should be in place and workable. It is also clear that most of us will need one of these devices at some time in our life. It is to be hoped that these regulations will give patients more information and choice, and that they will benefit from more up-to-date therapies. I ask the Minister this: what will be the effective way of seeking expert opinions on the wisdom of a proposed new operation that does not necessarily involve a medical device? It would be helpful to have a second opinion on whether it is likely to be feasible and safe.
As there are often notoriously long delays in obtaining answers from official bodies, and we are talking about regulations now, has any thought been given to placing a regulation to require answers within a certain time?
There has been discussion about a robust financial compensation mechanism to ensure that patients are dealt with fairly and justly for the damage caused by defective devices and by their inappropriate use in certain parts of the body. For instance, the mesh which caused so much damage in operations for incontinence is used widely and safely in hernia operations. Could the Minister tell the Committee who will operate these compensation mechanisms? Who will decide whether compensation is justified and how much to award?
My Lords, in his introduction, my noble friend the Minister talked about upholding the protocol and upholding the Belfast agreement. I say to my noble friend that the protocol, and what is flowing from it, including what we have before us today, drives a stake through the heart of the agreement because it breaches one of the fundamental principles—but that is an argument for another day.
The Minister also referred to enforcement regulations. What we are trying to do here is to circumvent the imposition of rules and regulations on these devices that will be made by the European Union and ratified by the European Parliament as we move forward. We will have no say or role in any of that—neither will the Minister—so we are trying to pretend that we are not simply rule-takers here. We are trying to indicate that we are doing something that will have an impact and minimise the damage. That is basically what this is about.
I would like to know from the Minister what the future will hold. The United Kingdom and the European Union basically start off on the same page, because we spent 43 years as part of that union and were involved in all the standards that were set up until this point, but those will diverge over time. I want to know from the Minister what his and the Government’s approach will be if, over time, these regulations start to diverge.
We saw on the vaccine issue that the European regulatory regime operated at a much slower pace than our own, here in the United Kingdom. What would be the implications in future if devices were conceived and made available in Great Britain, under whatever rules might apply, but had not been accepted in the European Union? Would people living in Northern Ireland not get access to such devices in future? That is at the core of our concerns over this and a whole range of other items that will arise from the protocol.
My Lords, I am grateful to my noble friend the Minister for his clear introduction to these regulations. I want to take the opportunity to comment on just one aspect of these arrangements: the processes for a conformity assessment on medical devices placed on the market in Northern Ireland.
A European conformity assessment, a CE mark, is to continue to be recognised in the Great Britain market until 30 June 2023. Likewise, the certificates issued by EU notified bodies will continue to be recognised until that date. It seems to me that, if one is a Northern Ireland-based manufacturer of a medical device—the Explanatory Memorandum estimates that there are some 300 such businesses—for the next two years the CE mark should be a sufficient basis for placing a product on the market, whether in the EU, Northern Ireland or Great Britain. I would be grateful if my noble friend were in a position to confirm what I say or correct me.
If a Great Britain manufacturer is meeting EU requirements then, from 2023, it will require a UK conformity assessment, but this in itself will not enable its product to be placed on the market in Northern Ireland—hence the references in these regulations to the “UK(NI) indication”, which appears to become of greater significance after 1 July 2023. From that time onwards, British manufacturers will be required to adopt dual marking and conformity assessment through two systems, with the attendant cost and complexity. Obviously, the same is true for non-EU third-country suppliers.
At the heart of this problem is the failure of the trade and co-operation agreement to provide for mutual recognition of conformity assessments, given the simple fact that, as my noble friend Lord Empey adverted to, our MHRA undertook 40% of the most significant assessments in the EU. We do not have divergent technical standards; what we have, unfortunately, are divergent political priorities. I personally do not blame Theresa May’s negotiators for our failure to secure that mutual recognition.
One option now would be to roll forward our recognition of European conformity assessments—the CE marking—beyond 2023. Frankly, I do not expect that to happen, because it would undermine the role of the MHRA and British notified bodies, but can my noble friend explain what the position will be for Northern Ireland manufacturers post 1 July 2023? Given the principle of unfettered access to the UK market, will they be able to sell in Britain on the basis of their CE mark or will they require dual marking? This regulation makes provision for the UK(NI) indication, which is useful for UK manufacturers using a previous EU approval and for British devices to access the Northern Ireland market, but it seems to me no more than a face-saving approach to cover the harsh reality that we are going to put our highly successful medical devices sector through significant additional cost, disruption and bureaucracy.
My Lords, I begin by thanking the Minister for his clear explanation of the purposes of this secondary legislation. The statutory instrument is necessary, of course, only because of the Northern Ireland protocol, as the Minister made clear. That protocol means that EU law is applied to Northern Ireland across a wide range of matters without any elected Member of the Stormont Assembly or this Parliament having any vote on the matter.
On Friday, in evidence to the Northern Ireland Assembly, the noble Lord, Lord Frost, said that
“you need to have broad consensus”
to make the protocol work between now and four years’ time,
“and the fact we don’t have it is what worries us so much.”
He has also said previously, in speaking to the Northern Ireland Affairs Select Committee on 16 June, that
“the protocol depends on consent. It is very difficult to operate it if there is not consent and willingness from one segment of Northern Ireland opinion”.
I am sure the Minister will confirm his agreement with his ministerial colleague on this vital issue.
So we have before us this afternoon a situation where the EU regulation on medical devices entered into force in Northern Ireland directly on 26 May, and Northern Ireland is now subject to the EU regulatory system for medical devices and not the UK one. This statutory instrument is necessary to try to meet the challenges and practical applications of the EU directive applying directly to Northern Ireland. Whatever the mitigations, it would be better in every sense if Northern Ireland were simply in the same regime as the rest of the United Kingdom. Most medical devices, and £600 million-worth of medicines, are brought into Northern Ireland every year, 98% of which are from Great Britain. As has been mentioned, there are 300 operators of medical devices in Northern Ireland affected by this SI.
Following up on what the noble Lord, Lord Lansley, referred to, can the Minister confirm that the CE marking will be required indefinitely for devices placed on the Northern Ireland market by manufacturers, unlike in the rest of the United Kingdom? Can he confirm that the somewhat bizarre UK(NI) marking will be needed if a UK-notified body undertakes third-party conformity assessment? Can he also confirm that, to place a device on the Northern Ireland market, Great Britain manufacturers will need to appoint an EU or Northern Ireland-based authorised representative? The complexity and extra bureaucracy of all of this, and the cost to the taxpayer, need to be called out and quantified.
The applicability of the EU regime in this area adds not one jot to the safety or security of the people of Northern Ireland. Having Northern Ireland under the UK regime for medical devices would not harm or endanger the EU single market in any way. The whole basis of this SI is unnecessary and undemocratic.
Finally, the noble Lord, Lord Frost, has indicated that the EU is yet to respond to 12 papers tabled by the UK Government. Can the Minister indicate in his response whether any of them relate to medicines or medical devices?
My Lords, the changes that the EU MDR introduces will affect medical device economic operators in Northern Ireland, estimated to be about 300, and any prospective UK notified bodies. This instrument does not implement the EU MDR itself, but updates the statute book to allow us to implement the EU MDR effectively and addresses areas of national decision to align with policy that applies in the rest of the UK. Specifically, these areas of national decision allow for the continued practice of allowing the reprocessing of single-use devices, if reprocessors adhere to the requirements of an original manufacturer. The instrument will also give the MHRA powers to serve enforcement notices for breaches of the EU MDR.
The instrument will correct current legislation where required, introduce relevant enforcement provisions and outline the fees structure for Northern Ireland. It will introduce provisions in areas of flexibility allowed for under the EU MDR, to allow Northern Ireland to continue to align with Great Britain policy, where possible.
In addition to the 2002 regulations, the instrument also makes amendments to the following retained EU law: namely the Blood Safety and Quality Regulations 2005, to include a reference to the EU MDR alongside the reference to the 2002 regulations; and the human tissue regulations 2007, to include a reference to the EU MDR in order to maintain the scope of the regulations.
I believe that this instrument will protect the safety of medical devices that will be used in the UK and Northern Ireland.
My Lords, I thank the Minister for his explanation. In moving this SI, he made a very brave attempt almost to make it seem as if it is terribly normal and wonderful and no one should be worried about anything in it. In fact, he has made the best of a bad job because, as the noble Lords, Lord Empey and Lord Dodds, said, the reality is that this SI is not something we should even be thinking of discussing, let alone supporting.
I accept that some of the moves in it are to make things a little better for the 300 or so device manufacturers in Northern Ireland, and to make it seem—as the noble Lord, Lord Empey, said, it is almost a pretence—as though there is nothing wrong with what is happening. It is particularly sad to say today—and I hope that everyone has had a good Twelfth of July, at the commemoration and celebrations going on in Northern Ireland—that we are in a situation where the protocol is now dividing Northern Ireland from the rest of the United Kingdom, more and more. What we have seen today will be the first of many inevitable divergences, not just in this area of medical apparatus and medical issues but throughout, because we are left in the situation where the European Union is going to make those laws.
As has been said by many of us, over and again, and as has been said today by the noble Lords, Lord Dodds and Lord Empey, this is completely undemocratic. No one has been asked about this. From 21 May, we have simply had to take what the European Union has said on this issue. Whether it is right, wrong, good or bad is not the issue; the issue is one of basic democracy and consent. It is even in the Explanatory Memorandum, which talks about allowing
“Northern Ireland to continue to align with Great Britain policy where possible.”
Who decides “where possible”? It certainly will not be the people of Northern Ireland; it will be when and where it is permitted under the EU.
We are now a little colony of the European Union for certain regulations within the single market. The reality of this has to be accepted by the Government. This will be one of many SIs; I am not prepared to simply nod them through in future. The Government will have to face up to the fact that, if they try to nod them through, many of us will vote against them. We will not win, but the reality is that we have to show the Government that what they are doing is undemocratic and not in the interests of the United Kingdom.
My Lords, I thank the Minister for his explanation of these regulations. I accept what the statutory instrument is intended to do. However, I have some questions, as I want to see streamlined processes with no impediments to the supply of medical devices into Northern Ireland or to those that are currently under construction. There are about 500,000 medical devices, ranging from sticking plasters to dental implants to hip replacements, so they have many forms and functions. We are trying to achieve pragmatic solutions under the protocol to ensure that there are no impediments to their supply.
I have several questions for the Minister. Does the existing legislation on medicines and medical devices, which was approved in Parliament last year, have corresponding legislation in Northern Ireland to ensure that people with particular mesh problems will have a resolution and see an improvement to their health?
Furthermore, on the protocol, what discussions are taking place in the joint committee and the specialised committee with the EU on the exportation issues relating to the transfer of medical devices and medicines, to ensure that they will all continue to be supplied post December 2021? For example, the Royal College of Podiatry and the Ethical Medicines Industry Group are seeking mutual recognition agreements for the supply of those medicines and medical devices post 2021 as part of the protocol. What progress has been made in this regard? What evidence is there of working together to arrive at a long-term solution that avoids unnecessary regulatory complexity and duplication?
Given that the risk of medicines leaking into the EU single market from Northern Ireland in an unregulated manner is very slim, an agreement that permits medicines licensed for use in GB to be supplied to Northern Ireland only without additional checks would deliver on both sides’ needs. What steps are being made in this regard by UK and EU negotiators?
Do the common frameworks on blood safety and quality, on organs, tissues and cells, and on public health intersect with the protocol? What pressure can be brought to bear on the Northern Ireland Executive to sign off on these common frameworks, which deal with technical and policy divergence between Whitehall and the devolved Administrations? I look forward to the Minister’s responses to these issues on this important matter for the people of Northern Ireland.
My Lords, I thank the Minister for a non-urgent statutory instrument that was tabled on 16 June and is being debated at an appropriate time, after MPs and Peers have had the opportunity to look at it in detail. I am sure I am not alone in looking forward to more of these in future. I also thank him for his helpful explanation at the start of this debate.
These regulations set out the mechanism to adjust legislation to ensure that the use of medical devices complies with both the EU’s and Great Britain’s regulations. As the noble Lord, Lord McColl, said, most people in Northern Ireland are likely to need to use one of these devices during their lives, so it is important that we get it right. He also referred to the problems with certain devices covered in the Cumberlege review. Can I further refine his question to the Minister? Which Minister will be responsible for the delivery of the Cumberlege review in Northern Ireland? Will it be the Minister in Stormont or the Minister in Westminster?
Even though it has been made necessary by the Northern Ireland protocol, this SI appears to have been come to sensibly, solving the problem without the noble Lord, Lord Frost, or the Prime Minister immediately blaming the EU. That has to be encouraging because an enormous amount of detail has to be sorted out. The noble Lords, Lord Empey and Lord Dodds, and the noble Baronesses, Lady Hoey and Lady Ritchie, set out their frustrations with these regulations as an inevitable necessity resulting from the Northern Ireland protocol. From these Benches—over the past three years, at least—we have warned about the problems of what became the Northern Ireland protocol and the position that it would leave Northern Ireland in, which we deplore. However, given that this Government pushed through the Northern Ireland protocol with the withdrawal Act, we believe that the issues with the implementation of the protocol will be solved only by the EU and the UK working together to find a solution.
It appears that this SI might be one of the first to take that route. This is at least better than the noble Lord, Lord Frost, and the Secretary of State for Northern Ireland, Brandon Lewis, going to the Irish press just after 21 June to accuse the EU of adopting a theological approach to the protocol that is frozen in time, only a few days after the European Commission had announced its proposals for, among other things, medicines entering NI to be exceptionally regulated by the UK. That is a step forward, despite the concerns raised by the Northern Ireland Peers.
This SI lays the pathway for current legislation to be amended, including the creation of a criminal offence. Can the Minister say what scrutiny there will be by Parliament of this specific offence nearer the time? The Explanatory Memorandum makes it plain that this is not
“to address a deficiency in retained EU law”
but because of the withdrawal Act, as has been mentioned. It is good to have that confirmed, although some detail is about the UK elements of its parallel regulation. We are just going to have to become used to this, but I have some questions about the fees for applications and inspections.
Paragraph 12.4 of the Explanatory Memorandum says that “fees for services” will be
“kept on par with those charged in Great Britain, despite there being additional resource requirements to carry out the work under the EU MDR. The fees … will therefore be below the cost recovery level.”
Which Government will bear the cost of that extra work if it cannot be recovered from the manufacturers? Will it be the UK Government or the Northern Ireland Assembly? I hope the answer is the UK Government because the Northern Ireland Assembly should not have its budget penalised because of the Prime Minister’s decision to support the Northern Ireland protocol. In Regulation 12(1)(a) of the SI, in relation to “Prior authorisation of clinical investigations by the Secretary of State”, will the Secretary of State have these powers elsewhere in the UK or does this relate only to Northern Ireland?
I thank the Minister for introducing these regulations and for the opportunity to debate them. This debate takes place in the context of the Northern Ireland protocol, a protocol signed by this Government and now readily disowned by the very people who agreed to it. When the noble Lord, Lord Frost, says that it is not right to view the protocol as a definitive text, that does not reflect well on our country, its Government and the people who signed it at the time, said that it was excellent and denied that it would create a border in the Irish Sea. It is a bit rich of the noble Baroness, Lady Hoey, to protest, given her role in getting us to where we are.
However, I agree with the noble Baroness, Lady Brinton, that this is an attempt to find a way through on the important matter of medical devices. The SI addresses the fact that, although under the Northern Ireland protocol medical devices regulations are fully applied in Northern Ireland, the MHRA remains the Province’s regulator; there therefore needs to be provisions for enforcement, fees et cetera so that those elements of MDR that allow for national decision—such as on the reprocessing of single-use devices, custom-made devices and so on—are consistent across the UK.
What does this mean for people in Northern Ireland? What impact will there be if the EMA and MHRA depart markedly from each other’s regulatory regimes, and what would that mean for businesses? At the moment, you need a CE mark to go to market, as least as long as the Northern Ireland protocol holds. That is potentially advantageous for NI patients versus GB ones, as the vast majority of products will be CE marked and will continue to be so. However, as the ABPI has said, there are 600,000 medical devices approved in the EU and, at the moment, they are all available in Great Britain. Surely the test of the new UK regulations will be how many of them are still available in three, five or 10 years’ time. I hope that the Minister will be able to address those issues.
I seems to me that the final decision concerning the availability of a product would ultimately be a matter for the EU. Is it the case that, for those products authorised under the decentralised procedure by one member state acting as a reference for another member state, the MHRA would be able to suspend the use of a product only if one of the 27 member states had triggered a review of that product?
I have a couple of other points. I could see no mention of in vitro diagnostic medical devices. Will they come as another statutory instrument? I would be grateful if the Minister could clarify that. Can he tell the Committee what plans he has to update the House on a regular basis on the supply and regulation of medicines and medical devices in Northern Ireland to ensure that regulatory alignment and mitigation against adverse consequences are undertaken?
Finally, on enforcement, the instrument will also give the MHRA powers to serve enforcement notices for breaches of the EU MDR. How many people are these enforcement measures expected to affect? Manufacturers will need to take a number of steps to ensure that their goods can still be sold after the 2023 deadline, as noble Lords mentioned. What discussions have the Government had with the sector? Can the Minister confirm that the threshold to obtain the UKCA certification mark will largely be the same as that for the CE mark?
My Lords, as a responsible Government, it is absolutely imperative that we deliver on the Northern Ireland protocol and do so pragmatically to minimise the impact on the activities of economic operators and the public in Northern Ireland. As was intimated by the noble Baronesses, Lady Thornton and Lady Brinton, we are trying to find a way through. I believe that this instrument achieves that and, in doing so, ensures that high standards for patient safety are maintained throughout the United Kingdom.
I assure the noble Baroness, Lady Hoey, and other noble Lords who asked similar questions that the Government are fully committed to a system of medical device regulation that prioritises safety and safeguards public health. As such, the department has sought to minimise any disruption to patients and industry by providing consistency in policies where that is possible and ensuring a functioning statute book for the regulation of medical devices in Northern Ireland.
My noble friend Lord McColl asked about an advisory body. No formal advisory body is currently planned, but we will take his suggestion on board. NHS Digital is working with industry on a surgical devices register and, as such, is extremely engaged with industry in the manner to which he alludes. On the matter of deadlines, I agree with him about the importance of high service levels, but that is best left for management, not for secondary legislation. Compensation is covered in a large number of fora, including the courts, and is best left there.
I reassure my noble friend Lord Lansley about the Government’s commitment to unfettered access. As set out in the Government’s Command Paper of 20 May 2020, the UK’s approach to the Northern Ireland protocol ensures unfettered access to Great Britain for Northern Ireland businesses. It protects the territorial integrity of the UK by safeguarding Northern Ireland’s place in the UK’s customs territory and keeps goods flowing between Great Britain and Northern Ireland, applying measures that help to maintain food supplies and, of course, the flow of medicines. This includes access for medical devices from Northern Ireland businesses that are CE or CE-and-UKNI marked. The CE or CE-and-UKNI marking applies to Northern Ireland now and after June 2023.
My noble friend Lord McColl asked about mesh. We wholeheartedly commit to demonstrating to the patients and families who have shared their experiences during the Cumberlege review, and to anyone else who has suffered, that we have learned from them and are changing and improving because of what they have told us. The SI focuses on implementing the EU medical devices regulation in Northern Ireland under the specific powers of the European Union (Withdrawal) Act 2018, which would not extend to making changes to the regulations to respond to my noble friend Lady Cumberlege’s review. The Medicines and Medical Devices Act 2021 provides the powers for future regulations that have patient safety at their heart, and we are reflecting on the lessons from the Cumberlege review for future regulations. We will consider questions on the responses.
The points made by the noble Lord, Lord Dodds, on the 300 manufacturers are extremely well made. I reassure him that we are committed to implementing the protocol, but we must do so in a way that is sensible, balanced and attuned to the unique circumstances of Northern Ireland. As the noble Lord has already noted, my noble friend Lord Frost and the Secretary of State for Northern Ireland have recently made public statements on the Northern Ireland protocol. The Government are carefully considering next steps and will set out their approach to Parliament before the Summer Recess.
I reassure the noble Lords, Lord Dodds and Lord Empey, and the noble Baronesses, Lady Hoey and Lady Ritchie, that the Government are committed to adopting a pragmatic approach to regulatory divergence, seeking to minimise the impacts wherever it is possible to do so. I cannot emphasise enough that the changes contained in this instrument are essential to delivering on that commitment. The instrument does so by providing consistency between regulations in Northern Ireland and Great Britain where we are not constrained by the EU medical devices regulation. The instrument also ensures that when a medical device complies with the EU medical devices regulation and is a qualifying Northern Ireland good, it can be placed on the market in Great Britain without needing to meet any further regulatory requirements.
The noble Lord, Lord Empey, asked about future regulation. I reassure him that for a two and a half year period after the end of the transition period, devices compliant with EU medical devices regulation and EU in vitro diagnostics regulation can be placed on the Great Britain market as part of the UK’s acceptance of EU-regulated CE goods.
In answer to the noble Baroness, Lady Thornton, the UK will be consulting shortly on the future of Great Britain’s medical device regulations which will include a review of the elements of EU medical devices regulation and EU in vitro diagnostic devices regulation which benefit patient safety and patient access. Work on the future Great Britain regulatory regime will explore any risks around regulatory divergence between Great Britain and Northern Ireland.
To the noble Baroness, Lady Brinton, as I said in my opening remarks, by keeping the fees in Northern Ireland the same as those charged for equivalent activities in Great Britain under the 2002 regulations, this instrument ensures that there are no financial deterrents which may cause any disadvantage for Northern Ireland manufacturers or those carrying out clinical investigations.
By way of summing up, I thank noble Lords for their valuable contributions to this debate. I reassure all noble Lords that as a Government we are fully committed to ensuring that patient safety in all parts of the UK is prioritised and that high standards are maintained within Northern Ireland. I am enormously grateful for the support shown by many noble Lords for these measures, and I commend these draft regulations to the Committee.
The Grand Committee stands adjourned until 3.35 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person and others participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for the next debate is one hour.
Medical Devices (Coronavirus Test Device Approvals) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, one in three people with coronavirus show no symptoms and are potentially spreading it without knowing. Testing will remain vital to controlling and containing the spread. To do this we will need a reliable supply of high-quality tests available to everyone, giving people and businesses the confidence to be recalled to life.
We should be proud of how we have risen to the challenge of this pandemic. We have grown our national diagnostics capability dramatically, with laboratory capacity now at around 614,000 PCR tests a day. The Government have to date administered 218 million tests in total, delivering around 1.1 million a day. The UK has one of the largest testing diagnostic capabilities in the world.
We have a growing market. More than 1,000 organisations are undertaking accreditation through UKAS to deliver testing services. Tests are already available on the market and their presence is growing, from use in film and sports to huge potential markets in events and workplaces. We estimate that around 97 million LFD kits are reaching our market each week, and this is increasing.
It is therefore clear that the quality of the tests available is critical, yet I know at first hand, through our stringent procurement of tests, that more than 75% of tests that we considered failed. Some tests were up to 17% less effective than they claimed. That means that, in the real world, a highly infectious person would be significantly more likely to get a false negative. These tests do not work in the real world and can in fact harm public health, causing people to spread the disease in the false belief that they are uninfected. Bad tests will increase mortality; I will not stand by and let that happen. Even meeting the low bar of CE marking has proved too much for some. The MHRA has taken action against 80 companies, including seizing approximately 48,000 non-compliant tests.
There is clear evidence of the risk that businesses and individuals can buy tests that are, frankly, not good enough. I will not settle for low-quality CE-marked tests that manipulate their instructions for use or construct their own rigged validation. I will not have them for the NHS and I do not want them mis-sold to my fellow citizens. We must act now. I have already regulated the more mature services side of the market through accreditation, but we must close any loopholes on the goods side by regulating the quality of the tests themselves.
I know it is frustrating for the producer of any high-quality test to see its product lost in a sea of lower-performing tests, often at lower prices, as some rivals have not put in the work to assure their tests and ensure the sensitivity and specificity to be useful in the real world. We want to support businesses developing quality tests through a rigorous validation process. This will set those quality tests apart.
When we conducted a public consultation earlier this year, more than 75% of respondents agreed with the need to implement a minimum performance standard for Covid-19 tests on the UK market. Indeed, one of the consultation responses highlighted:
“Current performance claims are unreliable and can easily make use of cherry-picked data. There are no set standards for sensitivity and specificity to be evaluated against, and therefore no objective way of comparing 2 tests.”
This was also reflected in what manufacturers have told me on numerous occasions. Manufacturers welcome this legislation. Many see this as an opportunity to make the market more equitable and fairer to those who strive to deliver a good product.
A cornerstone of these regulations is the register of quality tests that they will make available to anyone in the world. It will separate the wheat from the chaff in terms of tests. Empowered by this information, individual consumers and companies will be able to make informed, prudent choices when buying kits for themselves, their families or their workforce. This will provide consumers with clear and comparable information, not the miasma of confusion that some companies exploit. Either their test meets the Government’s standards and can be sold or it does not. Any manufacturer that tries to avoid these standards will face the force of the UK’s regulatory enforcement agencies. I am not interested in burdening businesses with bureaucracy but, in return, I expect businesses to engage with the scientific process openly and honestly and, when they fail, to be candid about it.
Although some may see this as a radical intervention in the market, I am reminded of Dr John Snow, the father of epidemiology. When the evidence is clear and you need change to happen quickly, radical action is no vice; it is a virtue. The change can be as simple as removing a pump handle, as Dr Snow did to prove that the source of cholera was in London’s water supply, or acting to ensure consistent standards that bring the best of business creativity to bear for the public good.
I want people to know that the tests they buy will be as good as those they would receive under the NHS, and therefore trust the results. This will empower people to take charge and make their own decisions about managing their personal health. Our experience of the pandemic shows why we urgently need to level up the whole pathology infrastructure in our country. This legislation will not only remedy the immediate market failure but be an example of effective regulation that we can build on in future.
Freedom requires vigilance. If we are to be free of this pandemic, we need a wholesale culture shift in how we manage disease. We are reliant on one another, as fellow citizens in the shop, pub or workplace, to safeguard each other’s health. Each of us needs to take responsibility as an individual. If we feel sick, take a test. If we might have been exposed to someone who was sick, take a test. If we have been somewhere where there is now an outbreak, take a test. This legislation is about empowering people to take personal responsibility for their health and giving them quality tools that they can rely on to do so.
This regulatory regime will not achieve that legacy in isolation but it will be part of the paradigm shift in how we manage disease going forward to a more proactive testing culture. It will ensure a market that provides choice to consumers through high standards and clear information; certainty to producers through clear and consistent regulation; and lessons for government to apply to future regulations. I beg to move.
My Lords, I do not wish to be at all critical of the figures that the Minister gave in his first few sentences regarding our capacity and what we have been able to do in our laboratories. I suspect, by the way, that he has a new speechwriter, as his speech was slightly different from what I have heard from him before. The reality is that I put my name down for this debate for one simple reason: last week’s reports that the Government intend to charge for devices that are currently free on the NHS. These regulations are about tests for sale.
The eighth report from our Secondary Legislation Scrutiny Committee is a masterclass in drafting. It clearly states that the market is “overwhelmingly dominated” by free NHS tests. Paragraph 3 states that
“the Government want to support a ‘thriving private sector market for COVID-19 detection tests’”.
Paragraph 4 says that these regulations are
“for a time when privately bought tests play a more significant role”.
Well, they certainly will be when the Government start charging for NHS tests. It is a £3 billion market, after all—at least I think so, from the figures I have seen.
In April, when the tests were first brought out, we were told that handing them out—and, indeed, encouraging people to take them—was vital to getting the country back to normal. The Secondary Legislation Scrutiny Committee has been very critical of the failure to supply documentation when the regulations were laid. In at least two paragraphs of its report, the committee makes it clear that free NHS tests must continue.
It is clear that the Government want to charge for the tests. I understand that the promise—and I have made checks—was made to supply them free only until the end of next month, August. There has been no commitment to go beyond that, hence the rush to get these regulations through. Quite clearly, that is what it is all about. It is being pushed through at this last minute, a few days before the Recess, so that the Government can abandon free tests at the end of August. I realise that the Minister has come briefed on the regulations and I am asking about something extra, but let us face it: it was predictable that this would be raised. He has not taken any opportunity to say anything about the maintenance of free tests. I think that is sad because he is going to be asked that repeatedly until the Government are clear about their intentions.
My final point is a question: why do we need to buy the NHS Test and Trace kits for the lateral flow test, the one being given out by local chemists, from one of the Chinese Communist Party-approved companies? How do we know they are not made with slave labour? What kickbacks go to that corrupt political party? What efforts are being made to get them made in the UK—dare I say Europe—or, indeed, Commonwealth countries? We now have the capacity to check the tests in laboratories. Why have we not done something about manufacturing capacity? Why are we reliant—we appear to be reliant—on the fix of the Chinese industrial structure, which is controlled by the Communist Party or it cannot operate? In winding up, the Minister has the chance to be clear. I do not expect him to answer everything, but it would be useful if he would say that the Government intend to pursue free NHS tests for a period beyond the end of August. After all, that is in Recess. We will not have time to query that, as we are not back until 6 September, so that decision would be taken outwith Parliament sitting, and I do not think that would be right.
My Lords, following on from the speech of the noble Lord, Lord Rooker, and particularly referring to the Secondary Legislation Scrutiny Committee, I shall cover a number of additional points that the committee raised and seek the Minister’s advice on them.
These are welcome regulations providing rigorous quality approval processes for all Covid-19 tests sold in the United Kingdom. It is essential that tests currently sold outside the NHS do not lead to an unregulated black market developing. As we emerge from the lockdown phase and work towards a more open market based on personal responsibility and extensive, easily available testing, confidence, clarity and a strong legal framework need to be the guidelines for all such products.
I have a number of questions for my noble friend the Minister in this context. Are the proposed minimum standards to be employed exactly the same as the standards already in place for tests used by the NHS? If not, will he set out the differences? Will the proposed mandatory processes be clear and well publicised for manufacturers of molecular and antigen tests? In particular, I am interested in the process envisaged for PCR tests since it focuses on genetic material—RNA—and is new in the mainstream pharmaceutical market. In this context, is it envisaged to widen all testing on RNA-based vaccines and medications? This area of medicine impinges on major ethical issues in an area of science that is gathering pace and that many see to have advanced 10 years or more as a result of the substantial investment made in RNA-based vaccines and medicines during the Covid period.
I invite my noble friend to follow up on the intervention by the noble Lord, Lord Rooker, regarding addressing the problems with the accuracy of lateral flow tests. They are disturbing and have rocked public confidence, with 75% not meeting the performance and quality standards of the NHS tests. If we want public support for test and trace, the whole edifice of confidence collapses if there is no confidence in the accuracy of the market-based tests whose failure in turn blurs, and indeed damages, confidence in NHS tests.
Like other noble Lords, I think timing is important. It is difficult to read these regulations and believe them to be, as described, “rapid”. As I understand the position, existing tests will continue to be available in the UK market and will be required to submit their application only by 1 September. The validation process will then have to be completed by 31 October for them to remain on the market on 1 November. That means that potentially substandard products can continue to be supplied to the market for another three months or more before these regulations take effect. It is regrettable that this approach was not considered a year ago, or very early this year at least.
Can the Minister provide an update on the recruitment process required to put the DHSC validation team on a more suitable long-term footing? When do we anticipate that it will be completed? Is £6,200 sufficient to cover the proposed costs? How many applications do the Government expect as a result of these regulations?
In closing, I note that local authority trading standards are being asked to ensure that unapproved tests are removed from sale. From my experience of the Consumer Protection Act and the many hours of debate on subsequent consumer protection legislation—as applicable to, in my case, the secondary ticket market, which trading standards are being asked to oversee—I know that one of the consistent calls from all sides of the House is to increase resources to trading standards. Trading standards are constantly subject to a regular flow of additional responsibilities generated by legislative action taken in Parliament. Is it the Government’s intention to ensure that any additional resources for these purposes will be made immediately available to trading standards? If so, what do they estimate these to be?
The noble Lord, Lord Hunt of Kings Heath, has withdrawn, so I call the noble Lord, Lord Lansley.
My Lords, I am grateful to my noble friend the Minister for his introduction to these regulations. I agree with the noble Lord, Lord Rooker: my noble friend has acquired a rhetorical flourish or two today.
We can see the powers that we debated on the Medicines and Medical Devices Act coming into use already. The powers in Section 15 are being used for this purpose, but my noble friend will of course recall that Section 16 related to the criteria, including the effect that any regulations made would have on the life sciences industry in the UK. The Explanatory Memorandum argues persuasively that this validation process will increase the resilience of the supply chain and may even encourage domestic suppliers. It also refers to the discount available to SMEs, which is welcome. But paragraph 12.8 of the Explanatory Memorandum says that an impact assessment would be published in time for the parliamentary debate. I could not find one yesterday or today. Will my noble friend say where it is and whether it confirms that it is the Government’s clear view that the life sciences industry and SME interests are fully protected?
There is a clear case for validation of these tests, given the reported failure rates of tests submitted for public procurement, to which my noble friend referred. We need to use lateral flow tests to support the return to school in the autumn, to enable employers to bring their staff back to their workplaces, and to counter outbreaks—in particular with large-scale surge testing—when we have achieved a lower prevalence again, which I hope will be in the late summer.
Studies including the Cochrane review, published in April, suggest that lateral flow tests will reliably confirm that someone without Covid is negative; in that sense, they have very high specificity. Where their sensitivity is concerned, they will confirm infection in someone with symptoms in an average of 72% of cases, but will on average identify the infection in asymptomatic cases only 58% of the time. Those results will vary according to the location and experience of the tester—where it is done and by whom. We need these tests to work at home and not just in the hands of healthcare professionals.
I support the regulations but I have three issues to raise. First, the tests procured by the Government will not be subject to validation because that would essentially be duplicatory, as the test approval is based on that same procurement process. But that procurement process has been used by the Government principally for the procurement of the Innova tests, which, as the noble Lord, Lord Rooker, made clear, are essentially manufactured by Xiamen Biotime Biotechnology in China. The Government, of course, had an intermediary company—Disruptive Nanotechnology, in Northampton—which, as far as I can see, was effectively a non-trading company at the end of December 2019. It is Innova Medical Group that is essentially the intermediary.
Innova is a Californian company. It is reported that it has sold 380 million tests to the Government. But on 10 June, the Food and Drug Administration issued a safety communication that the Innova rapid antigen tests should be withdrawn. Indeed, its communication suggested that the people who had them should simply throw them away. The question I come to is this: if we are confident in the Innova tests, what has been the nature of the discussions we have had with the Food and Drug Administration? My understanding is that, essentially, the Food and Drug Administration took the view that Innova was advertising the tests for use with asymptomatic people, but that they were authorised for use with those who have symptoms and that their sensitivity is greater for those with symptoms. Is that why the FDA issued its class I recall on these tests? That being the case, why did my noble friend say when he introduced the regulations that it is really important that we have tests that work for those who are asymptomatic? These tests are not sufficiently specific for those who are asymptomatic.
I know that it is a legal case, so my noble friend might hide behind his inability to speak about it, but why has Mologic, a Bedford company that has a track record, found it necessary to sue the Government in relation to their validation processes for the public procurement? What does that tell us about the validation they propose to use for this purpose?
I have two very quick other points. To put at rest the mind of the noble Lord, Lord Rooker, could my noble friend update us on the plans announced last month for Innova and Sharp packaging to build a factory in Caerphilly to produce up to a million tests a day, starting in July—this month? It is absolutely right that we should have leading medical technology companies in this country and manufacturing supply alongside them.
Thirdly, to further endorse what the noble Lord, Lord Rooker, said, could my noble friend explain what the Government’s intention is on charging for tests, particularly for employers, who will want to institute testing regimes to bring their staff back into their premises and to protect the public and their customers while doing so? They have had 18 months, in many cases, during which they have lost revenues. Should we really expect them to meet this further cost at this stage? Their taxes will sustain us in the future, but should we not now support them to get back to work? I would be grateful for my noble friend’s response.
The noble Baroness, Lady Brinton, has withdrawn, so I call the noble Lord, Lord Scriven, in her place.
My Lords, of course these Benches welcome the general thrust of the regulations—that tests should be safe and that there should be a standard across the UK. However, we also raise the same issue as a number of noble Lords, including the noble Lord, Lord Moynihan, about their timing, and ask why this is emergency legislation. I am afraid it is becoming a bit of a trend that the Government bring things through in emergency legislation. If the instrument had come through a different route in which we had a lot of time, we could have asked many of the questions that we are now asking, and improved and amended the legislation to deal with some of the issues. This is so important, because this is about testing and trying to give the country a sense of what the new normal will be.
The underlying basis of this is a significant change of public health policy. I am not aware of any other infectious disease where public health policy on testing is left purely to the market—unless the Minister can advise otherwise. There is a real issue of this being about not just market failure but the role that public health, public health professions and the public sector will play to ensure that this works.
I say that because, without being linked to the test and trace system, there is a sense that testing in itself will become not as effective as it could be. This SI assumes that public policy will be for most testing to be done outside the NHS, and possibly for a charge. So once these tests are approved and there is a standard, how do mandatory tests then get into the tracing part of test and trace? There is no legislation at present to suggest that has to happen. Employers, or particularly an individual at home, could take a test and it turn out to be positive. Coming back to what has been said many times before in the House and in Grand Committee, if people feel that they cannot afford to self-isolate, they are not going to give details about them being positive.
The question is: if this becomes predominantly a market-driven approach, done by employers and businesses bringing in customers, as the Explanatory Memorandum suggests, or by individuals at home, how does that then trigger tracing? How will it trigger a person having to inform somebody, either locally or nationally, through test and trace, that they are positive? Significantly, how will tracing then kick in to help ensure that the chains of transmission are dealt with as speedily as possible, particularly since evidence suggests that 48 hours is the maximum time before the chain continues to spread?
Regulation 39A says that the Secretary of State can make an exemption for tests coming on to the market which are not tested. In what circumstances does the Minister feel that the Secretary of State would be able to use the power under Regulation 39A? How will it be reported to Parliament or to the public, so that they know whether the test they are getting—or potentially buying—has not been through the statutory testing regime?
I want to further explore something mentioned by the noble Lords, Lord Lansley and Lord Rooker. It is to do with the Innova test and the recommendation in the email from the Food and Drug Administration, which said that this test should be thrown “in the trash”—that was the exact quote. Since it was a class I recall, I need to know what extra testing or analysis has been done by the UK Government based on what they have seen from the FDA and that recall. When was that done and what is the outcome of that testing or analysis, based on the extra evidence that has come from the FDA?
Finally, I would like to ask whether free testing will still be available on the NHS. If it is to be available, a number of questions arise. If I could have free testing on the NHS and it is not means-tested, why would I buy a test, unless certain categories of organisations will not be allowed to use the NHS test? At the moment, people going abroad are not allowed to use the free NHS test. Is it anticipated to be the same for organisations such as businesses—for their staff and for customers coming in, et cetera? What thought has been put into that?
These issues, and the others which noble Lords have raised, are important because this is a matter of public health and of how we contain the virus in the most effective way possible, while keeping people safe. I come back to my opening remark: this is not emergency legislation. It should have been laid normally before Parliament, so that we could have dealt with it and tabled amendments. I would have hoped to make this better, to keep people safe and to deal with proper testing across the UK.
My Lords, the importance of this SI is underlined by the decision of the Secondary Legislation Scrutiny Committee to draw the regulations to
“the special attention of the House on the grounds that they are politically or legally important and give rise to issues of public policy likely to be of interest to the House.”
The noble Lord, Lord Scriven is quite right: this is not emergency legislation. Here we are, more than a year in. It is not an emergency. However, this is a very important statutory instrument. My noble friend Lord Rooker and the noble Lord, Lord Lansley, have outlined many of the questions that need to be addressed, but I need to put the Minister on notice that, depending on his answer to this debate, I may oppose it here in the Grand Committee and take it to the Floor of the House.
I am very concerned listening to this debate. I was concerned when I made my own notes, and I am even more concerned now listening to other noble Lords. This is not just about the quality of testing; it is about the market of testing, and that is quite different. That is why the Secondary Legislation Scrutiny Committee was concerned about a major change in public policy. Putting a major change in public policy through in Grand Committee under these circumstances is probably not a good idea and does not make for good legislation.
We absolutely support a quality approval process for all Covid-19 tests in the UK. It is important that the new process is rigorous to ensure that all tests, including those for sale, meet the relevant quality standards, especially if such tests are to play a greater role in the long-term management of Covid-19. In the meantime, it is essential that free NHS tests continue to be available. This is all the more important given the rising case numbers and the Government’s insistence on going ahead with the removal of all restrictions, including the legal requirement to wear face coverings on public transport, in a week’s time.
Given the importance of reliable high-quality testing devices for the effective management of Covid-19 in the long term, can the Minister explain why the new validation process was not introduced earlier? Given that the DHSC says that as part of managing Covid in the long term the Government will want to support
“a thriving private sector market for COVID-19 detection tests to supplement and support testing led by NHS Test and Trace”
“encourage the private sector to bring a number of testing products and services to market to meet the differing needs of businesses and individuals”
and provide consumer choice, how will we ensure that all the tests available will meet the minimum performance standards? According to the department, the new quality requirements introduced by this instrument
“will make the UK private testing market more competitive, as manufacturers will need to improve the accuracy and speed of their tests in order to outcompete competitors”.
Can the Minister confirm the timeframe for shifting to a private testing model? How much will these tests cost and who will bear the brunt, employers or employees? Will there be waivers or business support for vulnerable workplaces, including hospitals, care homes and schools, as well as other key workers where frequent testing is key to protecting the vulnerable and often to things such as keeping a school open? Does he agree that it is essential that free NHS tests continue to be available, given the rise in case numbers and the Government’s insistence on going ahead with opening, as I have already said?
I would like to have some more information about the August cut-off point. During the procurement of lateral flow device tests for the NHS, only 25% passed through all stages of validation including the assessment for performance and quality standards under the current regime. The 75% of the LFD tests assessed as not meeting performance or quality standards of the NHS still qualify as fit for market. The DHSC says that rapid intervention is therefore required to address this. Does rapid mean now or a year ago?
Department of Health and Social Care data showed that six out of 10 positive rapid test results at schools between 4 March and 17 March turned out to be wrong. It is therefore legitimate to ask whether the real reason that we are backing away from them is because they do not work for self-testing and do not represent value for money. What is going to happen next? The Minister needs to set out the timescale. Can he confirm that if the third-party approach is to be considered, these contracts will go out for public tender?
Does the Minister share my concern that the department’s explanation appears to suggest that less accurate tests can be of diagnostic value for the NHS if such tests are used by clinicians who are able to consider other factors and information and therefore put any tests into a wider clinical context? Finally, what extra resources will be available to local authority trading standards teams for testing enforcement activities?
My Lords, I start by assuring the noble Lord, Lord Rooker, the noble Baroness, Lady Thornton, and others that when we look at this validation SI, our overarching objective is safeguarding public health. That is the primary impact of this regulatory regime for the validation of Covid-19 tests. I think noble Lords agree that high-quality tests are essential to avoid public health risks in future.
I will just clarify one key point. When I said that 75% of tests did not meet those standards and that only 50 of the 280 we had looked at passed, I meant that we rejected and never bought the 75% and were limited to only a smaller number of suppliers. That created a bottleneck in the supply of tests, which noble Lords will remember as a terrible feature of the pandemic last year which severely inhibited the progress of our campaign against this awful virus.
The importance of tests was bitterly showcased last year because of the dangers of one person potentially causing an outbreak in the whole community. Therefore, the primary purpose of the regulatory regime we are debating today is to safeguard public health.
The UK Government are clear that we want to be a world leader in agile regulation; this will encourage businesses from the UK and elsewhere to research and manufacture tests in the UK. We need that because when the pandemic began at the beginning of last year, we had neither a domestic diagnostic industry nor institutional experience of how to assess and validate tests. Those were functions that we had to build from the ground up. This SI puts in place mechanisms for encouraging a domestic industry and the standards to assess that industry.
British manufacturers and pharmaceutical research and engineering firms have led the way as part of a global effort to combat the virus, keeping the NHS supplied with kit, tests and medicines. We engaged with them thoroughly. A consultation has been published, and I would be glad to distribute it to noble Lords. They resoundingly support these measures.
If companies do not want to improve the quality of their tests to meet our standards, they simply will not sell their tests here. I see the loss of poor-quality tests from the market as positive, as it will leave more market share for high-quality tests. That is a message I give to all those manufacturing tests that cannot make the standards.
I say to the noble Lord, Lord Rooker, who asked a number of perceptive questions about the role of free testing and the policy in this area, that reports in the press are not to be given the credibility he suggests and that we have not moved on as far as he suggests. However, it is true that we have always established the principle that the Government cannot provide every single test for every single purpose. That is for two reasons. For instance, travel is essentially a voluntary matter, and it is not right for the taxpayer to pay for tests that people take in order to conduct a voluntary matter.
The other reason is pragmatic. We will not be able to sustain or have a resilient diagnostic system in this country if the state is the only player and we have no private capacity to lean on. That was our experience last year and it damaged us greatly. Countries that had private diagnostic capacity, such as Germany, survived much better and had much more capacity to lean on. So we are looking to evolve the way we do testing in this country and I will be glad to update the House when those plans are fully formed.
In response to the noble Lord, Lord Rooker, the role of asymptomatic testing will undoubtedly evolve when a large proportion of the country is vaccinated and when vaccination greatly reduces the link between infection and hospitalisation, whereas the role of PCR testing will become more important as we move to a situation where there may be new infection. We hope that R will be below one, and these changing dynamics will have a profound effect on the provision of diagnostics.
In answer to my noble friend Lord Lansley’s questions, we are enormously engaged with UK manufacturers. We have a Make programme, with a substantial team that is fully engaged with the UK diagnostics industry. I pay testimony to SureScreen, one of the key suppliers to test and trace, for the incredibly valuable contribution that it makes to our procurement. I am grateful to all those partners that supply test and trace and the NHS with tests, but we are doing everything that we can to support the UK industry.
In reply to my noble friend Lord Moynihan, the standards are the same for the NHS as the validation for test and trace. We are trying to bring about a situation where the test you take in a test and trace or NHS capacity will be exactly the same one that you take in a private capacity.
On timing, we are moving as quickly as we can and we have heavily resourced this area. In fact, our major constraint has been our desire to take these measures through Parliament in the usual fashion. On costs, the programme currently washes its own face, but we are conscious of the pressure of costs on manufacturers and we very much hope to bring the costs down.
I completely share the sentiments of noble Lords who mentioned trading standards. It has already performed an important task in holding test distributors and service firms to account, and I am enormously grateful for its interventions in the market.
We have completed an impact statement but we are waiting for final comments from the RPC. As soon as it is available we will make the statement available to parliamentarians. We have assessed that the direct costs to business of this policy are made up of £6 million annual equivalent for the validation programme and £165 million in forgone profits for manufacturers either not applying for validation or for products that do not pass validation. As the Covid-19 diagnostic market inevitably shrinks, forgone profits fall year on year from £647 million in year 1 to £35 million in year 6.
On my noble friend Lord Lansley’s question about whether NHS tests will need to undergo validation, all tests used by NHS Test and Trace have already undergone rigorous clinical evaluation, providing confidence in their performance. The Government’s proposals aim to ensure that all tests available in the UK meet the same high standards.
My noble friend Lord Lansley asked about the sensitivity and specificity of the LFD tests, and his points were very well made. The LFD test is for infectiousness. An extremely mild infection that is not in itself infectious will not necessarily be picked up by an LFD in the same way that it will by a PCR, but that does not invalidate the effectiveness of LFDs in breaking the chains of transmission.
On the taking of tests, our experience has been that, after one or two goes, tests taken at home are just as good as those being taken by clinicians in the laboratory. In fact, it is a testament to the British public that they have been as diligent and thorough as they have been in using their swabs.
I completely understand noble Lords’ concerns about the FDA press release and its concerns about the Innova tests. I assure them that MHRA colleagues were entirely involved in the intense conversations with the FDA and have satisfied themselves that the FDA’s concerns were not applicable to the UK market. We continue to maintain the purchasing of Innova tests based on validations that we in the UK have done for ourselves.
My noble friend Lord Lansley mentioned inward investment. We really hope that many firms, both British and from overseas, will invest further in the UK. We are working hard to build up a UK diagnostics industry from relatively humble beginnings into something that is muscular, innovative and makes the very best use of UK science. I hope that I will be able to make announcements on that in the near future.
The noble Baroness, Lady Thornton, asked how the costs of tests will be regulated. The cost to the public will be governed by the marketplace. I am pleased to say that the costs have come down dramatically in the past year; it is my hope that they will continue to come down.
As we move beyond the pandemic, we must consider its legacy. After World War II, our grandparents left us the NHS as its legacy. As they turned their tools and talent against fascism, so too they turned them against disease, and they moved from the business of taking lives to saving them. In the same way, we must ensure that this greatest test of our nation since World War II leaves an equal legacy for our grandchildren. I hope that a revolution to our approach to diagnostics will be that legacy, with proactive, not reactive, healthcare and disease management. I say to the noble Baroness, Lady Thornton, that our intention is for good-quality, well-regulated Covid-19 diagnostic tests to be a small but integral part of that legacy and for us to learn lessons to support the NHS in saving lives for generations to come.
The Grand Committee stands adjourned until 4.35 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for the following debate is one hour.
Railway (Licensing of Railway Undertakings) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, these draft regulations will be made under the powers conferred by the Channel Tunnel Act 1987. They will make the necessary amendments to domestic rail operator licensing legislation to enable the implementation of a bilateral agreement between the UK and France on the recognition of rail operator licences for the Channel Tunnel and cross-border area. This will support the continued smooth operation of Channel Tunnel traffic when the temporary arrangements expire on 30 September 2021.
The regulations will also provide long-term certainty, clarity and confidence to cross-border operators, both current and prospective, regarding the future operator licensing framework for the Channel Tunnel. They will apply to England, Scotland and Wales, although the main operative provisions will, in practice, apply only to the Channel Tunnel and cross-border area. The regulations are subject to the affirmative procedure, as set out under the Channel Tunnel Act, and Schedule 8 to the European Union (Withdrawal) Act 2018.
The regulations amend the 2005 railway operator licensing regulations, which updated the rules for the licensing of passenger and freight train operators in Great Britain established under the Railways Act 1993 by introducing a new EU form of licence. This was done to reflect changes to EU operator licensing laws. The 2005 regulations introduced the requirement for operators running services on the basis of the new EU form of licence in Great Britain to hold a statement of national regulatory provisions, or SNRP. SNRPs supplement licensing requirements, covering, for example, the provision of information to passengers, membership of industry bodies and third-party insurance conditions.
The regulations also amend the Railway (Licensing of Railway Undertakings) (Amendment etc.) (EU Exit) Regulations 2019, which were introduced to correct deficiencies in the 2005 regulations arising from the UK’s exit from the EU, to ensure that they continued to operate effectively post exit. As well as converting the EU form of licences issued by the Office of Rail and Road, the ORR, to “railway undertaking licences”, the 2019 regulations provided for the continued recognition in Great Britain of European licences for a period of two years from exit day—in other words, until 31 January 2022.
Following the end of the transition period, there is no longer automatic mutual recognition of licences between the UK and the EU. The recognition of UK licences for the Channel Tunnel is currently provided for by an EU contingency regulation that expires on 30 September 2021. These operator licensing regulations, and the proposed bilateral agreement that they implement, will ensure the continued recognition of operator licences for the Channel Tunnel when the current temporary arrangements expire. This will have a significant positive impact on cross-border operators, by providing long-term certainty on the licensing requirements for the Channel Tunnel. It will also reduce the administrative burdens on them, by enabling them to operate in the Channel Tunnel and cross-border area without the need to hold two separate licences—that is, one issued in Great Britain and one issued in the EEA.
Under the regulations, EU licences will be recognised up to the first border crossing station in the UK only, which is Dollands Moor for freight and Ashford International for passenger services. This mirrors the extent of the recognition of UK licences in French territory under the proposed bilateral agreement, and so ensures equivalence.
The regulations, and by extension the agreement that they will implement, are fully compatible with the Government’s fundamental red lines in the Channel Tunnel negotiations with France, which are to support the continuation of cross-border services while conferring no role for the EU courts or the European rail agency in UK territory and avoiding dynamic alignment with EU law.
Information-sharing provisions are included in the regulations to give effect to requirements of the proposed bilateral agreement. Under these requirements, the ORR will be able to share information with the equivalent French authorities in relation to, for example, any doubts as to the validity of a licence or compliance with licensing requirements on the part of either a European licence holder operating a Channel Tunnel service in Great Britain or an ORR-licensed operator operating a Channel Tunnel service in France.
The regulations will also ensure a level playing field regarding the licensing requirements for operators on the French and UK sides of the Channel Tunnel and cross-border area by disapplying the current UK requirement to hold an SNRP for EU-licensed operators of Channel Tunnel services, up to Dollands Moor or Ashford International only, and ensuring that no equivalent additional licensing requirements will be in place for UK-licensed operators on the French side—it will be the same either side. Again, this will support the recognition of those licences on a fully reciprocal basis under the bilateral agreement.
To conclude, the regulations will reduce administrative burdens on cross-border operators and enable them to plan their businesses into the future with confidence. Most importantly, they will support the long-term continued smooth operation of cross-border services through the Channel Tunnel. I commend these regulations to the Committee.
My Lords, I find myself in a uniquely privileged position today because, when looking at the Order Paper this morning, I was rather amazed to see that my role here has been defined as “all other speakers” and I have been afforded no less than 10 minutes to make a speech. This is almost unique in the last 15 months, but I want to placate my colleagues, or at least reassure them, by saying that I do not intend to use all of that time. Still, it was a marvellous bit of news this morning, and I hope it will be replicated in future debates.
Since the Channel Tunnel opened in 1994, I, like many millions of other UK and European citizens, have been able to travel on dry land between our states in comfort and at speed. I have occasionally used the shuttle when I have required my own car to be with me on the continent, but I must, and want to, declare an interest: I hold the record of being one of the most-travelled Eurostar train service passengers, thanks to the weekly journeys that I undertook during the 17 years that I served as a Member of the European Parliament, commuting to Brussels and Paris. I commend Eurostar on its trains and service, which got better and better during those years, with the provision of new facilities at the terminals, as well as its rolling stock.
The Covid crisis has of course presented it, and other cross-channel transport operators, with serious financial challenges. Although that situation is not directly addressed in the legislation that we are considering today, I hope my noble friend will understand that merely expressing positive and good wishes may not be sufficient. I hope it will not be long before Eurostar and others can enjoy renewed growth and prosperity, but the company may need more help, as others have received from Governments on both sides of the Channel.
Having said that, I wish to spend a moment on the treaty of Canterbury, signed by the late Baroness Thatcher, as our Prime Minister, and President Mitterrand of France in Canterbury Cathedral in 1986. It is not perhaps the most exciting thing in history to have happened in Canterbury Cathedral but it is probably close to it. As noble Lords will recollect, this was the treaty that allowed the Channel Tunnel to be constructed, in which the legal and territorial structure for its operation was laid down. A new border between France and the UK was created below the seabed, halfway across.
This was followed up by a protocol signed in November 1991, which effectively juxtaposed national control bureaus at Fréthun near Calais and Folkestone in the UK. This was in itself a unique territorial exchange, allowing security and frontier arrangements to be operated in full co-operation and harmony. Over the years, it has worked very well in protecting both France and the UK, as well as preserving respective immigration rules and policies. It will no doubt please some to know that all this was, and is, based largely on bilateral agreements between France and the UK. The international interest in the Canterbury treaty at that time was from the United Nations. Any modification of the protocol should be by exchange of diplomatic notes.
Of course, although the basis of the tunnel relationship is bilateral, as my noble friend the Minister said, there are consequences for rail operators of our leaving the EU, which is why these provisions are now required. The original pre-Brexit regulations were approved in 2005, as she said, and gave cover for EEA-issued operator licences. In the aftermath of our withdrawal, new regulations were put in place in 2019 to cover the two-year period until September this year.
As my noble friend the Minister said, we now need to renew the regulations to protect the rail operators of Eurostar and freight services until a new agreement with France is, hopefully, concluded and ratified. I understand that the shuttle and Eurotunnel are protected under alternative provisions. Perhaps my noble friend can advise on how the ongoing discussions on the bilateral arrangements are proceeding. I understand that the technical details are agreed. I assume that there are no political or other impediments to the satisfactory conclusion of this.
As a former Leeds MP and Yorkshire MEP, may I press my noble friend a little further? I know it is a long time ago but, in 1987, when the then Channel Tunnel Bill referred to earlier by my noble friend passed through our Houses, a number of MPs from outside the south-east of the UK supported it and allowed the scheme to proceed on the basis of clear promises that there would be direct services from northern cities such as Leeds, Newcastle and York to European cities such as Paris, Brussels and Amsterdam. These have essentially not materialised; no doubt plans remain on the table. Perhaps my noble friend can elaborate on how this might be taken forward and any possible linkage there might be to the HS2 network in due course. It would be very positive if we tried to bring this about because we all know that, with COP 26 being hosted in this country later this year, the environmental benefits of electric trains cannot be underestimated. We have the opportunity to give fresh endorsement to this form of travel. Can my noble friend also confirm that, in view of the separate EU legislation covering Eurotunnel, there are no risks to the continued smooth running of the shuttle?
Obviously, I fully support these protective measures to cover us for the time being. Not only should we welcome them; we must also look for the enhancement of services using this vital piece of infrastructure, ensuring its use to rebuild positive relationships with our European neighbours after an undoubtedly fraught period.
My Lords, like the noble Lord, Lord Kirkhope, I am a firm fan of both Eurostar and the shuttle service through the tunnel. I mainly take the Eurostar to Brussels for family reasons but I have gone on to a number of other locations on that excellent service. One of the things I have really missed in the last 15 months is those regular trips through the Channel Tunnel.
Given the months of political wrangling about whose responsibility it was to prop up Eurostar, it is a relief to see that at least this aspect of Channel Tunnel services seems to be progressing in a straightforward manner. This SI has a limited application but is nevertheless fundamentally important in keeping people and trade flowing between the UK and the EU and mainland Europe.
When there are so many stories of additional post-Brexit hurdles for those wanting to do business with the EU, it is important that this SI is presented in anticipation of the UK and the EU reaching an agreement at the end of September. I join the request to ask the Minister to update us with the latest information on the discussions with the EU. Is this agreement firmly on track? Can we be confident about it? I have a sense of Groundhog Day about these regulations, as I recall a similar measure in preparation for Brexit in 2019.
The SI is to be welcomed, especially because of the increasing awareness of the environmental importance of encouraging international rail transport, both passenger and freight. EU countries have recognised this and there is strong growth in the number of long-distance rail services being launched to replace air travel. I thoroughly recommend the journey using the Channel Tunnel through to Lille then taking the TGV further south. It is a brilliant and luxurious way to travel, even in standard class. The need to replace air travel applies to both passenger and freight travel. France has even legislated to prevent short domestic air journeys. I hope that the UK Government will similarly work to encourage long-distance rail in our country and use HS2 in the way in which it should be used to encourage that.
I want to take this opportunity to ask the Minister about the level of freight services through the tunnel in the last 18 months during the pandemic. I am especially keen to look at the levels of freight using the tunnel pre and post Brexit. We know that passenger travel has been heavily hit but freight should be flourishing, especially because of the shortage of HGV drivers. The two specialist freight operators using the tunnel are sure to be well placed to take some of the heat out of this situation. I look forward to the Minister’s comments in the hope that she can reassure me that freight is flourishing.
I thank the Minister for her explanation of the purpose and content of the regulations. It was very helpful and almost led me to rewrite parts of what I am going to say.
Before I go any further, I congratulate the noble Lord, Lord Kirkhope of Harrogate, on noticing that he had been given 10 minutes to speak, compared with me, who has six minutes, and the noble Baroness, Lady Randerson, who also has six minutes. I hope that the Government Chief Whip will at some stage explain why this state of affairs happened. The noble Lord, Lord Kirkhope, wondered whether it would ever happen again; I assure him that precisely the same thing does happen again in the next SI we have to deal with.
I also noted the noble Lord’s comments about the possibility of through trains between the north and Europe. I suspect that I am in the same boat as him in wondering why it is not possible to link up HS2 and HS1; the situation at the moment appears to be that there will not necessarily be a link.
I come back to the regulations, which, as the Explanatory Memorandum states,
“provide for the continued recognition of EEA issued rail operator licences … for the Channel Tunnel and the cross-border area”
“make the necessary amendments to domestic rail legislation to support the implementation of a UK-France bilateral agreement on the mutual recognition of rail operator licences”,
which, subject to final checks, is to be implemented and ratified. I, too, look forward to the Minister’s response on what progress is being made in those bilateral discussions.
The Explanatory Memorandum refers to
“cross-border operators, both current and prospective”
for whom these regulations are intended
“to provide long-term certainty … regarding the future operator licensing framework for the Channel Tunnel”.
Can the Minister say who the current operators referred to are and whether there are currently any further credible prospective operators on the horizon?
In paragraph 3.3 of the Explanatory Memorandum, there is a reference to
“information sharing by the Office of Rail and Road … in respect of holders of railway undertaking licences issued by the ORR”.
The Minister made reference to this matter in her opening comments. Is this sharing of information a regular occurrence? Did she cover all the issues involved in information sharing in her helpful comments, or are there other issues involving information sharing in addition to the ones she mentioned?
As the Minister said, and as the EM explains, the 2005 regulations, which are amended by these regulations,
“introduced the requirement for operators … to hold a Statement of National Regulatory Provisions … SNRPs supplement licensing requirements, for example setting out specific third-party insurance requirements over and above the general licensing requirement for adequate insurance to be maintained.”
The EM states:
“The requirement introduced by the 2005 Regulations … to hold a SNRP will be disapplied by the Regulations for operators relying on such licences to operate services through the Channel Tunnel and up to … Dollands Moor or Ashford International station.”
It says that this change
“is deemed necessary to support the mutual recognition of licences on a fully reciprocal basis.”
Yet it also says this:
“The impact of disapplying this requirement, if any, is expected to be very limited in practice given the very limited geographical scope of the exemption and given that all cross-border operators currently running services through the Channel Tunnel do so on the basis of a UK licence.”
Can the Minister confirm that this change in respect of an SNRP has no impact on the situation as it is at present or on any current operators of services through the tunnel? If I am wrong in thinking that, can she say what current arrangements and current operators are affected and in what way? Can she also say what the change in respect of disapplying the requirement to hold an SNRP will represent from the current position for any future EEA operator of rail services operating services
“through the Channel Tunnel and up to (but not beyond) Dollands Moor or Ashford International station”?
Finally, the Explanatory Memorandum states that
“the transitory provisions … which provide for the continued recognition of European licences in Great Britain”
will continue in force
“until they expire at 11pm on 31 January 2022.”
It also says that the “current EU contingency legislation”, which provides for the continued recognition of GB operator licences in the French half of the tunnel and immediately beyond,
“expires on 30 September 2021”.
Paragraph 7.8 of the draft Explanatory Memorandum states:
“If … the bilateral agreement is only ratified by both sides after the expiry period of the transitory provisions, the Regulations provide for the amendments to the transitory provisions not to take effect, as the transitory provisions will themselves be spent by that point.”
What happens at midnight on 30 September 2021, when the EU contingency legislation expires, if the bilateral agreement has not been ratified by then by both sides, and what happens at 11 pm on 31 January 2022, when the transitory provisions on the continued recognition in Great Britain of European licences cease to have effect, if the bilateral agreement has not been ratified by then by both sides?
Like the noble Lord, Lord Kirkhope of Harrogate, and the noble Baroness, Lady Randerson, I await the Government’s response to the points that have been made in this debate with interest.
My Lords, I thank all noble Lords for their contributions to this short debate. There were lots of warm wishes for continental train travel; I add mine to them. We all enjoy going on the train, whether it be in a vehicle or on Eurostar. We obviously closely monitor the impact of Covid on Eurostar—I know that my noble friend Lord Kirkhope was interested in this—and all transport services. All being well, I hope to see their passengers and other customers return soon.
Turning to the regulations under consideration today, I start by providing a bit more colour about the status of the discussions with France; I think all noble Lords were interested to hear how we were getting on. My officials have been in active and regular discussion with their French counterparts since the beginning of the year to secure this bilateral agreement on the recognition of the rail operator licences for the Channel Tunnel and the tiny cross-border area either side of it. I assure the Committee that the talks have been highly constructive. Agreement has been reached in principle at the technical level and it is now subject to final legal checks. It is expected that the agreement will be signed before the end of September, then provisionally applied by both sides for a limited period to support the continuation of services in the immediate term once the current EU contingency measure expires.
The agreement will still need to be ratified through the UK Parliament; this will of course be done as soon as possible thereafter. It will be done via the Constitutional Reform and Governance Act 2010 process, rightly giving Parliament the opportunity to scrutinise the text in full before it is ratified. I am not sure whether this will reassure the noble Lord, Lord Rosser, but it will certainly inform him: we have been clear with our French counterparts that the regulations will not receive ministerial signature and become law unless and until the related bilateral agreement is signed by France or, failing that, a EU contingency measure is extended pending the final conclusion of the agreement. Something will thus have happened by 30 September to maintain the smooth running of services. It does not strike me that it would be in anyone’s interest for that not to occur.
In the extraordinarily unlikely event that France does not ratify the signed agreement, for whatever reason, we could also revoke these regulations in future. There is no risk that the UK will continue to recognise EU licences indefinitely without that being fully reciprocated by France. We do not think that we will end up in that situation. We absolutely believe that the agreement will be signed and that we will be able to put in place in the immediate term while it is being ratified by the UK Parliament.
On the disapplication of SNRPs, the disapplication of the requirement to hold a SNRP in the UK half of the channel and the immediate cross-border area will ensure equivalence with the licensing requirements applicable to UK operators on the French side, so it will be the same. Given the extremely limited scope of the regulations, disapplication of the SNRP requirement is expected to have almost no impact in practice. It is therefore considered acceptable in the interests of reciprocity. In practice, there are no current operators to which this disapplication will apply; I know this was of interest to the noble Lord, Lord Rosser. All the cross-border operators—the two freight operators, GB Railfreight and DB Cargo UK, and the passenger operator, Eurostar—do so on the basis of a GB licence. They are scooped up in the SNRP requirement anyway by having a GB licence.
The noble Lord, Lord Rosser, also asked whether there are any credible prospective operators. I am not aware that there are any at this moment in time but, should one wish to come forward, we would obviously welcome its involvement in the market. Any future operator of rail services, if it was an EEA operator that went beyond either Dollands Moor or Ashford International, would in any event have to have an ORR-issued railway undertaking licence, so they too would then be subject to the SNRP requirement. We believe that the situation we have works very well. It is time to be pragmatic and, in practice, it makes no difference.
On stakeholder views and the impact on operators, the amendments in these regulations will in reality have a very limited impact on cross-border operators. Indeed, the measures being introduced will have a significant positive impact in that they will be able to continue the smooth running of cross-border operations. We did a survey on the draft regulations and sent it to Channel Tunnel stakeholders. DB Cargo, Eurostar International Ltd, Eurotunnel, the Rail Delivery Group, the Rail Freight Group and High Speed 1 Ltd responded; all were highly supportive of the regulations and recognised the importance of securing this continued smooth running. A couple of concerns were raised but they were outside the scope of the regulations or related to the geographic scope of recognition in the UK. Obviously, we have chosen to mirror that closely to what they do on the French side, where you go up to the first station for either passengers or freight; that is the cross-border area, so to speak. We continue our discussions with these stakeholders and keep them informed as to how the bilateral negotiations with France are going.
To give noble Lords a quick heads-up, it is also worth mentioning that this is just one element of what we are discussing with the French at the moment. We are also discussing train driver licences, safety certificates and the overarching safety rules applicable to the Channel Tunnel. Again, these discussions are going well. We will bring more regulations to your Lordships’ House in the autumn and we will have the opportunity to scrutinise them in full. In any event, there are robust and effective contingency agreements and arrangements in place for those matters at the moment.
My noble friend Lord Kirkhope asked a question about services from Europe to the north. I will write a letter to him, if I may, because then I can explain more generally our plans for rail in the north and how they might link into European services.
The noble Baroness, Lady Randerson, asked about pre-Brexit and post-Brexit freight volumes. I do not have that information to hand, unfortunately; again, I will happily write to her.
If I have missed anything else, I will ask officials to look through Hansard very carefully and make sure that they pick up everything I have forgotten.
The Grand Committee stands adjourned until 5.10 pm, which is really quite soon. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person and others participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Motor Fuel (Composition and Content) and the Biofuel (Labelling) (Amendment) (No. 2) Regulations 2021
Considered in Grand Committee
That the Grand Committee do consider the Motor Fuel (Composition and Content) and the Biofuel (Labelling) (Amendment) (No. 2) Regulations 2021. Special attention drawn to the instrument by the Secondary Legislation Scrutiny Committee, 8th Report.
My Lords, the purpose of these regulations is to introduce E10 as standard petrol across Great Britain while ensuring that the current E5 grade remains available to those who need it. E10 petrol contains up to 10% renewable ethanol, double the amount that can be blended into today’s E5 grade. Increasing the renewable ethanol content can reduce annual carbon dioxide emissions by 750,000 tonnes, helping us to meet our ambitious climate targets.
The regulations also update labelling requirements that must accompany the sale of E10 to ensure that fuel consumers have the right information. Finally, the SI makes some necessary amendments to the Motor Fuel (Composition and Content) Regulations 1999 to correct for deficiencies and replace references to EU directives following the UK’s exit from the European Union.
Introducing E10 allows us to cut carbon emissions from cars, motorbikes and other petrol-powered equipment in use today. This is done by simply increasing the limit to which renewable fuel can be blended into standard petrol. It is one of the very few measures available to us today with an immediate impact.
E10 is a proven fuel that is already in use across the world, including in France, Belgium, the Netherlands and the US, to name but a few. We also have a valuable bioethanol industry in the UK that will benefit from increased demand; indeed, following our policy announcement, one large facility operator has already announced that it is recommencing production. These facilities play important roles in their local economy, employing hundreds of skilled workers directly and supporting thousands of jobs in the wider community.
That community includes the agricultural sector, with locally grown feed wheat used to produce ethanol. By-products, such as high-protein animal feed, are used by livestock farmers in place of soya products. It is vital to support these industries as we endeavour to build back greener, with low-carbon industrial hubs crucial to our path towards net zero by 2050.
Introducing E10 is part of a wider set of measures to encourage renewable fuels. Overall renewable fuel blending is incentivised through the renewable transport fuel obligation, or RTFO, obligating larger fuel suppliers to supply renewable fuels. However, because the RTFO allows for different ways to meet targets, it has proven insufficient to remove market barriers for the introduction of specific fuel blends such as E10.
As RTFO targets have increased over the past three years, fuel suppliers are now blending very close to the 7% biodiesel limit for standard diesel and 5% bioethanol limit for standard petrol. If we want to increase renewable blending further, we need to take additional measures now. While most diesel vehicles are approved to use only a maximum of 7% biodiesel, known as B7, the vast majority of petrol vehicles—over 95%—are cleared to use E10 petrol. Our immediate focus is therefore on E10.
Fuel suppliers and retailers have made it clear to us that, for technical reasons related to vapour pressure, the best time to introduce E10 is at the same time as the change from summer to winter fuel specification. This happens every September. To ensure we reap the full greenhouse gas benefits of E10 introduction, we have consulted separately on increases to the RTFO from January 2022, allowing for a short transition period. We will announce the next steps on the target increases soon.
While 95% of all petrol vehicles can use E10, some older vehicles cannot. That is why this instrument includes provisions to keep the current E5 petrol available in the higher octane super grade. The super grade is available nationwide but in areas with less coverage, such as in parts of Scotland, exemptions are available to ensure that everyone can access the fuel they need. We have also launched a comprehensive communications campaign involving local radio, roadside posters, social media and information on the forecourts. This informs motorists of the changes to petrol that will happen this summer and directs vehicle owners to the online compatibility checker, ensuring everyone can be clear on the right fuel for their vehicle or equipment.
The SI also makes amendments that are required following our departure from the European Union. We have replaced references to EU legislation with references to domestic legislation to ensure the ongoing operability of the fuel standards. It is also important to note that, as a result of this amendment, all petrol supplied in the UK will still meet the same standards as apply across Europe.
In proposing this statutory instrument, the Government have carefully considered a balance of interests. It recognises the need to maximise our efforts to decarbonise vehicles on the road today and support our domestic renewable fuel industry, while maintaining access to a suitable petrol grade for all. I believe introducing E10 petrol this September strikes that balance. I beg to move.
My Lords, I am grateful to my noble friend for that exposition of the regulations. I hope that her colleagues in the Department for Transport will take the opportunity, over the next few months, to listen to their colleagues in Defra because at the same time as considering this measure we are taking the Environment Bill through the House, which faces in a very different direction from that which underlies this measure.
Biofuels, as in taking human food and burning it in vehicles, are a scam. They cause much more environmental damage than alternatives and are absolutely not the way we should be going. Biodiesel, for instance, seems to contain quite high proportions of palm oil, sourced from the expansion of palm oil plantations at the expense of forests—putting “a tiger in your tank” in a way that Esso never intended. Bioethanol involves taking food that could perfectly well be used by humans and burning it. It puts pressure on landscapes which could well be used for rewilding and to bring nature back into this country, in a way that the Environment Bill majors on. I would welcome an integrated approach to where we get our transport fuel from.
The basic direction in favour of electric must be right; getting electricity from sources other than the destruction of the environment must also be right. I very much hope that this is the high-water mark of a failed European policy and that we will see no more of it.
My Lords, these regulations involve the transition from E5 to E10 for premium petrol. I thank the Minister and her officials for their previous assistance and help in explaining the purpose of these regulations. However, I share the concerns just expressed by the noble Lord, Lord Lucas.
The Secondary Legislation Scrutiny Committee has some harsh things to say about the way the regulations have been presented. It says that
“issues are raised in the Impact Assessment … that are glossed over in the Explanatory Memorandum”.
Specifically, the committee cites
“the role of E10 in propping up the UK’s struggling ethanol production sector”.
The impact assessment mentions the reason for this problem being lower than expected demand for ethanol across Europe. What are regarded as the reasons for this lower than expected demand? It may be that there is a sound reason for that, which could be increasing awareness of the disadvantages of ethanol as a solution to the problem of how to make our petrol less polluting by reducing emissions from it, or it could involve other European countries finding an alternative solution.
The second thing the committee cites is
“comparative CO2 savings from ethanol and other biofuels.”
It believes that there needs to be more clarity here.
Thirdly, the committee talks about
“the long term costs to motorists as E10 delivers lower miles per gallon.”
Taking this last point, although a gallon of E10 petrol might emit less CO2 than E5 petrol, if it burns faster and allows you to do fewer miles per gallon, surely the CO2 savings are all but, if not entirely, cancelled out? The picture is further complicated by the fact that E10 can actually be anything between E5.5 and E10, so changes or improvements are likely to be gradual. Is the Minister convinced that this is really the right way to go to reduce CO2 emissions? Are the Government convinced and confident that this is not their version of Gordon Brown’s ill-conceived push to encourage us all to buy diesel cars?
The Minister says that the industry supports this measure. It would, would it not? The ethanol industry is said to be struggling, so it would be bound to support this measure. The Government also say that the industry will not introduce E10 unless mandated by the Government. I am concerned that the Government are being led by the industry rather than by the environmental needs of the country and the needs of drivers.
Clearly, I support efforts to reduce greenhouse gas emissions from transport, which are now the largest single source of those emissions in the UK, but the noble Lord, Lord Lucas, rightly criticised the fundamentals of this. Ethanol production is mainly from crop feedstocks: wheat, sugar beet or corn. This is controversial as it takes up farmland that could be used for growing food. We are increasingly aware of the importance of growing more of our own food in the UK and relying less on imports because their environmental footprint is larger. Biodiesel is made from waste cooking oil, but the noble Lord, Lord Lucas, pointed to problems with that too.
The impact assessment warns that ethanol could at least temporarily replace other biofuels such as biodiesel, which has a higher greenhouse gas saving. Even if this does not happen, it will enable the Government to achieve only 7% of their additional transport savings required under their fifth carbon budget. That leaves 93% to be tackled by other means.
My question to the Minister is: why are the Government not being bolder? We no longer have to wait and work at the pace of the EU. EU targets are more than a decade old and have certainly led to significant improvements, but we now face real urgency to do something in this country. There is still another 14 years of sales of petrol and diesel vehicles before the Government’s 2035 target comes into view. The Government must devise new ways to counter the increase in average emissions from new cars as drivers opt for larger vehicles. Despite the technology being there, the emissions are going up on average—not down, as they should be.
Far-distant targets are not effective. We now need annual targets so that there is a constant process of improvement. We need a system of tax rewards and penalties to encourage faster take-up of the less polluting models, with the greatest rewards for those buying ZEVs.
I once again thank the Minister for her explanation of the purpose and content of these regulations. As she said, to reduce greenhouse gas emissions, premium petrol in the UK is currently blended with up to 5% ethanol, known as E5 grade. These regulations require the ethanol content to be increased to up to 10%, E10 grade, with effect from 1 September this year, to meet future emissions targets. E10 petrol has been approved for sale in the UK since 2011 but no supplier has chosen to move above 5%.
The E10 petrol requirement will apply only to filling stations with an annual fuel throughput of over 1 million litres per annum. What percentage of petrol sales by litres is through filling stations with an annual fuel throughput of 1 million litres or less per annum?
The E10 requirement is that premium 95 grade petrol contains at least 5.5% ethanol all year round, but how does that help us reach blending of up to 10% in a meaningful way? What is the Government’s objective with these regulations as far as the E10 level of blending with ethanol is concerned, because 5.5% seems an inadequate increase from the current requirement?
As the Minister said, biofuel blending levels are generally driven by a separate government scheme, the renewable transport fuel obligation, with the next RTFO increases planned for 1 January next year. The Explanatory Memorandum indicates that during the period between these regulations taking effect on 1 September 2021 and the RTFO amendments in January 2022, the policy will cost the motorist around £87 million per year and decrease CO2 savings. The Secondary Legislation Scrutiny Committee queried why the start of these regulations could not be aligned with the complementary increase in the RTFO targets from 1 January next year, or alternatively why the date of the RTFO target increase could not be changed.
The committee accepted that the Department for Transport’s response on these two points was persuasive but said it would have been even more convincing if the relative costs of the extra disruption to the industry
“were estimated for comparison with the impact on the consumer and on CO2 savings.”
Can the Government now provide that estimate of the relative costs of the extra disruption to the industry if the existing schemes were synchronised for this changeover?
The SLSC commented that while the Explanatory Memorandum indicates a negative impact on consumers during the changeover period, the impact assessment indicates that, due to lead times, the effects of implementing the two regulations separately may not be as great as they first appear. The committee said that the reply on this point from the Department for Transport made the consequences of transition to E10 less clear, and suggested that this House might wish to ask the Minister for a clearer view of the effects of introducing the two sets of regulations three months apart. I am now asking the Minister for that clearer view.
The SLSC said that issues raised in the impact assessment, as the noble Baroness, Lady Randerson, has said, had been glossed over in the Explanatory Memorandum on the instrument—issues such as the role of E10 in propping up the UK’s struggling ethanol production sector, the comparative CO2 savings from ethanol and other biofuels, and the long-term costs to motorists as E10 delivers lower miles per gallon.
On the UK’s ethanol production sector, capacity has regularly been seriously underutilised. Significant amounts of bioethanol supplied under the RTFO come from outside the UK. UK producers have said that if the UK does not introduce E10, it is likely that the domestic industry may not remain viable. Could the Government spell out in their response, with some specific facts and figures, the impact of E10 on the UK’s ethanol production sector?
The SLSC commented that the Explanatory Memorandum was based on the assumption that increased ethanol content by changing to E10 was the only way forward. However, the impact assessment indicates that the greenhouse gas savings from the additional ethanol are lower than the savings from other biofuels such as waste-derived biodiesel, but concludes that, provided that the RTFO target is suitably adjusted, E10 will result in longer-term reductions in greenhouse gas emissions. Could the Government explain why blending petrol with ethanol is perceived as the most effective way to reduce greenhouse gases, taking account of all the environmental considerations to which reference has been made?
The Explanatory Memorandum appears to suggest that the additional costs to motorists of the switch from E5 to E10 will be transitional, since those costs and the decrease in CO2 savings will be only until the RTFO targets can be increased, yet the impact assessment indicates there will be significant long-term costs to consumers because E10 fuel is less efficient. The impact assessment concludes that fuel costs for petrol cars are estimated to increase by 2.3% as a result of moving from 5% to 10% ethanol content, meaning additional fuel-supply costs to consumers of E10 petrol of £701 million over 10 years because of the reduced miles per gallon. Further costs of £169 million over 10 years are estimated for consumers whose vehicles will accept only E5 petrol. Could the Government clarify what the position is? Are the additional costs to motorists transitional until RTFO targets can be increased, as per the Explanatory Memorandum, or are they long-term, as per the impact assessment?
Lastly, the SLSC concludes that the Explanatory Memorandum presents a rather sketchy view of the rationale for, and the consequences of, the proposed change to E10 petrol, and recommends that whenever the policy requires an impact assessment it should be made available alongside the published draft, which did not happen in respect of these regulations. What consideration have the Government given to this recommendation from the Secondary Legislation Scrutiny Committee?
I thank all noble Lords for their contributions to today’s debate. I also thank the Secondary Legislation Scrutiny Committee for raising various matters, a number of which have been echoed by noble Lords today. Most recently the noble Lord, Lord Rosser, mentioned that the impact assessment was not published alongside the draft SI. That impact assessment was already a public document, but we will certainly take that away and I hope that will not happen again. Perhaps we should make sure that we signpost noble Lords to previously published documents where we possibly can.
A number of issues have been raised, and I will of course write with further details if I am unable to cover them in my remarks. This is very much a question of balance; there is an awful lot of balance to be had here. Anybody working in the field of transport knows that there is no silver bullet to solve carbon emissions in transport. The solution will be in a large number of interventions, some of which will have to happen over a large period of time. We will be publishing the transport decarbonisation plan fairly soon, and that will set out the firm foundation on which our thinking is based.
I shall start by addressing the wider focus on E10, which is the last low-hanging-fruit option for renewable fuel blending. Again, it is about balance: it works alongside the RTFO. There are literally no other short-term options for reducing emissions from road transport immediately, so we have to consider not only the balance of what the intervention is but how quickly it can achieve the goals that we need to achieve. We know that using waste biodiesel blended from fossil diesel saves more carbon dioxide per litre than bioethanol. That is true but we are up to the limit on biodiesel—up to 7%. Our only option now is therefore to increase petrol to E10. We also know that the vast majority of cars can use E10 successfully.
The interaction with the RTFO is really important. I noted that there are many reasons why the gap has arisen between the E10 implementation and the changes to the RTFO, including the technical reasons relating to the vapour pressure and the switchover of the type of petrol that is sold on the forecourt. However, we also know that the RTFO target can be changed only at the start of each calendar year because it is a market-based scheme; participants will of course plan their compliance through the whole of the year, so if we changed it mid-year it would be the same as a retrospective change and therefore deeply unwelcome. So the introduction of E10 in September, followed by increasing the targets in January, allows for a transition phase. We expect that during this phase blending will be ramped up, and that existing fuel stocks will be used up.
It is worth noting, as did the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, that the fuel for E10 can be from ethanol of 5.5% upwards. This flexibility is intentional to ensure that the overall RTFO targets can be delivered cost-effectively, based on market prices for different biofuel options, and to allow for seasonal and geographic variations. There would be no point in mandating immediately a much higher percentage for blended petrol.
Furthermore, the changes were made under two different pieces of legislation and different powers, so that has had an impact on how we can introduce this measure. There is of course a need for a comprehensive communications campaign, so there was always a need too for a date, at some stage in future, in order that consumers are well aware of what they will be buying when they go to the pumps in September.
I turn to the carbon savings in the four-month transition period between the introduction of E10 and the increase of the RTFO targets at the beginning of next year. The impact assessment did not specifically model the impact of the four-month period between these two interventions. A snapshot of the annual modelling suggests costs of around £29 million, with an emissions-saving reduction of around 0.07 megatonnes of carbon dioxide, but that shortfall in emissions savings —if it happens, because again these are assumptions—would be recouped by the end of January next year following the RTFO target rise. As I say, there will be a net overall carbon dioxide benefit of around 0.73 megatonnes by the end of 2022.
Exactly how the suppliers meet their RTFO obligations at the end of 2021, and the speed with which they ramp up the ethanol blending, is unknown due to commercial sensitivities. However, we can say with certainty that by introducing E10 we are maximising the available capacity for biofuel blending in the coming years and providing the space to increase the RTFO targets as a step change in 2022.
Noble Lords have noted that biofuels produce different emissions reductions from their fossil fuel comparator. The noble Lord, Lord Lucas, mentioned the impact of blending biodiesel. It is often made from used, or waste, cooking oil and saves more carbon dioxide per unit of energy delivered than for ethanol, although the difference is relatively small. As a result, where ethanol displaces waste biodiesel in the fuel mix delivered under the RTFO, the actual emission saved can be reduced. That is why this has to happen along with the changes to RTFO targets from the start of next year; again, it is all about balance.
Turning to the costs and the impact on the motorist, although we believe blending the petrol at E10 is unlikely to alter the pump price of standard 95 octane petrol, as the noble Baroness, Lady Randerson, pointed out, drivers might experience a small reduction in miles per gallon. This will vary quite significantly by vehicle and the specific fuel blend used by that supplier, as well as the driving style. The overall reduction in miles per gallon is similar to driving with the aircon on, or with underinflated tyres.
Based on simplified assumptions and a potential worst-case scenario, the impact assessment estimated that each litre of E10 could contain around 1.7% less energy, which could result in increased fuel costs of around £70 million per annum. However, the industry has also suggested that there could be a change to the energy content, because different blends have different energy content according to the constituent parts of the petrol. This assumption could therefore be very much the worst-case scenario.
On incompatible vehicles, we again feel that there will be a very limited impact. Of the 5% of vehicles that are currently incompatible, the vast majority are classic or cherished vehicles, so fewer than 1% of the cars that are everyday run-arounds cannot use E10. As I have mentioned, we will make sure that E5 petrol will be available to owners of incompatible vehicles. It should also be remembered that those who own classic or cherished cars often use the higher super grade anyway, so they will see no difference in price. Again, the estimate of £70 million that might be added to fuel costs is very much a worst-case scenario. It assumes that all incompatible vehicles currently do not use the super grade, and we know that is not the case.
I turn to the bioethanol sector. The noble Baroness, Lady Randerson, suggested we were being led by the nose by industry. There are two different industries here and they both want it, while being on slightly different sides of the coin. We have the bioethanol industry and the traditional fossil fuel suppliers, and those suppliers want us to give them a kick because in Germany they did not give the industry a kick and have not had a very successful rollout of E10.
I have already mentioned that the bioethanol sector is a valued sector in this country and that, for the time being, it is essential that we look at all different ways of reducing our carbon emissions. Bioethanol is one of those and will provide highly skilled jobs and support the agricultural community, but I accept my noble friend Lord Lucas’s point that environmental concerns are also critical. Biofuels, supported under the RTFO, comply with strict sustainability and minimum greenhouse gas savings criteria. There are protections for biodiversity and land use change, such as deforestation. I will probably write more in a letter because I am aware that I am running out of time.
These regulations are about balance. We need to balance the need to maximise our efforts to decarbonise vehicles on the road today and support our domestic renewable fuel industry, while maintaining access to a suitable petrol grade for all. I believe that we have achieved that balance and that by introducing them now, with changes to the RTFO in January, we will achieve our ambitions.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
Committee adjourned at 5.44 pm.