Delegated Legislation Committee
Draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: James Gray
† Bardell, Hannah (Livingston) (SNP)
† Brereton, Jack (Stoke-on-Trent South) (Con)
† Cunningham, Mr Jim (Coventry South) (Lab)
† Day, Martyn (Linlithgow and East Falkirk) (SNP)
† Double, Steve (St Austell and Newquay) (Con)
† Eagle, Maria (Garston and Halewood) (Lab)
† Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)
† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)
† Herbert, Nick (Arundel and South Downs) (Con)
† Morris, Anne Marie (Newton Abbot) (Con)
† O'Brien, Neil (Harborough) (Con)
† Pearce, Teresa (Erith and Thamesmead) (Lab)
† Quince, Will (Colchester) (Con)
† Smith, Nick (Blaenau Gwent) (Lab)
† Tolhurst, Kelly (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)
† Twigg, Derek (Halton) (Lab)
† Watling, Giles (Clacton) (Con)
Mems Ayinla, Committee Clerk
† attended the Committee
Sixth Delegated Legislation Committee
Tuesday 12 March 2019
[James Gray in the Chair]
Draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Gray. Since the referendum decision to leave the EU, the Department for Business, Energy and Industrial Strategy has undertaken a significant amount of work on withdrawal agreements, preparing for a range of potential outcomes, including a no-deal scenario. This statutory instrument has a single, yet crucial, objective to continue to protect consumers and give businesses the clarity that is needed to operate under a no-deal scenario. It will ensure that in the event of no deal, the UK continues to have a robust and highly effective product safety and legal metrology regime.
The UK product safety and legal metrology regime is among the strongest in the world. The toys our children play with, the electrical items in our homes and the petrol pumps on our garage forecourts all rely on the legal framework carried by that legislative regime, and it is vital that post exit we retain such a robust system. This SI will not change the system or approach, which I know are supported by business and enforcement authorities.
The changes made by this instrument to 38 product safety and metrology laws will ensure that the UK’s product safety and legal metrology framework will remain as it is—as followed by the UK as an EU member state—but that it is converted into a UK regime. The changes include: retaining the requirement for conformity assessments to ensure products meet the essential requirements set out in the legislation; retaining the need for assessment by a third-party organisation to confirm that a product can be placed on the market, where it is currently required; retaining the standard systems to give rise to presumptions of conformity with the legislative requirements; and ensuring UK market surveillance systems will continue to work, to limit the number of unsafe and non-compliant goods available to UK consumers and businesses.
Without this no-deal SI, we risk disruption and confusion for businesses and enforcing authorities, limiting our ability to remove a wide range of unsafe or non-compliant everyday and high-risk products from the market, as there will be uncertainty about the extent, impact and application of the existing legislation.
Before I set out the key provisions in more detail, I will explain the approach we have taken and highlight what we have done to make an unusually large SI easier to navigate. We are laying a number of separate product regulations before the House together, because there are many cross-cutting issues that are the same for the majority of products featured. They have similar definitions, obligations and requirements needing similar fixes, and it made sense to group them together into one SI. For example, many of the product areas require third-party conformity assessment bodies to assess the products against the legislative requirements and some require the manufacturer to self-certify and mark the product, as confirmation that the product complies with the requirements. This similarity across the SI makes it easier to use for businesses that have to comply with the legislation and for the enforcement authorities, such as trading standards, which advise and enforce across the wide product safety system.
Another reason for the size of the instrument is the lengthy technical schedules that are included. These are widely used by industry. Including them together removes the effort for business and stakeholders in having to cross-reference separate EU directives and allows them to understand the requirements of UK law, given that they are all set out in one place alongside the related product schedule. Incorporating those annexes accounts for a third of the SI.
Throughout November, after the publication of the technical notices, the draft SI was shared with several stakeholders for information, via a series of reading rooms. The purpose of this exercise was to inform and update stakeholders on our plans for the product safety and legal metrology framework after exit. Stakeholders told us that this was a worthwhile exercise, reassuring them about our approach, which they supported. Furthermore, this engagement has meant that we have been able to understand the main requirements and concerns of businesses, industry experts and enforcement agencies, which were also able to give their feedback on some specifics about the draft SI, and which we welcomed, allowing us to make drafting amendments as appropriate.
I am interested to hear the Minister refer to stakeholders and these reading rooms. It is all very well referring to business, but there are other interests—what about consumers? Were there any consumer organisations at these reading rooms? We do not have a number for how many stakeholders in each area were actually consulted.
I thank the hon. Lady for that intervention, and I can answer her questions. We consulted with more than 6,000 business, which are quite important in this legislation as they have to understand and implement it, and are ultimately responsible for placing safe products in the marketplace. It was therefore vital that we could confirm that with stakeholders. I can reassure the hon. Lady that organisations such as Which? were invited to our reading rooms and fed into the process, and that consumer groups were given the same amount of access to the draft SI.
I appreciate that there are concerns about the impact of such a significant instrument on business. Despite being de minimis, we have completed and published a full impact assessment given the importance of this SI and in the interests of transparency. During development of it, we have been mindful of the impact on business of the changes to processes as a result of the UK’s exit from the EU. Where possible, we have made specific arrangements, including an 18-month transitional period for importers regarding labelling and a 90-day transition period for notifying a new UK database of cosmetic ingredients. Businesses have welcomed that.
Having touched on process, I move on to addressing some more detailed points about the substance of the regulations, given the issues that cut across many of the individual schedules. The regulations provide for continued recognition of goods assessed against EU regulatory requirements, including continued acceptance of products lawfully carrying the CE marking and of product certifications carried out by EU recognised bodies. This means that products that meet EU requirements in these areas can still be placed on the UK market after exit. In the event the UK leaves the EU without a deal, this is intended to be for a time-limited period and will help minimise disruption to the public and business in the event of no deal. At the same time, the regulations establish an equivalent UK framework to ensure that the legislation functions domestically once we leave.
I will now turn in more detail towards some of the further elements of the framework, including the new UKCA marking and the establishment of UK approved bodies.
On the point about CE marking, I knocked a door in my local area at the weekend, in Livingston, and was met with a chap who worked for a mechanical engineering company. He was particularly concerned about this and asked how, despite the fact that the UK may want to have its own regulations, we will keep up with the EU and what impact that will have on businesses. Can the Minister tell us about what impact assessment she has done on that?
I thank the hon. Lady for her intervention, particularly regarding CE marks, which I shall go on to discuss. I want to reassure her that part of developing this UK framework and having it all in the one place is to ensure that, in a no-deal scenario, we can improve and keep in step with any improvements in regulations. In fact, when scientific evidence suggests that we can make a change, powers that previously referred to the European Commission are given to the Secretary of State. In some respects, the SI gives us more flexibility to make those changes.
From my past knowledge, I can tell the Committee that we were part of the formulation of some of the regulations, particularly as regards some the areas covered and some of the technical and particular product requirements, when they were considered by the European Union. I am therefore confident that, with our focus on product safety and the development of requirements, that we in the UK will continue to operate as we always have done in this area.
The UKCA marking will cover most goods subjected to CE marking. Whereas the CE marking indicates compliance with EU rules, the UKCA marking will indicate compliance with UK rules. Products lawfully made and assessed against EU regulatory requirements, including those with CE markings affixed, will continue to be accepted on the UK market. The vast majority of businesses will therefore be able to continue applying the CE marking as they do now, and they will not need to use the new UKCA marking.
It is legally necessary to create the new UK marking as part of a domestic legal framework so that products can still be assessed by UK-based conformity assessment bodies, which will no longer be recognised as meeting the requirements of the EU legislation in a no-deal scenario, meaning that manufacturers using them will no longer be able to affix a CE marking to products.
There is a requirement that some of the products covered by the legislation should be assessed by third-party organisations, called conformity assessment bodies, before the product can be placed on the market. For most of the products within the scope of this legislation, the conformity assessment bodies are usually called “a notified body”, and they play a valuable role in ensuring products available to businesses and the public are safe, and are produced according to a legal framework.
The EU has made it clear that in the event of a no-deal exit, it would no longer recognise work carried out by UK-notified bodies to assess products for sale on the EU27 market. That is why we are putting in place a UK framework that will allow UK bodies to continue to assess products. This benefits not only the bodies themselves but also their customers, who might not be seeking to export to the EU and would prefer to continue to have their products assessed by a body established in the UK. Therefore, for areas within the scope of the legislation, UK-based notified bodies will automatically be given new status as UK-approved bodies. Products successfully assessed by these bodies will then be marked with the UKCA marking before being placed on the UK market.
A further common element of the product legislation covered by this SI is the use of authorised representatives, commonly known as ARs. These are natural or legal persons established in the European economic area who can be appointed by a manufacturer of a product to carry out certain tasks on their behalf. The regulations provide for the ongoing recognition of existing ARs in the EEA, however any new AR appointed after exit day will need to be based in the UK.
For cosmetic products, a different approach is being taken because of the risk they pose to human health. Responsible persons playing a key role in ensuring the safety of cosmetic products on the market will be required to be based in the UK rather than the EEA from the point of exit.
To conclude, the regulations establish a domestic product safety framework in the event that the UK leaves the EU without a deal. They are making only the changes to the framework that are needed to ensure the UK’s product safety and metrology system functions effectively and to the same high standard after exit; otherwise they maintain and secure the current system in domestic legislation. As hon. Members will recognise, it is essential that the UK has a functioning product safety framework in place in the event of a no-deal to prevent a flood of unsafe and non-compliant products into the UK market. I urge the Committee to approve the regulations.
It is a pleasure to serve under your chairpersonship, Mr Gray. We are 17 days from our departure from the European Union. It is perhaps no wonder that statutory instruments are being rushed through Parliament. Once again, the Minister and I are here to discuss a statutory instrument that makes provision for the regulatory framework after Brexit in the event that we crash out without a deal. On each such occasion, my Labour Front-Bench colleagues and I have spelled out our objections to the Government’s approach to secondary legislation. The volume and flow of EU exit secondary legislation is deeply concerning in respect of accountability and scrutiny.
The Government have assured the Opposition that no policy decisions are being taken. However, establishing a regulatory framework inevitably involves matters of judgment and raises questions about resourcing and capacity. Secondary legislation ought to be used for technical, non-partisan, non-controversial changes because of the limited accountability it allows. Instead, the Government continue to push through contentious legislation with high policy content via this vehicle. As legislators, we have to get it right. These regulations could represent real and substantive changes to the statute book and, as such, they need proper, in-depth scrutiny. In that light, the Opposition would like to put on the record our deepest concern that the process for considering these regulations is not as accessible and transparent as it should be.
Today, we are focusing on the SI on product safety and metrology, which has been called a “beast of an SI”, to quote a story in The Times on 12 February. It is 636 pages long, weighs 2.5 kilos and puts together 11 issues that would usually be in separate documents to be sifted through. The Secondary Legislation Scrutiny Committee was damning about the length and scope of the SI and the Government’s approach to bringing it to Parliament. It notes that
“the exceptional size and complexity of the instrument inhibit effective parliamentary scrutiny of the proposals (both by this Sub-Committee and by the House in debate), carry a considerable risk that the whole instrument may have to be withdrawn if a single serious drafting error has been made (as happened in this case), and reduce the accessibility of the legislation. We find that the Department may have chosen the approach for its own convenience, rather than in the interest of Parliament or those affected by the proposals”.
I appreciate the Minister’s attempts in the last few days to bring forward more information to help us scrutinise the draft regulations, but those attempts cannot justify the size and scope of this secondary legislation. It risks setting a precedent, and risks the democratic scrutiny that is vital to bringing about new legislation. In light of this, will the Minister make a commitment that this does not set a precedent for bundling significant changes into one SI in the future?
The statutory instrument relates to a no-deal scenario under which the UK leaves the EU without a deal. Despite the Prime Minister’s claims in October 2017 that leaving the EU would not negatively impact consumer protections, the Government’s own no-deal analysis wholly contradicts that. There is serious concern and uncertainty about the impact of a no-deal scenario on consumer protection, as it may essentially water down 40-plus years of progress in this area. Major consumer groups such as Which? have come out strongly against a no-deal Brexit, arguing that it could be catastrophic for consumer protections, many of which are intrinsically linked with the EU.
The SI attempts to transfer the rights and regulations from EU law into UK law, and in the process to iron out some of the deficiencies that would arise as a result of the UK leaving the EU. Under a no-deal scenario, this is a necessary piece of legislation to ensure that we continue to enjoy important consumer protections. I do not dispute that. However, further scrutiny reveals a few problems. First, the SI proposes that following our departure the UK will no longer be able to use the CE mark to identify safe products. That will be replaced in the UK with a new “UK conformity assessed” marking—the UKCA. The Government have said that they will continue to accept the CE mark until further notice. Will the Minister outline what assessment her Department has made of the timeframe for doing that?
Furthermore, the CE mark is a trusted and established mark that gives consumers the confidence to purchase products. That is a basis of a healthy economy: one where consumers have trust that the products they buy are safe. It will take significant work to bring the UKCA to the same level of credibility. What resources are there and what actions are the Government taking to ensure that people are aware of the new UKCA marking?
Furthermore, what discussions have the Government had with the European Commission about it accepting the UKCA mark in a no-deal Brexit, given that if it does not, there will be no incentive for foreign manufacturers to have their products certified in the UK? Rather, they will get their CE marking, assured that it will be accepted in the UK. What assessment have the Government undertaken of the EU not recognising the UKCA marking, and the impact this will have on consumer confidence and business activity in the UK?
Another point of contention is market surveillance following the UK leaving the EU. The UK will lose access to RAPEX, the EU’s rapid alert system, and the information and communication system on market surveillance, and replace them with a UK-based database on market surveillance to help us remove unsafe goods. Information sharing is a vital element of our continued good consumer protection. The RAPEX system is a good example of UK co-operation. This SI and the Government’s failure to secure a commitment on RAPEX risk losing the vital information sharing that has been critical to the safety of products across the EU.
We know that the increased transfer of responsibilities to UK authorities will increase the workload of the extremely overstretched trading standards bodies, which have suffered cuts of 40% since 2010. What assessment has the Minister made of the impact of a no-deal Brexit on local trading standards and their workload? Furthermore, what discussions has the Minister had about securing further resources for trading standards bodies and other enforcement bodies, so that consumers are reassured they will be safe in the event of no deal? I have consistently asked the Minister that question. Has she taken steps to make such assessments? It is vital that we are aware of the cost to local enforcement bodies so that we can plan ahead.
The explanatory memorandum outlines that an impact assessment was made and an informal consultation was undertaken with cross-representation of stakeholders, including trade associations and other industry representatives. It is suggested that there is no significant impact on business and other organisations. On the same page, it contradicts itself by suggesting that familiarisation costs will impact around 241,000 businesses to the tune of some £19.6 million and a further £1.2 million for cosmetic products specifically. In addition to the costs a no-deal Brexit would have for business, even the familiarisation costs are not insignificant, particularly for small businesses with very tight margins.
Furthermore, I am sceptical about the calculations. It is suggested, for example, that the assessment of the impact is based on a corporate manager or director taking three hours to familiarise themselves with the new legislation. I simply suggest to the Minister that it may take far longer than three hours for a manager to read and digest all the information in the 600-plus pages and share it with staff across the organisation. If the regulations pass today, what plans does the Minister have to bring the details of the SI to the public and particularly to the businesses it affects in bite-sized and understandable language to make it easier for businesses to familiarise themselves with it?
I have spoken to many consumer bodies that have been seriously concerned about the lack of engagement from the top levels of Government during the Brexit negotiations. Consumers are at the heart of our economy, yet there has been little interaction with consumer groups throughout the Brexit process. It is an indictment of the way in which the Prime Minister has overseen the negotiations. It is suggested that there was an informal consultation with groups. Will the Minister provide a list of all the organisations that took part in the consultation process and the nature of those meetings?
I conclude by making it clear that I am deeply concerned about the length and breadth of the SI. While I do not dispute the need for it in a no-deal scenario, the Opposition will vote against it on the basis of the process by which the Government have sought to take it through Parliament.
It is a pleasure to serve under your chairmanship, Mr Gray. I am grateful to the Front-Bench spokespersons for setting out the case. It certainly is a mammoth tome, and I am glad that I got it this year and not last year when I was waiting for a hernia operation. Humping it around Parliament was a fair job. I emphasise the point made by the Opposition spokesperson that it will take considerably longer than three hours to go through and digest it, even with an informed summary.
While I have some sympathy for rolling different measures together to make things simpler for the future, I noticed in the impact assessment that the principal reason for doing this was for
“effective use of Ministerial and Parliamentary time.”
Bearing in mind that this is a no-deal provision, we could have made much better use of our time by simply ruling out no deal in the first place, had we had the sense to do that. However, we are where we are.
I find myself concerned about a number of points, many of which have been mentioned already. I worry about things such as the loss of access to cross-border regulators such as the European consumer centres, which affect customers and not only businesses. Coming on to the businesses, which is the main issue, points have been made about the simple cost to them of doing this: 241,000 businesses, many of which will be very concerned, spending around £19.6 million—I fear that is a conservative estimate—is too much and we should not be forcing that on people during such a hard-pressed and stressful period as the Brexit process.
Of course, all of this could have been avoided by remaining in the single market and customs union, and avoiding having dual sets of standards. I worry about dual standards, from both a business and a consumer point of view, so I too will not be supporting the regulations today.
It is a pleasure to serve under your chairmanship, Mr Gray. I thank both Front Benchers for the way in which they set out the points they made, and the SNP spokesman for his contribution.
I am deeply concerned about this SI. Apart from the fact that it is as thick as a brick and weighs probably more than that, I find it difficult to conceive that anybody who might be affected by it could understand the meaning of it by reading it. It simply is not possible.
Let me give the Minister an example of what I mean: if we turn to schedule 26, which is on page 318 and is something I have picked out at random, it sets out the amendments to the Non-automatic Weighing Instruments Regulations 2016. The schedule goes on to set out what the amendments to those regulations are, but needless to say, the regulations that are being amended are in a different document that, by the way, is not in the room. If I wanted to assure myself that the measures in the SI were doing what they purported to do, it would be difficult for me to do so, because I do not even have the document that is being amended present in the Committee Room.
I know we now have the wonders of the internet, but when I was a Minister it was the practice always to have present in the Committee Room all those documents—primary legislation and statutory instruments—that were being amended, so that if somebody sitting in the Committee wished to consider whether a particular clause was doing what the Minister, in all good faith, said it was doing, they could check that. It is impossible today for us to do that.
It is impossible—and it will be impossible should this instrument pass—for anybody picking it up and reading it to understand, without having a whole library of legislation, what on earth the provisions are doing and whether what they purport to do is what they do do, or whether, because the civil service is so hard-pressed these days from having to produce these documents, there has been some technical error in the drafting. That is a problem that I have referred to in other SI Committees. Not having the documents that are being amended in the room is a problem.
I turn now to the fact that this is the Tyrannosaurus rex of SIs, or the Giganotosaurus—one of those enormous dinosaurs that got really, really large—and the impact assessment tells me in annex A that 38 pieces of legislation are subject to amendment by this SI. Some of them are extremely important bits of legislation in terms of public and consumer safety. They are also extremely varied, from the General Product Safety Regulations 2005 through to specific regulations such as those on toy safety, the making available on the market and supervision of transfers of explosives, aerosol dispensers, gas appliances, cosmetics and cosmetic products, intoxicating liquor, consumer protection more generally, weights and measures, and all kinds of things. I could read out all 38 pieces of legislation, but that would detain the Committee for too long. However, that is an illustration of the problem.
The hon. Lady is making a powerful and appropriate point. Those 38 measures include ones on offshore installations: the Offshore Installations (Safety Case) Regulations 2005 and the Offshore Installations (Offshore Safety Directive) (Safety Case etc.) Regulations 2015. What business do those have being in a document with cosmetics? That is not to diminish the importance of regulations about cosmetics, but those on offshore installations are vital and should have had specific time dedicated to them. Is not the reality that we are in such a rush and a dash to do something that might never even need to be used that such things are being rushed through without proper scrutiny?
I cannot but agree with the hon. Lady. The scope and range of the legislation subject to amendment by this one SI are extensive and startling. Many of those pieces of legislation do not have obvious connections to others being amended by the same instrument.
I must agree with my hon. Friend the Member for Sheffield, Brightside and Hillsborough about the assessment of the costs of implementation. I bear in mind the fact that the Minister has said, in total good faith I am sure, that the aim of the draft regulations is to keep things as they are in the envisaged circumstances of no deal. I do not suggest for a minute that there is any bad faith in any of this, but it is impossible for us to consider properly whether what the Minister seeks to ensure happens will actually happen. The extent and size of the regulations, and the way in which the legislation is written, with the powers that Ministers have given themselves to change legislation, is impossible to scrutinise properly.
In answer to my intervention, the Minister told us about stakeholder reading rooms and the 6,000 businesses involved. That sounds like a lot until one turns to page 21 of the impact assessment: the number of manufacturing industries covered by specific product safety regulations amounts to 24,255. Just over the page, in table A1.2, we see that other manufacturing industries producing consumer products amount to 38,614. The wholesale industries affected consist of some thousands more and the retail industries affected consist of very many thousands more businesses.
I also note that paragraph 87, on page 17 of the impact assessment, states:
“Based on data from the ONS…around 95% of manufacturing businesses and over 96% of distributors in the industries affected by the SI are small or micro businesses.”
Those are exactly the kinds of businesses that simply do not have the time or capacity—if they are to stay in business—to buy this statutory instrument; to look in it to cross-reference it to the EU directives, other statutory instruments and primary legislation that it amends; to understand and interpret the legal language, of which there is a lot; and therefore to understand what their obligations are.
I, too, will vote against the draft regulations because they are too large a piece of legislation, with too wide a scope to enable those of us scrutinising it in Committee the appropriate opportunity to do so properly. Not only that, but even after the SI passes, it will be almost impossible for anybody who is bound by an element of it to pick it up and understand what on earth it is that they are bound by.
The Minister says that the SI is not intended to make any changes, but changes may have been made, even inadvertently, through the language it uses. We have been unable to check that; I certainly could not check that in Committee today, in respect of even one of the pieces of legislation it amends, never mind 38 of them. It is an exceedingly bad way of making law, it is to be deplored, and I will not be supporting it.
I thank Committee members for their contributions. I will correct a statement I made to the hon. Member for Garston and Halewood. I said that over 6,000 businesses had been part of the consultation, but the number was 4,000—I knew that, but I was thinking about a figure for something else. I apologise.
The reason the SI is 600 pages long is purely to allow us to bring changes across a number of pieces of product safety together into one bundle, to make it easy for businesses, trade associations, enforcers and consumers to go to one place to find all the legislation that affects similar and cross-cutting issues, in a no-deal scenario. There is absolutely no intention to use this process as an opportunity to reduce transparency or the amount of scrutiny that SIs receive.
The hon. Member for Garston and Halewood is quite right that the intention of the SI is absolutely not to change policy; it is about making the statute book function from day one, were we to leave the European Union without a deal. As a Minister responsible for this area, and having spent my whole life prior to entering the House working with products, whether in the European Union or the UK, I would not want my legacy to be to have done something detrimental to consumers or businesses in a no-deal situation.
The Minister is being generous in giving way. I accept that the regulations are all in one place, but does she accept my point that if a fictional local businessman from a microbusiness were to come along and think, “Well, I need to check what I am doing if there is no deal,” he would be unable to understand what on earth this meant. It refers to documents that are not attached to it. Anyone would need to have the House of Commons Library available in order to get all the documents together to cross-reference them and understand what on earth any of it means
I understand the hon. Lady’s concerns, but the majority of the changes in this SI are fixes. I take her point; she is an experienced parliamentarian who has been a Minister in the past. I understand that I am doing things in a way that are not really up to the standard that she would have expected from me. However, on the issue of establishing a framework, businesses are keen to have all the information in one place, where it is simple to access. I know from my previously work that having to keep up to date with EU regulation, which changes every other week, can sometimes be a challenge. The beauty of this arrangement is that it is a UK framework. It does not make a policy change; it concerns a functioning statute book after exit.
We have consulted businesses and trade associations because, in the event of no deal, they are fundamentally responsible for product safety. We have engaged with business. I do not know whether members of the Committee have been lobbied directly by firms, but I have had MPs ask me when the mega-bundle is going through and the SI coming to the House, because they want assurances on EU exit, particularly on conformity. I know that what I am saying might not alleviate some of the Opposition’s concerns, but I want to make it clear that these provisions are about making the process easier for enforcers and businesses, so that we are able to maintain the high standards that we currently have in the UK.
I mentioned that there are no significant changes to elements of product safety. The measures are about fixes and making the process workable. Many of the businesses that will be interested in the SI, or need to understand its content, will not need to refer to all 600 pages. They obviously include the 38 different sets of regulations that cover different areas. We have put the schedules in with those 38 areas, alongside the changes, so that people can turn to the specific areas in the UK framework that interest them.
As for business impact, there will of course be an impact on business when moving to any new framework. In the event of a no-deal scenario, businesses or individuals may have to familiarise themselves with particular changes. To be frank, it is quite within the competence of organisations that are already adhering to the existing legislation to understand where the small changes have been made.
The hon. Member for Sheffield, Brightside and Hillsborough asked how we will assess the timeframe in which we will continue to maintain or accept the CE mark for products placed on the UK market. The timeframe is yet to be decided. It will be discussed in conjunction with businesses and interested parties. The focus is on making this an easy transition for businesses in the UK and for the flow of products. The intention is to have a UK mark so that UK manufacturers, when they have to place a product on the UK market, can establish that they are certified in the UK and meet the necessary requirements.
In a no-deal scenario, however, any UK business wanting to place a product on the EU market would still have to comply with certain regulations there. Currently, the EU has said that it will not recognise or accept the UKCA mark. Quite rightly, the EU has the CE mark to indicate conformity. Any acceptance of a UKCA mark would be part of further trade negotiations, into which the Government may or may not enter, regarding acceptance of our product standards in future. That would be usual in any trade deal as a third country, when operating not just with the EU but with any other country in the world.
The shadow Minister rightly pointed out the concerns about access to European databases. I must give her some comfort that we will still have public access to the RAPEX database, and we are already developing the three databases to do that. Market surveillance is carried out in a number of different ways, and is not reliant just on those databases; it also comes from border and customers, and we hold our own data. I am confident that we will be able to continue carrying out the same level of market surveillance, and it is in the UK’s interests to ensure that unsafe products that should not be here are not placed on the market.
The hon. Member for Sheffield, Brightside and Hillsborough asked whether I could give her details of the meeting on the consultation that was carried out. I would be happy to write to her about that. With regard to trading standards enforcement, we have had the debate about trading standards enforcement many times in the House in recent weeks. Although the shadow Minister is right to challenge me, I hope that she accepts that trading standards enforcement is a particular interest of mine as a Minister. I would therefore like to give the Committee some comfort by pointing out that the Office for Product Safety and Standards has trained over 600 local trading standards professionals in 200 local authority areas, and at no cost to the local authorities. They will ensure that we are preparing our enforcers in the event of no deal, and for the wider aspect of when we do leave the European Union.
With regard to planning and the future direction of the Office for Product Safety and Standards—as well as what we are doing on data and increasing surveillance—we are bringing in more investment: the £12 million is focussed directly on the Office for Product Safety and Standards and the work going on with the border project. I know that the hon. Member for Sheffield, Brightside and Hillsborough has looked into this in great detail.
On the impact on business, labelling is a key concern. That is one reason why we have given organisations 18 months to comply. As a Minister, I have taken an interest in the matter, as Committee members would hope and expect, and have challenged officials in many of these areas, including by asking them how we could do things better or give businesses more opportunities. We have struck the right balance there. It is feasible for even a small business to be able to comply with what we have been able to do, including by familiarising themselves with the legislation.
Again, I thank Committee members for their contributions and I understand their concerns. I reiterate that this is about ensuring that we are in the right place if we leave the European Union without a deal on day one. The regulations are essential to ensuring that people across the UK continue to have confidence in the safety of the products they buy and use every day. If this legislation is not in place, the UK’s product safety regime simply would not work if the UK leaves without a deal agreed by both sides.
Without regulation, unsafe products could more easily be placed on the market, with no effective mechanism for removal, with the result that the British public would have less protection from unsafe and non-compliant products than they do today. The UK product safety and metrology regime is currently among the strongest in the world, and it is vital to ensure that we continue to have an effective product safety and metrology legal framework post exit. Without this, we risk disruption and confusion for businesses and enforcement authorities. Most significantly, we would limit our ability to remove unsafe or non-compliant products from the market. I am disappointed that the Opposition will be voting against the SI today. Many stakeholders out there will be looking for the Committee to approve the SI so they can have assurances on the requirement if we leave the European Union without a deal.
12 March 2019
The Committee divided:
Question accordingly agreed to.View Details
That the Committee has considered the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019.
Draft Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residue Limits) (Amendment Etc.) (EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: Joan Ryan
† Bryant, Chris (Rhondda) (Lab)
† Burns, Conor (Bournemouth West) (Con)
† Chishti, Rehman (Gillingham and Rainham) (Con)
† Debbonaire, Thangam (Bristol West) (Lab)
† Hayman, Sue (Workington) (Lab)
† Kinnock, Stephen (Aberavon) (Lab)
Powell, Lucy (Manchester Central) (Lab/Co-op)
† Rutley, David (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)
† Seely, Mr Bob (Isle of Wight) (Con)
† Slaughter, Andy (Hammersmith) (Lab)
Smith, Owen (Pontypridd) (Lab)
† Soames, Sir Nicholas (Mid Sussex) (Con)
† Stewart, Iain (Milton Keynes South) (Con)
† Thomson, Ross (Aberdeen South) (Con)
† Throup, Maggie (Erewash) (Con)
† Twist, Liz (Blaydon) (Lab)
† Wood, Mike (Dudley South) (Con)
Ben Street, Committee Clerk
† attended the Committee
Tenth Delegated Legislation Committee
Tuesday 12 March 2019
[Joan Ryan in the Chair]
Draft Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residue Limits) (Amendment etc.) (EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residue Limits) (Amendment etc.) (EU Exit) Regulations 2019.
It is an honour to serve when you are in the Chair, Mrs Ryan. Veterinary medicines are tightly regulated, both here in the UK and in Europe. They are essential for the treatment of animals and ensuring animal welfare, but can also present a risk to human health and the environment. If misused, they can affect human health directly, or may enter the natural environment, causing long-lasting damage. The existing Veterinary Medicines Regulations 2013 set out the requirements for the manufacture, authorisation, supply, possession and administration of veterinary medicines in the UK. Separately, the surveillance of residues from veterinary medicines in animal produce is an important safeguard, providing assurance that any meat, eggs or milk consumed is free from harmful residues of medicines used in animals.
The Animals and Animal Products (Examination for Residues and Maximum Residue Limits) (England and Scotland) Regulations 2015 provide for a surveillance programme for residues in England and Scotland. Those regulations adopt the level of permissible residues set by the EU, and prohibit the use of certain substances as growth promoters. As residue surveillance is a devolved matter, there is equivalent secondary legislation covering Wales and Northern Ireland.
The Government share the British public’s high regard for animal welfare, and understand the need for safe and effective veterinary medicines. This instrument addresses operability issues in our veterinary medicines legislation to ensure that such legislation continues to operate effectively when we leave the EU. The instrument will make sure that the legal framework continues to provide an effective regime for the regulation of veterinary medicines through which we can safeguard the wellbeing of our animals, and does not diminish the high standards of the established veterinary medicines and residues surveillance regimes. Notwithstanding the concerns raised by both the Secondary Legislation Scrutiny Committee in the House of Lords and the European Statutory Instruments Committee in the House of Commons, I emphasise that the amendments in this instrument are to ensure operability, and are very technical in nature. The high safety standards that are in place will continue, and will not be watered down.
The current UK legislation is designed to work in the context of EU membership, and therefore some existing elements will not work sensibly in a national context. Part 3 of the instrument amends the existing national legislation; for example, the mutual recognition provisions for medicine approvals between member states are no longer relevant. Similarly, as approvals of generic marketing authorisations rely on sharing of information between member states, they cannot continue to operate in the same way. Minor corrections are also made to the text to address references concerning EU membership that are no longer accurate or appropriate.
This instrument introduces one change that is necessary as a consequence of leaving the EU. It relates to the location of holders of marketing authorisations for veterinary medicines. Marketing authorisation holders must be established in the UK. As set out in the explanatory memorandum, that may result in a small increase in costs for those marketing authorisation holders currently based outside the UK, in the order of £100 initially and £40 annually. That cost increase is necessary to make sure that there are appropriate regulatory controls to ensure full compliance with UK law and standards, and that all marketing authorisation holders are treated equally.
The Minister refers to UK law, but as I understand it there is going to be separate legislation for Wales and Scotland, because this is a devolved matter. I do not quite understand how those two things match.
The arrangements that I am talking about are UK-wide; we are bringing what currently sits in EU law into, and across, the UK. If the hon. Gentleman wants further clarification, I can seek some inspiration, but it is a UK-wide statutory instrument.
In line with the Government’s better regulation principles, a formal impact assessment has not been carried out because the costs involved are small. The impact on businesses has been assessed as well below the threshold requiring an impact assessment. It is vital that marketing authorisation holders can be held accountable for their products, and this regulation provides for that.
Part 4 of the instrument sets out the necessary amendments to retained EU regulations that become UK law as provided by the European Union (Withdrawal) Act 2018. It is linked to another instrument: the Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019, which transfers the power to set maximum residue limits to the UK from the European Commission, and is yet to be debated in this House.
European regulation 470/2009 sets out how maximum residue limits for substances used as veterinary medicines are set. MRLs are the maximum safe limit of a particular substance in produce from animals. These limits are used to establish withdrawal periods—the period that must elapse after the last administration of a medicine before produce from that animal may enter the food chain. Without these amendments, the UK would be unable to regulate the marketing and use of veterinary medicines effectively. That would have negative impacts on businesses and our ability to protect human and animal health and the environment.
Although a formal public consultation has not been carried out, and has not been required under existing guidelines, the Government have proactively engaged with the animal health industry to discuss how we ensure that the regulatory regime continues to function effectively after exit day. Lord Gardiner of Kimble has met the veterinary pharmaceutical industry association, the National Office of Animal Health, on a number of occasions as part of our extensive engagement. Officials from the Veterinary Medicines Directorate continue to hold regular meetings with key industry representatives. The industry has welcomed our proactive and continued engagement with it. We have worked closely with the devolved Administrations on this instrument, and where it relates to devolved matters they have given their consent.
I would like to ask about the different standards in different UK devolved areas and when it comes to trading with other countries. Is there not a risk that we will have different standards as time goes on? We therefore need co-operation to ensure that we can continue to trade effectively.
Well, we will be leaving the EU, so we need our own mechanisms in place to validate veterinary medicines. That is primarily what we are talking about here. We are bringing back to the UK powers by which medicines are authorised. We will carry on doing that. As it happens, most authorisations already take place in the UK. Unlike for some medicines used for humans, veterinary medicine authorisations often take place in the national states themselves. It will be important to maintain high standards. The hon. Lady and I have exchanged views on that matter in other situations, and I know that she will continue to hold me and the Government to account on these matters. The steps that we are taking in this legislation will bring across powers that are currently in the EU so that we can do what currently takes place. The only thing that is different is the market authorisations. We are requiring those entities to have a market presence in the UK, but at a very low cost. That is the approach we felt was most appropriate to get the balance right.
The Government are committed to ensuring continued levels of protection for human and animal health, as well as making it straightforward for businesses to put medicines and relevant food products on the market, ensuring that UK businesses and individuals continue to have access to a range of veterinary medicines. This instrument will help to maintain the established veterinary medicines and residues surveillance regimes, and will ensure that an effective regulatory framework for veterinary medicines is in place. This instrument does no more than is appropriate to remedy deficiencies in law arising from leaving the EU. For the reasons I have set out, I commend this statutory instrument to the Committee.
It is a pleasure to serve under your chairmanship, Ms Ryan.
This legislation is very important for the protection of human health and the environment, and for maintaining important safeguards to ensure food safety and the health and welfare of farmed livestock, pets and animals used in sport and recreation. Misuse and overuse of veterinary medicines can lead to long-lasting damage to health and the environment. We know, for example, that the overuse of antibiotics in animals is contributing to the public health crisis that we see in antimicrobial resistance. The leakage of powerful growth and other hormones into our water supply is also of concern.
It is very important that there is no loss of collaboration and exchange of knowledge and expertise as we leave the EU. What guarantees can the Minister give that we will continue to have access to the best and latest scientific advice in this field? The Opposition take all of these matters extremely seriously and intend to do everything we can to maintain and enhance our country’s record of high standards and scientific excellence as we prepare to leave the EU.
I do not plan to detain the Committee long or to press the measure to a vote. The SI has already been subject to considerable scrutiny, having been recommended for upgrade by the scrutiny Committees and debated in the House of Lords. The Minister in the House of Lords was clear that the SI would not lead to any reduction in safety standards, which was a key concern raised by the scrutiny Committees. He also confirmed that nothing in the SI would enable the USA, for example, to start exporting hormone-injected beef to the UK. Will the Minister also provide a straightforward assurance for the record that there is nothing here that would allow the import of meat or dairy products treated with excessive antibiotics?
I welcome the clear, definitive statement in the explanatory memorandum that says:
“This instrument retains the current standards for veterinary medicines.”
It also says:
“No substantive policy changes are being introduced by this instrument. The policy objective is to maintain existing laws.”
Although there is no complete impact assessment, the explanatory memorandum at least provides much more information about the impacts and costs than many of the other DEFRA SIs we have seen. Why has it not been possible for the Department to provide, right across all of DEFRA’s EU exit legislation, consistently worded clear assurance and impact information to Parliament?
Veterinary medicines are already costly items. Will the Minister set out the Department’s estimate of the cumulative impact on the veterinary medicines sector of all the legislative changes that are being made to prepare for our EU exit? How much of the increased cost to pharmaceutical companies does he expect to be passed on to vets, farmers and, ultimately, the consumers of meat, eggs and dairy products?
The statutory instrument would require 90 companies, which hold marketing authorisations, to establish a UK base. Does the Minister share concerns that that could mean that some companies will exit the UK market, potentially leading to gaps in supply or increased cost? The National Office of Animal Health, to which the Minister referred earlier, has said that the Veterinary Medicines Directorate’s proposed extension of the parallel import scheme, to enable products to be sourced in any country, is inconsistent with the approach for human medicines. The Medicines and Healthcare Products Regulatory Agency further states that the human
“parallel import regime will remain limited to EU and EEA countries”
in the event of a no-deal Brexit.
NOAH also asks the Veterinary Medicines Directorate to consider adopting the same approach as the MHRA if there is a no-deal Brexit and, in the longer term, abolish the scheme, as it undermines the marketplace for companies holding UK marketing authorisations. What assessment has the Department made of the risks to UK business? Will the Minister consider NOAH’s request in this instance?
Last week we heard a lot about the arrangements for the priority transport of human medicines across the channel in the event of no deal. Will the Minister set out the practical arrangements to ensure that there is no interruption in the supply of vital veterinary medicine if there is no deal? Will there be capacity in the contracts to ensure that medicines for animals as well as humans can receive priority shipping?
Research published by NOAH in October found that nearly two thirds—62%—of UK pet owners are concerned that the supply of pet medicines could be interrupted in a no-deal Brexit. There were problems in December with the supply of the veterinary anaesthetic isoflurane, with some vets postponing pet operations. What advice can the Minister give to animal owners who are concerned that veterinary procedures or operations may be delayed or cancelled due to a lack of supplies in a no-deal Brexit?
I hope that the Minister will respond seriously to the matters I have raised. I confirm that Opposition Members will not vote against the draft instrument.
I thank the hon. Member for Workington for her contribution, which as usual was thoughtful and thorough. I will respond to some of the points she made. It is obviously vital that we continue to access science. The good news is that the Veterinary Medicines Directorate is regarded as an EU leader in veterinary medicines assessment and has considerable expertise already. We will make sure that it continues to meet that high standard—regardless of what we decide in Parliament today, or over the next few days—so that we have access to the very best.
It is also important to recognise antimicrobial resistance, which the hon. Lady rightly highlighted. As she knows, because we have talked about this in other debates, there will have been an overall reduction in antibiotics sales of 25% between 2016 and 2020, owing to the implementation of livestock-specific targets, which is good. New objectives will be defined by 2021, to sustain longer-term progress. Good progress is being made there.
The hon. Lady asked some challenging questions about the effect of all the legislative changes. I have to say that I do not have the answers to all of them.
Is the Minister prepared to write to me, to reassure me on certain issues I have raised? I am happy to receive that information in writing if he does not have it now.
I will do my very best to give the best possible estimates in answer to those questions. I was going to say that a lot of different factors need to be brought into play here. It is not just about the legislation but about market risk and people’s appetite for the changes that are going on and for the things that we will vote on in just a few hours’ time.
However, I assure the hon. Lady that I have been working closely with the Department for Transport and other Government Departments to ensure the continued supply of vet meds, which will be vital not only for pet owners but for agriculture as well. In the prioritisation that has taken place, medicines for human consumption stand out as key, but right next to that is veterinary medicines. They have a strong place in our priorities, and the Government have been working to ensure their continued supply, which I hope reassures the hon. Lady and many others. Again, we will have to wait and see what the House decides today, which will have quite an influence on what goes on.
I hope I have dealt with most of the issues that the hon. Lady raised. With her permission, I will come back to her on the wider concerns and with an estimate of the wider costs. I hope that Committee members now more fully understand the need for the draft regulations and the need to maintain the operability and consistency of our legislation after leaving the EU. For the reasons I have set out, I once again commend the draft instrument to the Committee.
Question put and agreed to.
Draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019 Draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment Etc.) (EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: Siobhain McDonagh
† Allan, Lucy (Telford) (Con)
† Brine, Steve (Parliamentary Under-Secretary of State for Health and Social Care)
† Brock, Deidre (Edinburgh North and Leith) (SNP)
† Caulfield, Maria (Lewes) (Con)
† Debbonaire, Thangam (Bristol West) (Lab)
Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
† Dunne, Mr Philip (Ludlow) (Con)
† Grant, Bill (Ayr, Carrick and Cumnock) (Con)
† Harper, Mr Mark (Forest of Dean) (Con)
† Hoare, Simon (North Dorset) (Con)
† Hodgson, Mrs Sharon (Washington and Sunderland West) (Lab)
† Mann, John (Bassetlaw) (Lab)
† Morton, Wendy (Aldridge-Brownhills) (Con)
† Norris, Alex (Nottingham North) (Lab/Co-op)
† Reeves, Ellie (Lewisham West and Penge) (Lab)
† Throup, Maggie (Erewash) (Con)
† Whitfield, Martin (East Lothian) (Lab)
Kenneth Fox, Committee Clerk
† attended the Committee
Nineteenth Delegated Legislation Committee
Tuesday 12 March 2019
[Siobhain McDonagh in the Chair]
Draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019.
With this it will be convenient to consider the draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment etc.) (EU Exit) Regulations 2019.
It is good to see you in the Chair again, Ms McDonagh. This makes it two in a row; you obviously enjoyed last week, so welcome back.
There are only two statutory instruments before the Committee today. The Government are committed to ensuring, as I have said before, that our world-class—as they certainly are—enforcement agencies and regulators can continue protecting the UK’s public health and biosecurity when we leave the European Union. That includes ensuring that imported food and feed that pose a risk to human or animal health continue to undergo border checks and controls. The measures will ensure that bodies such as the Food Standards Agency, for which I am responsible, and the Animal and Plant Health Agency, which is a Department for Environment, Food and Rural Affairs agency, are suitably empowered to continue working to ensure that the law is followed across the food chain.
Although the Government’s priority is to secure a deal—and I believe that there may have been some developments in that respect overnight—to ensure an orderly departure from the European Union, the role of any responsible Government involves preparing for all possible outcomes. To continue protecting consumers, our food and feed safety legislation, including that relating to imported food and feed, must be able to function effectively in the event that no withdrawal agreement is in place. That will also ensure that there is minimal disruption at UK sea ports and airports. It is for those reasons that the SIs have been made under the powers in the European Union (Withdrawal) Act 2018, which, I reiterate, is a housekeeping Act that allows us to transpose European Union legislation and regulation on to the UK statute book.
As to the purpose of the instruments, official controls verify business compliance with food and feed law across the agri-food chain. In the United Kingdom, responsibility for delivering official controls is divided between central competent authorities, such as the Food Standards Agency and Food Standards Scotland north of the border, and local authorities.
The draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment etc.) (EU Exit) Regulations 2019 are designed to ensure that the official controls system delivered by the authorities operates at a high standard of integrity, impartiality and proficiency. They are quite general and set the rules of the game on how we will operate in that space. Similarly, the draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019 will ensure the continuation of existing controls at the UK border, to ensure that imported food and feed of non-animal origin remains safe. DEFRA handles products of animal origin.
Will the Minister give way?
With the permission of the shadow Minister, my hon. Friend the Member for Washington and Sunderland West, I will mention that it has occurred to me that the Minister has now made three references to borders. He also referred to progress last night on the deal. Has he had time to digest the changes announced last night and to consider whether there will be any implications on the border on the island of Ireland for the movement of food?
I heard the statement in the House last night and I have read a little bit of it this morning, but I wanted to give every attention to the Committee, as the Opposition Whip will understand. I shall listen closely to the advice of the Attorney General, which I believe is imminent, and to any statements made in the House today.
The imports that I was referring to can contain contaminants, such as salmonella in sesame seeds and pesticide residues in peppers—and in lemons, believe it or not. Imports of those goods from specified countries are currently controlled by Commission regulation 669/2009. Notification about those products must be given in advance of their arrival and they must be subject to official controls ranging from documentary checks to identity and physical examinations, including sampling. To give another example, if I may, Commission regulation 884/2014 lays down controls governing the import of nuts, nut products and some spices from listed countries. Examples of listed countries could be India—I cannot read my own writing—Indonesia or Ethiopia. There is a full list. It is important that these controls and the others listed in the instruments function properly once we leave the EU.
Fundamentally, the amendments specified in these instruments address technical deficiencies in key pieces of European legislation with application to the entire UK and three pieces of domestic legislation that apply in England only. The amendments have been bundled together because they all address law designed to ensure the effectiveness and standards of our official controls system, including for food and feed imports.
Hon. Members will notice that the instruments concern the protection not just of public health, but of animal health and welfare. In particular, the draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment etc.) (EU Exit) Regulations 2019 have been jointly prepared by officials from the Food Standards Agency and DEFRA. However, it was agreed that ultimate responsibility for the instruments would lie with the FSA.
The instruments are intended solely to address inoperabilities in domestic legislation and retained EU law. However, as a result of the way the law is constructed, that results in some changes to the way our legal framework for official controls would work. As some of the amendments address retained EU law, it was necessary to remove references to EU terminology, such as “member states”—that is perfectly logical—and to systems such as the European reference laboratories network. Ultimately, UK competent authorities will no longer participate in European programmes regarding official controls, such as the European Commission’s international audit body, SANTE. That fact is addressed by the amendments and DEFRA is preparing a domestic audit body of its own.
Furthermore, the powers that are currently provided to the European Commission to make legislation are either repatriated to the appropriate UK authority, amended to become administrative functions or removed altogether as a result of their inapplicability—[Interruption.] Yes, exactly—inapplicability. It is my age. I was going to say “as a result of their inapplicability in a UK-only context”. We will edit that bit out. Powers have been transferred strictly where necessary for the UK to maintain a controls system responsive to emerging risks to public health and animal health and welfare.
That is particularly the case in the area of import controls. Although the existing rules governing official controls do not create detailed rules for the performance of controls on imported food and feed, they do set standards and powers for competent authorities controlling trade in such goods. In practice, in the short term this will only mean an increase in the need for more controls on high-risk food and feed, such as the sesame seeds contaminated with salmonella that I referred to earlier, entering the UK from third countries via the European Union. EU regulation 669/2009, which I mentioned, contains the list of those countries, and I can give some examples if hon. Members are interested.
I want to pose a question about the principles for goods that have been placed on our market before departure day and the same goods returning post departure day. Where in the two statutory instruments that are before us is the confirmation that the essential make-up has to stay the same to be recognised post departure, and how will we ensure that that takes place as we remove ourselves from the European Union structures?
I can expand on this in my response, but the point is that all we are doing here is transposing the very strict and world-class enforcement rules that operate at the moment for us as a member state. Anything that is within the chain at that time will be exactly in line with everything we have signed up to as a member state. Because we are talking about complete convergence in the immediate future after exit, I have no concern about that. I have asked officials about it.
Any checking to ensure that there is no divergence will be the responsibility of the agencies I have listed— the Food Standards Agency, Food Standards Scotland and local authorities. The regulations do not make any changes to that, and anything that came on to the market—whether into this country, into this country to go into the European Union, or into the European Union to enter this country—would be subject to all the same rules that it currently is. I think hon. Members should have confidence, as I do, that this is a continuation or a bridge between our membership and, hopefully, our transition period.
I will touch on the impact on local and public authorities, which I know there was some interest in last week. As the primary purpose of the existing legislation is to ensure the effective enforcement of food and feed law by competent authorities in EU member states, the amendments will be of interest to public bodies responsible for delivering those controls in the UK, such as local authorities and port health authorities. As I mentioned, there will be some impact on the way that certain high-risk food and feed is controlled when entering the UK as a result of our leaving the European Union. However, for authorities delivering official controls in the UK, the primary impact of the instruments will be familiarisation costs.
With regard to the point that the hon. Member for East Lothian alluded to, it is not foreseen that the day-to-day delivery of official controls, which are performed predominantly by local authorities, will be otherwise impacted by these changes. The UK will maintain its world-class operational standards in this area, regardless of the way in which we leave the EU. I have been crystal clear on that for all the SIs I have dealt with in this space, such as when I spoke to the EU Energy and Environment Sub-Committee in the Lords last week.
Public authorities will be impacted by the effects of leaving the framework for the performance of official controls created by this legislation. For example, we will no longer be legally bound to provide administrative assistance to other European countries upon request. That does not mean that co-operation with other countries’ enforcement agencies will cease—I stress that important point. We are developing new ways of working with our international delivery partners to ensure that we can continue to tackle complex international food safety incidents once we leave the European Union. It is important to note that the European Food Safety Authority grew out of the Food Standards Agency; in many ways, we were the rock upon which the EU built its church, not the other way around. Despite all the legal changes that will take place when we leave the European Union, the relationship changes will be minimal or non-existent, and our relationships are absolutely first class. I stress that point regularly, such as when I spoke to the FSA chair last week.
On the impact on industry, businesses will be interested in the amendments to the rules concerning charging for official controls. Official controls legislation creates minimum charges for the performance of official controls on the domestic production and import of certain imported food and feed. Amendments in this area centre on the use of Her Majesty’s Treasury and the Department for Exiting the European Union’s recommended conversion rate for references to euros in retained EU law. In practice, that will have minimal impact on businesses: the Food Standards Agency has a methodology for calculating the charges levied on businesses slaughtering and cutting meat that is not affected by the changes to the minimum rate set out in this legislation. Equally, DEFRA’s approach to controls on imports of EU-derived products of animal origin means that no new chargeable import controls are projected. As with public authorities, there may be one-off familiarisation costs. All told, we do not anticipate a great financial or administrative impact on businesses as a result of the technical nature of the amendments.
Food and feed safety, as well as animal health and welfare, are devolved policy areas. As such, the instruments have been drafted to reflect the distribution of responsibility for delivery of official controls in the UK. In some instances, that means powers flowing back from Brussels to the appropriate UK authorities, which include Ministers in Scotland and Wales and the relevant Departments in Northern Ireland. The devolved Administrations have provided their consent to these instruments, and officials from all parts of the UK have been working together well and constructively in this field. I place on record my thanks to them.
As with previous SIs, we have respected the full flow-through of powers; in fact, if the devolved Governments decide that they want to diverge in their treatment of high-risk imports, they will have increased devolved powers with which to do so. I would not expect too much divergence to take place within the UK, because with all the disruption that leaving the EU will inevitably bring, given the 40-odd years of culture involved, the last thing we want to do is create disruption and internal market issues within the UK. That would not be in the interests of Scotland, Wales or Northern Ireland any more than it would be in England’s interests.
The amendments only go as far as necessary to ensure that we have a fully functioning UK statute book; indeed, the legislation only allows us to go as far as necessary to ensure that our statute book equips our authorities with the necessary powers to continue to protect public and animal health after exit day. The successful resolution of the instruments is necessary to ensure that we can maintain the high standard of food and feed safety, biosecurity and consumer protection that is offered by this country’s excellent enforcement agencies and competent authorities. I place on the record my thanks for the hard work that those organisations have done and will do in preparation for exit day. I urge hon. Members to agree to the amendments that are proposed in the instruments, and I commend the regulations to the Committee.
It is a pleasure to serve under your chairmanship again, Ms McDonagh, on this bright windy morning. I thank the Minister for bringing the two statutory instruments to the House today and for ably summarising them.
We are all aware that today is a very important day for our country. We are only 17 days from Brexit, yet MPs are just, tonight, getting the latest meaningful vote on the Prime Minister’s latest deal. I expect that not much, or perhaps not enough, will have changed; as the Minister said, we are waiting on the Attorney General’s judgment. This is all very concerning for millions of people up and down the country—concerns I know the Minister shares.
In the event of a no-deal Brexit—we might know in the next few days if that is what will happen—we need to be prepared, but as I have said throughout our consideration of these SIs, I regret that the Government have waited so long to prepare for no deal, given that it was the fallout position for if we did not get a deal. Regardless of how much scrutiny we give the legislation this morning, it is being rushed through. As legislators, we need two things: information and the time to process and scrutinise that information. Unfortunately, the Government have failed to provide MPs with either. I regret the way in which the Government have processed the legislation, but here we are.
Moving on to the SIs, food and feed law serves to protect public health, as well as animal health and welfare. I appreciate that that is a difficult balancing act, particularly in light of growing public concerns about where our food comes from. What conversations has the Minister been having with his colleagues in DEFRA about animal health and welfare, and its impact on our food?
In addition to ensuring human and animal health, the Government must provide continuity for business operators and trade. The Minister touched on that. Is he confident that the SIs will ensure that continuity? What conversations has his Department had with business operators and trade? Similarly, what conversations has his Department had with the scrutinising bodies that will take over the responsibilities of the EU bodies? Will the Minister please confirm which bodies will be doing that? Is he confident that they have adequate time and resources to provide a check and balance on food standards once we leave the EU?
The explanatory memorandum says that staff will need to familiarise themselves with the amendments. Is the Minister confident that the staff referred to in the memorandum have had all the information they require to do that?
Originally, there was a reading time of less than 30 minutes, but following the consultation it was extended to not more than an hour. That has underpinned the financial implications of the statutory instruments. Does my hon. Friend agree that there seems to be an arbitrary take on the time it will take local authority officials and businesses to read the paperwork? When we have looked at it, it has certainly taken more than an hour to read, process and understand—if one is able to download it.
I agree with my hon. Friend. We debated that very point in some of last week’s Delegated Legislation Committees. I thought that perhaps I was a slow reader, as it took me considerably longer than 60 minutes not just to read it, but to try to understand and digest it. I recall the Minister saying last week that that time was just a guide, but I am sure he will address that point directly.
With that in mind, is the Department offering any support to scrutinising bodies to ensure that queries can be answered quickly and effectively? In the event of a no-deal Brexit, which none of us wants, there will be lots of new changes, so I hope that scrutinising bodies will be properly equipped to ensure that nothing is slipped through—chlorinated chicken, for example—that could cause harm later on. We need experts on the ground who are able to scrutinise and safeguard public health in the event of a no-deal Brexit.
Both statutory instruments cause fragmentation across the nations. Can the Minister tell the Committee when legislation will be made by the devolved Administrations? Has he had discussions with the devolved Administrations about these changes? Colleagues from all regions will be rightly concerned about the disparity that might be caused by the SIs.
The draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019 include an amendment to the Plastic Kitchenware (Conditions on Imports from China) (England) Regulations 2011. I am sure that there is plastic kitchenware from China in my kitchen and in all our kitchens. It would be difficult for there not to be, considering how much China produces. However, this seems entirely isolated from the rest of the measures in the SI. Will the Minister tell the Committee why those changes are being made in this SI? Is there something about Chinese plastic kitchenware that we need to watch out for? I certainly do not eat it.
The draft food and feed imports regulations state that functions currently undertaken by the European Commission on food controls will be the responsibility of the Secretary of State. Can the Minister provide information on how decisions on food controls will be made and managed? Who will advise the Secretary of State on those decisions? Imported food can be susceptible to known or emerging risks linked to specific food or feed of animal and non-animal origin. It is therefore important for human health and consumer trust that we get this right. Equally, consumer trust and consciousness mean that we cannot see a reduction in animal ethics.
I hope that the Minister can allay some of those concerns today, and I look forward to his response.
It is a great pleasure to serve under your chairship, Ms McDonagh. I find it hard to contain my excitement at another piece of secondary legislation necessitated by Brexit. The sheer delight of unnecessary legislation is unbounded sometimes.
Reading the explanatory notes for the regulations, we come across familiar lines—pieces of text that are familiar from other forays into this Brexit chaos. For example:
“The existing EU law is being retained in UK law after EU Exit. This instrument amends the legislation so that references to other EU Member States, the European Commission and associated elements are removed or replaced by appropriate wording.”
We are taking back control to replace with appropriate wording—a brave and decisive move. This legislation already exists, but here we are having to gather to pass it again with minor changes. That is some way to run this United Kingdom.
This legislation is very important, however. Most of the animal feed used in the UK is imported from the EU or under EU trade agreements, and any disruption to the supply will cause major problems for farmers and food production and for distribution across these islands. The same goes for fertilisers, forage seed, herbicides and pesticides. Without the EU supply lines, we are in trouble. If we do not have security of supply of these products, farmers might be growing a darned sight less than they have been used to. But it is a good fortnight until B-day, so this is not last minute or anything.
Another problem that farmers will face is that the trucks that bring these products to their farms and take away the farm’s output are more often than not driven by a non-UK EU citizen. They tend not to make £30,000 a year, so we will need a whole lot of replacements that we do not have. However, that is a headache for another day, isn’t it?
I am pleased to see that there is some indication in the regulations that the Government will respect that the devolved Administrations have different arrangements and their own positions. I hope that that is a sign of things to come, because that should be the attitude across the whole of Government and Parliament. In the middle of this epic bourach, it is one tiny glimmer of hope. Apart from anything else, it will make it easier when we come to the independence negotiations in a wee while.
I cannot say that I am entirely supportive of the statutory instruments, since they would never have been needed if there were no Brexit, but I accept that they will pass today and might be a useful part of the regulatory framework to keep the show on the road for a little while. Whether the physical manifestation of incoming supplies matches the regulatory framework, coming as they do on imaginary ferries, remains to be seen.
Well, where to start? Let me start with the hon. Member for Edinburgh North and Leith, who speaks for the SNP. I thank her for her comments and note her points about full flowing and passing competences to the devolved Administrations. We have always said that that would be the case where it was the right and sensible thing to do, and I am true to my word in these instruments.
I do not know where to start. I do not think the hon. Lady asked many questions. There was a referendum and we tend to respect the result of referendums in the UK. If the SNP can find me a referendum it does respect the result of, I am all ears. Yes, we are leaving and that has an implication for statute and regulation. We are therefore transposing these regulations under the European Union (Withdrawal) Act 2018 on to the UK statute book to make sure that food and feed are safe for our constituents and for human and animal health. That is the responsible thing for any Government to do. I do not apologise in any way, shape or form for doing that. It is absolutely the right thing to do.
I turn to the hon. Member for Washington and Sunderland West, who started where she usually starts. Will enough have changed overnight when we hear the Attorney General’s advice? For me, yes, but it was enough for me in January. If she wants to avoid any change or disruption, she knows what she has to do today. I look forward to having a chat with her in the Aye Lobby. She will be very welcome there and will be among friends—I have a funny feeling that quite few of her hon. Friends will be there too.
I will write to the hon. Lady with more detail in response to her question about the important issue of Chinese plastic. It is dealt with in the draft food and feed imports regulations because they are the most relevant place to do so. Only the terminology is corrected—there is no legal change. I do not think that there is any substantive change to the issues around Chinese plastic. However, it is always useful to be updated on what is in the hon. Lady’s kitchen.
The hon. Lady asked which bodies will perform the risk assessments. Risk assessment will be performed by the FSA and Food Standards Scotland, which are independent scientific risk assessors. Risk management decisions, which are different, will be taken by Ministers based on public advice from the FSA. The hon. Lady asked who will advise the Secretary of State and, therefore, me. Ultimately, risk management decisions in this space come to me, or to whoever holds this brief. The advice comes from the Food Standards Agency in England and from Food Standards Scotland to Scottish Ministers. In fact, to digress, I am meeting my opposite number, the Scottish Minister, on Friday because I want to talk to him about child obesity and dental issues—I give the Committee that exclusive.
The hon. Lady asked about continuity for business and what conversations have been had on that. I covered a fair bit of that in my speech. Businesses have been fully involved in the consultation process. We ran a six-week consultation, which is longer than for some other SIs. The responses were generally content. There was some concern about the timing and making sure that everything is in place by exit day. If the Committee agrees to the regulations today, it will be.
The hon. Member for East Lothian asked a question that the shadow Minister would have raised if he had not about the arbitrary assessment of the prep time, which is one hour. I responded to the hon. Member for Washington and Sunderland West on this point last week. The law does not change. From a cold start, downloading and reading the regulations would take more than 30 minutes or even more than an hour—there is no question about that. However, for someone who works in this space and is up to speed, as these organisations and public authorities already are, familiarisation will be minimal. Business is familiar with them already.
The hon. Member for Washington and Sunderland West asked whether I am confident, and whether the Department and its agencies are offering support to those organisations. I am absolutely confident, and I am sure that we are providing enough support.
The hon. Lady also asked about the resources going into the Food Standards Agency. The Food Standards Agency has increased its resources, thanks to support from Her Majesty’s Treasury. It has increased the number of scientific advisers and it has set up the new advisory body, which will advise it on many of these issues. I think that the FSA is well resourced. The chair of the FSA, Heather Hancock, who gave evidence to the Lords Committee with me last week, is a very competent person, and she is not shy in coming forwards when she feels that she needs more resources from the UK Government. She has argued effectively for that, and has received the response that I think she wanted.
The hon. Lady asked about conversations with colleagues in DEFRA. I said at the start of this Committee that this area is covered by the Department of Health and Social Care and DEFRA. That split has to be there, because I am interested in human health and DEFRA is interested in animal health, but of course there will be cross-over. I work closely with DEFRA colleagues in the House and I work closely with DEFRA officials, as do my officials who are here from the Foods Standards Agency, as is necessary on these SIs. That will continue as we leave the EU. The Department of Health and Social Care and DEFRA own these SIs in many ways, but contact between policy and legal officials at the FSA and DEFRA are strong, and will remain so.
The hon. Lady asked about discussions with the devolved Administrations. As I mentioned, they have consented to the SIs. I place on the record my thanks to them for that. I look forward to talking to my opposite number in Scotland about them when I see him on Friday. I mentioned the fragmentation across the nations, not in my speech, but in my ad-lib remarks, when I said that, with all the changes that there will be as a result of our exit from the European Union, the last thing our United Kingdom needs is disruption within the internal market of the UK right now.
It is absolutely right that we transmit those powers from the European Commission through England and to the devolved Administrations. They absolutely have the right, through consultation and democratic engagement with the Scottish Parliament, for instance, to diverge, if that is what they want to do. That would be done in consultation with the UK Government, as is right.
We are, whether everybody likes it or not, one United Kingdom. When we leave the European Union, we will leave as one United Kingdom, with one united, world-class, world-leading food and feed safety environment. That is what these instruments seek to achieve and I commend them to the Committee.
Question put and agreed to.
That the Committee has considered the draft Food and Feed Imports (Amendment) (EU Exit) Regulations 2019.
Draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment etc.) (EU Exit) Regulations 2019
That the Committee has considered the draft Official Controls for Feed, Food and Animal Health and Welfare (Amendment etc.) (EU Exit) Regulations 2019.—(Steve Brine.)
Draft Uncertificated Securities (Amendment and EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: † Mr Virendra Sharma
† Abrahams, Debbie (Oldham East and Saddleworth) (Lab)
† Glen, John (Economic Secretary to the Treasury)
† Green, Chris (Bolton West) (Con)
† Henderson, Gordon (Sittingbourne and Sheppey) (Con)
† Jayawardena, Mr Ranil (North East Hampshire) (Con)
† Johnson, Gareth (Dartford) (Con)
† Knight, Julian (Solihull) (Con)
Kyle, Peter (Hove) (Lab)
† Lord, Mr Jonathan (Woking) (Con)
† Lucas, Ian C. (Wrexham) (Lab)
† Prisk, Mr Mark (Hertford and Stortford) (Con)
† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)
† Smith, Jeff (Manchester, Withington) (Lab)
† Thewliss, Alison (Glasgow Central) (SNP)
† Walker, Thelma (Colne Valley) (Lab)
† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)
† Zeichner, Daniel (Cambridge) (Lab)
Bradley Albrow, Committee Clerk
† attended the Committee
Twentieth Delegated Legislation Committee
Tuesday 12 March 2019
[Mr Virendra Sharma in the Chair]
Draft Uncertificated Securities (Amendment and EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Uncertificated Securities (Amendment and EU Exit) Regulations 2019.
It is a pleasure to serve once again under your chairmanship, Mr Sharma.
The Treasury is laying this statutory instrument under both the European Union (Withdrawal) Act 2018 and the European Communities Act 1972. The Treasury has been undertaking a programme of legislation to ensure that if the UK leaves the EU without a deal or an implementation period there continues to be a functioning legislative and regulatory regime for financial services in the UK. This draft SI is part of that programme. It has been debated by the House of Lords and was approved on 25 February. The SI also uses the powers in section 2(2) of the European Communities Act to amend UK law as necessary to ensure that the directly applicable EU central securities depository regulation, or CSDR, operates effectively in the UK.
The draft regulations amend the Uncertificated Securities Regulations 2001, or USRs, which concern the registering and transfer of securities such as bonds or shares electronically on computer-based systems. Certain requirements within the USRs are also subject to the CSDR, which creates a common authorisation, supervision and regulatory framework for central security depositaries, or CSDs, across the EU. The SI makes the necessary changes to UK legislation to ensure that the EU regime operates effectively in the UK. The instrument also contains provisions to address deficiencies in UK law and retained EU law that arise due to the UK’s withdrawal from the European Union.
The changes to the USRs that implement CSDR will come into effect on the day after the draft regulations are made in Parliament in any scenario. However, the changes made under the EU (Withdrawal) Act to fix deficiencies in the legislation arising as a result of the UK’s withdrawal from the EU will only come into effect on exit day in the event that the UK leaves without a deal or an implementation period.
First, the draft regulations make amendments to ensure that the USRs align with both the EU regulation and the UK implementing legislation concerning the CSDR. That includes authorisation and recognition of CSDs and article 49 of the CSDR. Article 49 allows issuers the right to issue securities into a CSD in any European economic area member state. Accordingly, amendments have been made to ensure that no provisions in the USRs are incompatible with that right. By removing the duplication between CSDR and USR requirements for operators of relevant systems, the instrument provides clarity to the industry in the area. Further, USR operators now gain operator status by virtue of gaining authorised CSD, EEA CSD or third-country CSD status for CSDR purposes, not via the USR recognition regime, which will be revoked by this SI.
Secondly, the SI will provide transitional provisions for UK operators of systems that were approved under the USRs before 30 March 2017, when the period for CSDs to apply for authorisation or recognition under the CSDR began. That transitional power ensures that operators can continue to operate under the previous USR regime, pending their authorisation or recognition as a CSD under the EU CSDR regime. The SI also inserts a provision into the UK’s Central Securities Depositories Regulations 2014 that grants the Bank of England the power to charge fees to third-country CSDs. That is considered necessary in relation to its new role in recognising third-country CSDs following exit day. That role was granted by the Central Securities Depositories (Amendment) (EU Exit) Regulations 2018, which have been agreed by this House.
Finally, the draft regulations amend article 15 of the EU short selling regulation to change its scope from the EU to the UK. The change ensures legal certainty on the scope of that provision after exit day. To maximise transparency, the Treasury has worked closely on the instrument with the Financial Conduct Authority, the Bank of England and industry. The Treasury consulted on changes to the uncertificated securities regulations as part of implementing the CSDR in 2015, and undertook an informal consultation with industry in October 2018. The current form of the instrument, which includes EU exit changes, was laid on 17 January 2019.
Provisions relating to the consultation are dealt with in parts 1 to 4. Part 5 of the instrument deals with the EU exit changes.
On the consultation that the Treasury has undertaken, I note that the instrument provides for a requirement for a statutory review within five years. Does the Minister have a position on how soon it may be necessary to review the instrument?
I am sorry, but I do not have a position on that at this point in time.
What discussions have there been between the FCA, the Treasury and the Bank to determine the level of the fees the Bank can charge other than to meet the expenses incurred?
I am sure that my hon. Friend will understand that the Bank of England routinely issues fees under many financial services regulations. This power is consistent with that general responsibility and will be exercised in consultation with those subject to the fee, as in all the other areas of regulation the Bank engages with.
Regulators and industry have welcomed the Government’s approach to the SI. The Government believe that the proposed legislation is necessary to ensure the smooth functioning of UK financial markets if the UK leaves the EU without a deal or an implementation period. Relevant parts of the SI are also needed in any scenario to ensure the effective functioning of the CSDR. I hope that colleagues will join me in supporting the regulations, which I commend to the Committee.
As ever, it is a pleasure to serve with you in the Chair, Mr Sharma. Once again, the Minister and I are here to discuss a statutory instrument that would make provision for the regulatory framework after Brexit in the event that we crash out without a deal. On each of those occasions, the Minister has heard the objections that my Front-Bench colleagues and I have spelled out about the Government’s approach to transposing this amount of legislation through the secondary legislative process.
I thank the Minister for his explanation of the regulations. The Opposition are satisfied that parts 1 to 4 are essentially straightforward transpositions of the EU regulations into UK law. Central securities depositories form an important part of our financial market infrastructure, and it is important that their regulation continues to be robust and consistent. Post-trade market systems have been subject to significant reform after the financial crisis and it is important that those changes are not mitigated or unpicked in any way.
I would, however, like the Minister to provide additional clarity on part 5, which begins on page 7. As the explanatory memorandum stipulates—this was the subject of the exchange between the Minister and the hon. Member for North East Hampshire—the instrument allows the Bank of England to charge fees to some central securities depositories located in third countries. I ask the Minister for a little more explanation about whether that is a typical function of the Bank’s activities.
The explanatory memorandum also states that the Bank can charge fees to cover expenses that it or the FCA incur. Can the Minister clarify why the Bank would pick up fees on behalf of the FCA and the nature of that arrangement? Why would the FCA not collect its own fees? Once again, the concern is that this appears to be a material change to the relationship between significant institutions and we should be clear if that is what we are doing during the transposition.
Furthermore, as was announced on 1 March, the European Securities and Markets Authority will recognise the UK CSD in the event of a no-deal Brexit, but can the Minister say if there has been any clarity on whether the fee arrangement would be reciprocal? Would central banks in the EEA reserve the right to change the UK CSD fees and, if so, what assessment of the potential impact of that has been carried out? Those two points of clarity are all I want to raise with the Minister.
It is a pleasure to see you in the Chair, Mr Sharma. I very much agree with what has been said by the Labour Front-Bench spokesperson, the hon. Member for Stalybridge and Hyde. I do not want to delay us from all the exciting statements still struggling on in the Chamber, but I want to raise a couple of points.
The Minister will not be surprised to hear me say again that this is not what Scotland voted for and not what Scotland’s financial sector needs. Our interests are not best served by being taken out of the EU single market and customs union. The deal we have as a member state is particularly good for financial services. Nothing that the Prime Minister can negotiate will come anywhere near what we have at the moment. Nevertheless, we need to ensure that what comes into place does not undermine all the progress made since the financial crash. We cannot allow Brexit to be an excuse for any kind of backsliding on that regulation and on the progress made. I would like assurances from the Minister that none of the provisions in the SI would allow those kinds of things to happen.
I understand that a few concerns were raised in the Lords about the SI and the landscape in which it would sit. It has been raised before in Committee that we have all these financial services SIs coming through but no comprehensive picture of what the full jigsaw will look like when it is put together, or even if the pieces of the puzzle fit neatly. It would be good to hear a bit more from the Minister about the Government’s intentions. We have so much coming through at the moment that we need some clarity to ensure that nothing falls through the gaps, be it for purposes that are innocent or otherwise. We need to ensure that the system does not allow anything like that to happen.
In the Lords, Baroness Bowles said that
“by the time we have ploughed through all 60 statutory instruments that we are told we have to deal with, and then whatever other number we may get regarding corrections and re-workings—some of which are coming along now—FSMA will be even more incomprehensible on the legislation website, and so too will be any sensible comparison of how EU legislation has been retained with regard to the EU originals… It is actually quite a mockery to make a fuss about the accessibility and clarity of wording in individual documents while it remains impossible to find out their cumulative effect.”—[Official Report, House of Lords, 25 February 2019; Vol. 796, c. 33.]
We need to get to that cumulative effect.
The hon. Member for North East Hampshire made an interesting point about the fees and the powers going to the Bank of England. I have raised the issue of fees before, and it would be good to get more clarity on the scale, size, scope and application of the fees and how they would work. It seems that here and in all our other financial services SIs it is the Bank of England, the FCA and other bodies that are getting powers, not Parliament, which, as I am sure he would agree, is barely taking back control. I am sure that is not his intention with Brexit.
The hon. Gentleman is nodding his head.
Are there any resource implications, as indicated by the fees, for the Bank of England or the FCA, that would have to be recouped through the fees? How many more people would be needed to process these types of uncertificated securities? Do the Government have any idea how many people and what processes they might need? Is there a cost they would affix to that which we could see and understand?
The Minister mentioned the consultation process. It would be interesting to know what changed with that process. Can he give any narrative on where he started out and where he ended up, and were any substantial changes made as a result? I continue to be concerned that there is not enough ability for people to engage and for organisations and those concerned about uncertificated securities to come and give their views and seek changes. The biggest problem with the SI and the way the process works is that we cannot amend it—we accept it or reject it, but we cannot amend it. It is difficult to see where corrections might come from and what tracking there is of that.
I thank the hon. Members for Stalybridge and Hyde and for Glasgow Central for their observations, and I welcome their broad agreement with the main elements of the SI. Both made significant observations on the fees. Why does this SI contain a provision on the Bank of England fees? As a result of the UK leaving the EU and the changes made by the Central Securities Depositories (Amendment) (EU Exit) Regulations 2018, the Bank of England will have the power to recognise third-country CSDs. On why the Bank of England collects fees for the FCA, this SI concerns the Bank of England fees only. The assessment of other countries charging fees is a decision for other jurisdictions, so I do not have any clear observations on that.
The hon. Member for Glasgow Central asked how the SI had changed since the 2015 consultation draft. A central aim of this instrument is to implement the right, under article 49 of the EU CSD regulation 2014, for issuers of securities to use a CSD established in any EU member state. The 2015 consultation draft instrument contemplated that the uncertificated securities regulations might be extended to apply to securities governed by a foreign law.
Following industry feedback, the Treasury changed its approach so the uncertificated securities regulations would not be extended to foreign law-governed securities where article 49 is used. In order to avoid duplication and to provide legal certainty, the 2015 consultation draft instrument removed provisions from the existing uncertificated securities regulations, which are now governed by the EU central securities depositories regulation 2014. This element has not changed.
The hon. Lady asked about the regulators’ resourcing and the impact of taking on provisions of this SI. We are confident that the regulators are making adequate preparations and are effectively allocating resources ahead of the end of March. They have considerable experience and technical expertise. We have participated in a large number of groups with them and I am confident they are well resourced and ready for all outcomes.
I acknowledge the broader points made by all three Members about the Bank of England’s fee-raising powers. I will evaluate thoroughly what has been said, and where I can bring greater clarity following discussion with officials, I will write to the Committee if that is appropriate.
The Government believe that the proposed legislation is necessary to ensure the smooth functioning of financial markets in the UK if it leaves the EU without a deal or an implementation period. Relevant parts of this SI are also needed in any scenario to ensure the effective functioning of the CSDR. I hope my comments clarify matters sufficiently and that the Committee will be able to support these regulations.
Question put and agreed to.
Draft Detergents (Amendment) (EU Exit) Regulations 2019 Draft Detergents (Safeguarding) (Amendment) (EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: Ms Karen Buck
† Coffey, Dr Thérèse (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)
† Elmore, Chris (Ogmore) (Lab)
† Garnier, Mark (Wyre Forest) (Con)
† Heald, Sir Oliver (North East Hertfordshire) (Con)
† Jones, Mr David (Clwyd West) (Con)
Kendall, Liz (Leicester West) (Lab)
† Kerr, Stephen (Stirling) (Con)
Lammy, Mr David (Tottenham) (Lab)
† Mc Nally, John (Falkirk) (SNP)
† McMorrin, Anna (Cardiff North) (Lab)
† Martin, Sandy (Ipswich) (Lab)
† Paterson, Mr Owen (North Shropshire) (Con)
† Perkins, Toby (Chesterfield) (Lab)
† Seely, Mr Bob (Isle of Wight) (Con)
† Stewart, Iain (Milton Keynes South) (Con)
† Trevelyan, Anne-Marie (Berwick-upon-Tweed) (Con)
Dominic Stockbridge, Committee Clerk
† attended the Committee
Fifth Delegated Legislation Committee
Tuesday 12 March 2019
[Ms Karen Buck in the Chair]
Draft Detergents (Amendment) (EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Detergents (Amendment) (EU Exit) Regulations 2019.
With this it will be convenient to consider the draft Detergents (Safeguarding) (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Ms Buck. The first statutory instrument relates to reserved matters. The second SI relates to devolved matters, and the devolved Administrations have consented to that SI. Devolved Administrations have also been involved in the preparation for and discussions about the first SI.
This is one of a number of affirmative SIs to be considered as the UK leaves the European Union, as provided for by the result of the 2016 referendum and as subsequently agreed by Parliament. In line with the European Union (Withdrawal) Act 2018, the regulations simply make technical, legal amendments to maintain the effectiveness and continuity of the legislation that controls the placing on the market of detergents and that would otherwise be left inoperable so that, following our exit from the EU, the law will continue to function as it does today.
As the Committee will see, these SIs make many adjustments, but I can assure the Committee that they represent no change of policy and will not have any impact on businesses or the public.
The territorial extent of this provision is the United Kingdom, and the provision applies to all of the United Kingdom. Health and Safety Executive officials engaged with representatives of the main trade association with an interest in detergents and cleaning products, and no particular concerns were expressed at that time in relation to detergents.
The EU regulation on detergents establishes common rules to enable detergents and surfactants to be sold and used across the EU. Technical changes are made in these instruments to ensure the continuation of standards and requirements in relation to the placing on the market of detergents and to provide clarity for manufacturers.
Regulation 1 of the first SI makes introductory provision, including for the commencement date. In part 2, regulation 2 amends the domestic Detergents Regulations 2010, which provide for enforcement of the EU detergents regulation and related penalties. The amendments make corrections to the domestic regulations to reflect the fact that they will now be cross-referring to retained EU law, rather than a directly applicable EU regulation.
Part 3 of this SI amends EU detergents regulation EC 648/2004. Regulation 3 of the SI defines terms used throughout the instrument. Regulations 5 and 6 remove references to the free movement of detergents in the EU internal market and to the Union customs territory in articles 1 and 2. Regulation 7 refers to changes to article 3 that cross-refer to a number of other pieces of EU legislation, some of which are out of date and are updated through this instrument. Provision about manufacturers of detergents being established within the Community is omitted. After exit, a manufacturer established in the UK will no longer be an operator established in the EU, and as a consequence it would not be appropriate to have that as a requirement.
Regulations 8 and 9 amend articles 5 and 6 on the derogation provision. If a surfactant passes the primary biodegradability test but fails the ultimate biodegradability test, the manufacturer can apply for derogation, which the Commission has a power to consider granting for a product in line with certain criteria. That function is to be transferred to the Secretary of State.
Regulation 10 amends article 7, transferring functions of the Commission. The Secretary of State will have power to determine disputes about testing methods for a product, taking expert advice as appropriate. Provision is included for the manufacturer to appeal that decision by the Secretary of State to a domestic court.
Regulation 11 amends article 8 about the duties of the member states to notify to the Commission the list of approved laboratories that are authorised to carry out the tests required by the regulation. Provision is made so that tests required by the regulation may be carried out by approved laboratories, and there is a requirement for the Secretary of State to publish that list. In practice, the HSE will publish the list, as it undertakes the regulatory work under an agency agreement with the Department for Environment, Food and Rural Affairs.
Regulation 12 amends article 9 on the information to be provided by manufacturers. Paragraph 3 of article 9 requires that manufacturers placing detergent products on the market shall make available an ingredient datasheet, and provides that member states may request that such a datasheet be made available to a specific public body to which the member state has assigned the task of providing the information to medical personnel. The article is amended to refer specifically to the National Poisons Information Service or any other such body that the Secretary of State or the devolved Administrations may assign for that purpose. The NPIS already undertakes that role across the United Kingdom.
Regulation 13 amends article 10, on control measures, to ensure the compliance of detergents with the provisions of the regulation. The Secretary of State must make a decision as to whether a test concerned produced a false positive result. Advice to the Secretary of State will be provided by HSE, which is already well established in this area. An appeal provision for the manufacturer is provided. Regulation 14 amends article 11, on labelling, to provide that the information specified in this article must be in English. Regulation 15 omits article 12, which is no longer appropriate as it is an EU institutional working procedure.
The power of the Commission under article 13 to adapt the annexes to the regulation in line with scientific and technical progress is transferred to the Secretary of State by regulation 16. The Secretary of State will be able to do so by making a statutory instrument. Regulation 17 omits article 13(1), on the power of the Commission to adopt delegated Acts, and article 14, which contains provision about the free movement of detergents within the European Union. Regulation 18 omits article 16, on the Commission’s reporting assessments of the regulation to the European Parliament and Council. That refers to reports that the Commission had to have completed by 2014 and 2016. Regulation 19 omits article 17(4), which provides for repeal by member states of transposing measures for superseded directives on detergents. In effect, this is a legal tiding up exercise for what will be retained EU law.
Regulation 20 omits article 18, which requires member states to prescribe penalties for infringements of the regulation. Enforcement mechanisms for the UK were set out in the Detergents Regulations 2005. Regulation 21 inserts a new article 18A into the retained EU version of the regulation on appeals. With regard to determinations on testing, provision is included for the manufacturer to appeal that decision by the Secretary of State to a domestic court. Regulation 22 amends article 19, which is a standard provision about entry into force of the regulation.
Regulations 23 to 29 amend annexes 1 to 8 to the regulation. The annexes to the regulation contain technical detail, such as the required detail of the labelling and ingredient datasheet, as set out in annexe 7, and labelling provisions for consumer automatic dishwasher detergents, as set out in annexe 7B. The annexes contain references to various technical standards and other pieces of EU legislation and are being amended to make them operable, such as by removing references to member states. Out-of-date references have also been updated.
The draft Detergents (Safeguarding) (Amendment) (EU Exit) Regulations 2019 have been tabled on behalf of the four Administrations. The safeguard clause was introduced for member states to take provisional measures in relation to those detergents which, while fully compliant with the EU regulation, were deemed to pose a risk to the safety of humans, animals or the environment. Currently, member states intending to use the safeguard clause must immediately inform the Commission, documenting their reasons. The safeguard clause in article 15 of the detergents regulation is amended by the draft instrument, otherwise it would be an inoperable part of retained EU law because, as it stands, it refers to member states and the European Commission. It is amended to reflect arrangements in domestic law.
Regulation 1 of the draft instrument makes introductory provision. Regulation 2 provides a definition of terms used throughout the draft instrument. Regulation 3 amends article 15 of the detergents regulation. The Secretary of State and the devolved Administrations will have the full powers currently held by the European Commission and member states to initiate safeguarding action across the UK in relation to detergents. The Secretary of State and the devolved Administrations—where the matter is devolved—will be able to take urgent, temporary restrictive action in relation to products through this amended safeguard clause.
The draft instruments address technical deficiencies, do not introduce new policy and preserve the current regime, therefore providing legal clarity, certainty and continuity to businesses and the public. I commend them to the Committee.
It is a pleasure to serve under your chairmanship, Ms Buck. These draft instruments are largely non-contentious, and it would be easy to rush them through with very little scrutiny. However, there is a danger, even with SIs as straightforward- looking as these, that the changes proposed will in fact fail to enshrine the same protections in UK law as currently exist in EU law. The fact that we are addressing so many SIs over such a short period of time makes that possibility of failure all the greater.
Protecting our human health and our natural environment from inappropriate and dangerous detergents is absolutely crucial. The existing EU regulations are detailed and fairly restrictive. If it operates properly, the draft Detergents Amendment (EU Exit) Regulations 2019 should ensure that all the protection we currently enjoy from the EU will continue under UK law. The Opposition would certainly support that. I would like an assurance from the Minister that the UK Government have no intention of relaxing any of the regulations at any stage in the foreseeable future.
As EU members, we could rely on all future UK Governments being bound by the regulations, which are clearly in the best interests of the whole of Europe, with a degree of certainty that may not be quite so great if the decision is simply down to one country’s Government. Leaving the EU also makes it far more difficult for the UK to persuade other European countries to adopt higher standards if that becomes our position.
The corollary to the environmental and health protection is the provision of equal standards across the EU that enable detergents and surfactants to be produced and traded across the EU. To maintain the economies of scale necessary to enable detergents to be manufactured in the UK at a competitive price, most manufacturers will need to continue to meet the requirements of the EU market. In that regard, I am concerned about the passing of the power to make derogations in the UK to the Secretary of State, albeit that it will be administered by the Health and Safety Executive in practice. Will the Minister assure me that derogations of that sort will not have the potential to undermine the UK’s ability to produce and export detergents to the EU market?
We would also like to know whether the Minister believes that any changes in the regulation of detergents in the EU in future should be mirrored by similar changes in UK regulations. If not, what impact does she believe any future divergence will have on the ability of the UK to manufacture and trade detergents?
The power to make derogations, and the need to make amendments in future, will take expertise and diligence. Does the Minister believe that the HSE will receive additional resources to take on that additional workload post Brexit? Given that the HSE’s remit is to protect human health rather than to protect the environment per se, what scrutiny will there be of the effects of any future changes or derogations on the health of the natural environment?
The safeguarding SI is simple, straightforward and wholly sensible, and we support it. I am not aware of any element in the SIs with which we would disagree, but we will abstain due to our concerns about the limited means of scrutiny offered by the timeframe within which they are being presented, and the lack of any possible in-depth examination of the implications.
It is a pleasure to serve under your chairmanship, Ms Buck. It is worth noting that the regulatory powers will be devolved to the relevant Administrations, so they will be going in their own direction, particularly in the areas of the environment and public health. We need to uphold these things in Scotland as much as possible.
The Environmental Audit Committee went on a visit to Washington. We were told by every agency bar one that we need to preserve REACH at all costs and that the regulations need to be tightened as much as possible. We subsequently heard that something like 100,000 companies had re-registered in Ireland because of Brexit complications. Can the Minister give us reassurance that she has had visitations from the chemicals industry about REACH and that she has provided it with assurances that standards will be maintained?
In response to the hon. Member for Falkirk, I have not had direct representations from the detergents industry specifically, but as I shared with the Committee, HSE has had those discussions and seems content—this is about business continuity.
I assure the hon. Member for Ipswich that we will not relax environmental standards. There is no need to do so. I am not aware that the derogation is being used in this country, and I think it is probably only rarely used across the European Union. I do not anticipate a sudden flurry of applications given that, as he said, many manufacturers will want to ensure that their products can be sold as widely as possible.
Discussions are happening on future divergence and mirroring EU laws. In essence, as has been said, particularly in respect of the withdrawal agreement, Parliament will have to make those choices. It is not the case that measures will go through automatically—I anticipate that we will vote on those matters. What does future divergence mean? I will not rule out future divergence—that is a decision for future Parliaments—but I anticipate that most businesses whose main market is other parts of the European Union will follow the market, as long as a product is acceptable in this country. They will always have to comply with the rules of the European Union if that is the market in which they wish to sell.
On HSE and additional requirements, HSE already does the work and we believe that any additional work will be minimal. In effect, this is the day job—HSE already undertakes those obligations on our behalf as an agency contracted into the Department of Environment, Food and Rural Affairs.
I have covered the questions asked by the hon. Gentlemen, and therefore believe we can agree the SIs.
Question put and agreed to.
Draft Detergents (Safeguarding) (Amendment) (EU Exit) Regulations 2019
That the Committee has considered the draft Detergents (Safeguarding) (Amendment) (EU Exit) Regulations 2019.—(Dr Thérèse Coffey.)
Draft Services of Lawyers and Lawyer’s Practice (Amendment) (EU Exit) Regulations 2019
The Committee consisted of the following Members:
Chair: David Hanson
Ali, Rushanara (Bethnal Green and Bow) (Lab)
† Badenoch, Mrs Kemi (Saffron Walden) (Con)
† Eustice, George (Camborne and Redruth) (Con)
† Foxcroft, Vicky (Lewisham, Deptford) (Lab)
† Frazer, Lucy (Parliamentary Under-Secretary of State for Justice)
† Grogan, John (Keighley) (Lab)
† Hair, Kirstene (Angus) (Con)
† Hall, Luke (Thornbury and Yate) (Con)
† Hart, Simon (Carmarthen West and South Pembrokeshire) (Con)
McKinnell, Catherine (Newcastle upon Tyne North) (Lab)
† Milling, Amanda (Cannock Chase) (Con)
† Phillipson, Bridget (Houghton and Sunderland South) (Lab)
† Qureshi, Yasmin (Bolton South East) (Lab)
† Snell, Gareth (Stoke-on-Trent Central) (Lab/Co-op)
† Sturdy, Julian (York Outer) (Con)
† Tracey, Craig (North Warwickshire) (Con)
† Turley, Anna (Redcar) (Lab/Co-op)
Sean Kinsey, Committee Clerk
† attended the Committee
Seventh Delegated Legislation Committee
Tuesday 12 March 2019
[David Hanson in the Chair]
Draft Services of Lawyers and Lawyer’s Practice (Amendment) (EU Exit) Regulations 2019
I beg to move,
That the Committee has considered the draft Services of Lawyers and Lawyer’s Practice (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Hanson. The draft regulations, which form part of the Government’s preparations for the possibility of the UK leaving the EU without a deal, relate to legal services in the context of our relationship with Switzerland. I will not detain the Committee long, but I will set out, first, the current framework; secondly, what we propose in relation to legal services in the EU in a no-deal scenario; and, thirdly, what we therefore propose in relation to legal services in Switzerland in a no-deal scenario.
As an EU member state, the UK is required to implement two European directives on legal services: the lawyers’ services directive and the lawyers’ establishment directive, both of which extend to Switzerland as a result of the free movement of persons agreement between the EU and Switzerland.
As part of our no-deal planning, the Government laid before Parliament a statutory instrument to amend the domestic legislation that implements the two EU directives. It will revoke the relevant provisions in the event that the UK leaves the EU without a deal. The draft regulations will ensure that deficiencies in retained EU law are remedied in a way that reflects the agreements that we have reached with Switzerland, retaining some provisions for Swiss lawyers in line with the UK-Switzerland citizens’ rights agreement.
The draft regulations will grandfather UK and Swiss lawyers’ recognition and establishment rights under the citizens’ rights agreement, provided that they have transferred to the host state title before exit day. They will protect the rights of UK or Swiss lawyers who are established, registered and providing services under their home title; as long as they remain registered, they will be able to continue to provide services, as they do at the moment. The regulations will provide a transition period of four years for lawyers to register or transfer under these arrangements. Finally, they will allow lawyers and law firms to continue to provide up to 90 days of temporary services in a year for at least five years, where this is under a contract agreed and started before exit. Swiss lawyers will also be able to apply, within four years of exit day, to join a profession in English and Wales or Northern Ireland on the basis of three years’ qualifying experience as a registered European lawyer, in addition to the routes available to foreign lawyers. Switzerland has introduced its own legislation on the matter.
I said that I would be brief. I hope that the Committee agrees that the draft regulations will allow us to ensure that retained EU law functions effectively, provide continuity for Swiss lawyers with interests in the UK under our reciprocal agreement, and ensure an orderly exit from the EU.
It is a pleasure to serve under your chairmanship, Mr Hanson.
The Opposition will not seek to divide the Committee on the draft regulations. I agree with everything that the Minister said about the impact of the treaty and how the agreement will work. I just want to add one thing: as I am sure the Minister is aware, the new agreement does not make any provision to allow United Kingdom law firms to operate in Switzerland under their current structures. Some law firms will therefore face challenges and will have to amend their corporate structure. We hope that the Ministry of Justice and other Departments will work through the issues that arise from the future trade agreement with Switzerland in relation to law firms.
I thank the hon. Lady for indicating that she would not divide the Committee, which is a very constructive way forward. As I mentioned, Switzerland is introducing its own legislation on the matter.
I commend the draft regulations to the Committee.
Question put and agreed to.