Considered in Grand Committee
My Lords, these regulations were laid before the House on 13 October 2020. The draft instrument serves several purposes, from fixing deficiencies in retained EU law to implementing the Northern Ireland protocol, which I will explain further shortly. Ultimately, it is necessary to ensure the continued operation of ecodesign and energy labelling policy in the UK after the end of the transition period.
Before I talk specifically about the instrument, it may be helpful if I speak briefly about how the EU framework for ecodesign and energy labelling has worked. In recent years, the EU has introduced, through the ecodesign directive and the energy labelling framework regulation, a suite of product-specific regulations. Ecodesign regulations are about minimising the costs and environmental impact of products used in both homes and businesses by setting minimum energy performance standards.
Energy labelling regulations provide consumers with information on a given product’s energy performance to allow them to make informed purchasing decisions. In 2020, these policies will save households approximately £100 on their annual energy bills and lead to greenhouse gas emissions savings of 8 million tonnes of CO2, while also driving innovation and competitiveness among businesses.
This brings me to the instrument being debated today, which serves four purposes. It amends retained EU law to ensure that the ecodesign and energy labelling regime remains operable in the UK once the transition period has ended. It makes necessary amendments to the 2019 EU exit SI to account for regulations that have come into force between 29 March 2019 and 31 December 2020. It implements the Northern Ireland protocol and unfettered access for ecodesign and energy labelling policy. It also implements a change to replace energy labels’ use of the EU flag with a UK flag, and removes EU languages from these labels.
I turn to the amendments. First, amendments to retained EU ecodesign and energy labelling legislation are required to ensure that the legislation can continue to operate in the UK from 1 January 2021 without disruption. Fixes include, but are not limited to, removing EU-related references. For example, new energy labelling regulations for some products have come into force in the EU. These require suppliers of relevant goods to provide new re-scaled energy labels with their products from 1 November 2020. However, retailers do not need to display these until 1 March 2021. The SI ensures that the March 2021 requirements, which would otherwise not become retained EU law, will still come into force in March as intended.
Secondly, the 2019 EU exit SI for this policy area ensured that, in the event that no agreement was reached with the EU, existing minimum performance and energy labelling requirements would continue to operate and remain enforceable in the United Kingdom. The UK of course remains bound by EU law until the end of the transition period, and a number of EU ecodesign and energy labelling regulations have come into force since this first EU exit SI was laid. As a consequence of those new EU regulations, some aspects of our 2019 EU exit SI no longer work as intended. This SI makes amendments to the original SI to ensure that the new EU ecodesign and energy labelling regulations will be fully operable in the UK after 1 January 2021.
Thirdly, on legislative implementation of the Northern Ireland protocol and unfettered access, this instrument amends our 2019 EU exit SI and the underlying legislation so that certain UK-wide provisions are limited to Great Britain only. This will avoid confusion, as EU requirements continue to apply in Northern Ireland after the transition period, as per the terms of the Northern Ireland protocol.
This SI also allows relevant qualifying Northern Ireland goods that comply with EU ecodesign and energy labelling regulations to be placed on the GB market without undergoing additional checks. Qualifying Northern Ireland goods are defined in another instrument laid by the Cabinet Office. This SI will enable UK market surveillance authorities to ascertain whether a product came into the GB market from a Northern Ireland-based business through the information provided in a product’s declaration of conformity.
Fourthly, on labelling and marking requirements post transition period, this SI implements a decision to replace the EU flag on energy labels with the UK flag. Alongside this, we have removed EU language text from energy labels. As the UK is no longer part of the EU, the continued presence of EU logos and languages on energy labels would be inappropriate in UK legislation and could create confusion for consumers. UK energy labels have been made available to businesses free of charge through an online service to support compliance with this amendment.
Some UK trade associations wrote to the Secretary of State with concerns that they had had little time to prepare for these changes. Minister Kwarteng responded on 18 October, explaining that the change was a necessary fix to deficiencies in the law and that the Office for Product Safety and Standards would take a proportionate approach to market surveillance, as it has always done.
Officials in my department have undertaken the appropriate assessment of the impacts of this instrument on businesses and relevant bodies. It showed that the estimated cost to business was approximately £1.95 million, so a full impact assessment was not required. Nor was a formal consultation required under the legal powers used, Sections 8 and 8C of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018.
In conclusion, these regulations are necessary to ensure the continued functioning of ecodesign and energy labelling policy in the UK, while upholding our commitments under the Northern Ireland protocol, such that the UK, its consumers and its businesses may continue to realise the benefits of this policy. I commend the regulations to the Committee.
My Lords, I declare my interests as set out in the register, drawing particular attention to my chairmanship of Buckthorn Partners, which is active in the energy transition space. While the regulations are welcome and specific to the narrow issue of ensuring continuity after the end of the transition period, this debate provides a useful, albeit brief, opportunity to highlight the importance of government returning to this issue as soon as parliamentary time permits, since the system we are transposing into UK law is far from perfect and needs further consideration in terms of its objectives, ease of use and effectiveness in the welcome move towards substantial government support for energy transition.
To put my questions to the Minister in context, it is important to set the regulations in context. It is many years since I was a Minister for Energy in another place. During that time, significant developments have taken place in the context of ecodesign which have led to a European framework. The first major initiative in the sector was the European ecolabel, a voluntary scheme established to encourage businesses to market products and services that were kinder to the environment, with products and services awarded the right to carry the European flower logo. Ecodesign competitions followed. Ecodesign aspects were integrated into ISO standards, and framework conditions developed by the EU moved initially from waste management strategies and packaging to other end-of-life directives which aimed to follow the three Rs—reduce, reuse and recycle.
Educational initiatives were launched and now hundreds of ecodesign-related labels have come into existence across the world. The European Commission established integrated product policies to support the sustainable consumption and production action plans which underpin the regulations before us today.
Nevertheless, despite this remarkable increase in worthy activity, many issues remain. There has been a great deal of talk about environmental product development but, in many cases, too little change in practice. To remedy this, we will need to address the definition of each phase of a product lifespan from not just the producer’s perspective but the user’s. Just as much importance should be attached to the use as well as the after-use phases in the selection of ecodesign criteria. Do the Government intend to address this in the wider context of the 10-point plan for a green industrial revolution announced last month, particularly under point 7, greener buildings, where a target milestone was set for the launch of a world-class energy-related products policy framework? The document states:
“We will push for products to use less energy, resources, and materials, saving carbon and helping households and businesses to reduce their energy bills with minimum effort.”
The target milestone for this objective is set for 2021. When does the Minister expect this work to begin and will the House have the opportunity to debate ecodesign and energy information standards in this context? If so, this measure should be seen, as I believe it is, as a stepping stone to the design and development of more whole-life standards, thus enabling the UK to take the lead in ecodesign labelling.
Only last week, the Secretary of State for Housing, Communities and Local Government published the social housing White Paper, The Charter for Social Housing Residents, which focused on providing tenants in social housing with more information so that they can hold landlords to account. This is yet another example of the welcome incoming tide of green, sustainable change to everything we do in production lines, in our economy at large and in society. Energy information and ecodesign will need to keep abreast of these changes and be embodied in life-cycle principles. At the moment, too many of the ecodesign criteria are independent of one another, which increases the complexity of ecodesign labelling’s inner logic. There is no effective connection between the production and end-of-life phase.
I appreciate that this is not the time to do more, and I urge the Government simply to ensure that in 2021 they look carefully at the current system. Clean production, zero emissions, renewable resources, non-toxic resources, compressibility, short-distance eco-transports and limited eco-friendly to no packaging are all important production-phase criteria for ecodesign. At the point of sale, we need to introduce regional businesses, upgradeability, durability, shared-use potential, repairability, guarantees and maintenance, recyclability and compostability. For today, the two must be considered together. I urge the Government to recognise the challenge and to ensure that, as far as possible, investments made in ecodesign bring returns in the sense of ecological advantage.
Elsewhere, the blind spots of ecodesign are well understood and deserve urgent consideration so that we can seek to lead the world in the area of responsible environmental practice. Ecodesign is an instrument for increasing the potential ecological performance of a product, applying specific criteria, some of them with high interrelationships. Both the selection of the criteria and the realisation of the potential ecological advantages are beyond the reach of ecodesign. Future ecodesign strategies should wherever possible encompass the entire lifecycle of a product in the design phase, from the manufacturer to the consumer.
Ecodesign is an instrument; it is not a strategy. It is a welcome instrument which concerns environmental improvements; it is not an appropriate tool for setting these goals. Government needs to integrate ecodesign into a wider strategy, which can be achieved only by close collaboration with industry and by recognising the importance of continuing dialogue in Europe with our friends.
My questions on the regulations are brief and as follows. Is the Minister satisfied that the complex rules regarding Northern Ireland are workable, in particular the need for all products listed in the categories we are considering today to comply with relevant EU legislation, including the EU flag and QR codes that link to the required product information on the EPREL database? What rules will be expected to apply to goods placed first in the Northern Ireland market which are then sold elsewhere in Great Britain? Will EU labelling on those products not create the very confusion that the Minister is seeking to avoid in the rest of Great Britain, given the contents of EU labels, flags and EU languages on such products? In that context, who will undertake enforcement of these regulations, and is my noble friend the Minister persuaded that they will be sufficiently well resourced to undertake these responsibilities?
In addition to the point my noble friend made about the time constraint, what else did the Government learn from the informal consultation phase on the regulations which he can share with the Committee? Is a year enough time to allow the permissible CE mark for some goods to continue in place of the UKCA mark? Does everyone involved understand the need to act within that allotted timeframe, and are Ministers confident that it is sufficient when taking into account the need to link QR codes to the required product information on publicly accessible websites?
I look forward to hearing from my noble friend and, in the meantime, very much welcome the Government's objective to provide for the continuity and ease necessary after the transition period.
I thank the Minister for his clear introduction to the statutory instrument, and it is a pleasure to follow the clear expressions of concern of the noble Lord, Lord Moynihan, for green, sustainable change, the need for systems thinking and the joining up of various elements of environmental impacts in understandable ways.
It is clear that now, on 1 December, there is little alternative but to back the statutory instrument. As have so many noble Lords in recent days and weeks, I can only say thank you to the Secondary Legislation Scrutiny Committee for its clear examination of this and so many other SIs. I note that the committee says that
“this instrument allows qualifying NI goods which meet EU … requirements to be placed on the GB market, even where these requirements may differ from those that will apply in GB after the TP”
and that the instrument will also
“allow products from GB to be placed on the NI market, provisions are made for a UK(NI) mark which will have to accompany all products which have been CE certified by UK bodies and are destined for the NI market.”
The report continues, but I shall stop there. I am thinking particularly about small, independent businesses. Is the Minister confident that they are getting the advice and have the chance to understand these complex, very last-minute arrangements? As he said, this is another change from the 2019 statutory instrument. I am thinking of traders on eBay, perhaps, and similar trading platforms. What contact have the Government had not just with big businesses but such trading platforms, which are these days used by many small traders? They are suffering under the turmoil of Covid and now have this problem, but as we see regulations change and possibly diverge in future, it will only become more complex. There is a need to deal with the next month and the next 12 months, but will support also be in place for the long-term, continuing problems that will inevitably arise?
Both the Minister and the noble Lord, Lord Moynihan, noted that this is a chance to look over where we are with ecodesign. I doubt that many noble Lords can forget the period when these EU regulations were applied—or were mooted—over the past decade or so. It was a tabloid storm. British floors would turn into archaeological assemblages like a slovenly medieval household without 2,000-watt vacuum cleaners. British marmalade would be spread on soggy, white or somehow or other inadequate toast without a huge blast of heat. We would all be breaking our necks on the stairs without incandescent lighting burning up the planet while showing us the way. I wonder whether some of the journalists who were writing that guff then might like to recant now, particularly as, as the Minister noted in his introduction, it had the “terrible” effect of saving households £100 a year, as well as cutting greenhouse gas emissions.
Now it seems we are in a different age. The Government have issued a consultation on higher energy standards, improving on EU standards. I can only applaud that. The cleanest, greenest, cheapest energy you can have is the energy you do not need to use. The EU headline energy efficiency target for appliances for 2030 is at least 32.5%. Do the Government have in mind how much they would like to exceed that figure by? I also note that the consultation refers to the possibility of appliances being part of a smart grid. Your freezer might be part of the energy storage system, and there is talk of improving the performance of ovens and stove tops from A to A+, which could save 300,000 tonnes of carbon dioxide each year.
There is also talk of displaying lifetime energy costs at the point of purchase for a product, plus additional information on the cost of running it and, importantly—this picks up points made by the noble Lord, Lord Moynihan—how easily it can be repaired, reused and recycled, and how durable it is. Will the Minister consider whether the Government could sign up to the Manchester declaration, also known as the right to repair? We would be talking about an end to planned obsolescence, the creation of a situation where, if any element of an appliance goes wrong, it can be repaired, ideally at home or in a repair cafe, with the parts available when needed and the documentation available to assist the repairer. This is in a context where—I cite a German study from 2015, but I doubt the situation has changed—there was effectively a doubling in the proportion of defective appliances sold from 2004 to 2012, and the number of appliances failing in their first five years of use rose from 7% to 13%. We are talking about a real change towards ensuring that we and our appliances tread lightly on the planet.
We come back to Northern Ireland. Our discussion has already revealed how fast-changing this area is in technology, practice, consumer expectation and the urgent planetary need. The future will surely look back and ask just what we thought we were doing in the past few decades in terms of planned obsolescence. Batteries in a certain brand of popular phone were designed not to be replaced. There is the sheer profligacy of our use of resources. In Northern Ireland, the trading situation the Minister outlined in his introduction means there will be ongoing considerable difficulty. Are the Government ready? Do they have sufficient plans in place to help small business in particular, not just through the inevitable chaos of January and the next 12 months but in the years to come?
The noble Baroness, Lady Bowles of Berkhamsted, has withdrawn, so I call the noble Lord, Lord Grantchester.
I thank the Minister for his careful explanation of the order before the Committee. As he says, it does a number of things while basically transposing the EU ecodesign and energy labelling directives into equivalent standards in UK law. The effective continuation of the ecodesign directive of 2009 ensures a progressive energy efficiency standard for electrical products, so that the least efficient are progressively withdrawn from sale, and it embraces consumer rights in respect of the purchase of electrical goods, delivering continuous improvement in energy efficiency. In tandem with this, the labelling framework regulations of 2017 cover the energy efficiency ratings of a product as guidance to consumers.
We can all clearly see the importance of the continuation of those directives and that they are made effective. The other features of the SI update further measures to reflect changes in EU law made since the earlier order was laid at EU exit time. I can clearly approve the order today to continue the policy to reduce the carbon footprint of energy-related products, to support informed purchasing decisions and to encourage the uptake of the most energy-efficient products.
However, the difficulty of this SI clusters around the Northern Ireland protocol, which other speakers have commented on, and the timing of various directives and implementation in UK law. My first specific query relates to the fact that, since exit day, the dates of further EU measures and their implementation through this SI have got out of alignment in respect of the new lighting regulations. I understand that energy labelling requirements for luminaires are repealed in the UK, while ecodesign requirements in the new lighting regulations will not apply until September 2021. Can the Minister clarify what is being done about that mismatch?
In other respects the provisions appear to be consistent with measures that existed before EU exit and what will continue to exist into the future. However, this SI does not seem to accommodate all the issues that were highlighted through the Northern Ireland situation. Northern Ireland will continue to be in the EU regulatory system and the ecolabel with EU badging, as the Minister explained. Products within Great Britain will be marked on UK CA marking but with the additional UK(NI) mark, should products be marketed into Northern Ireland.
It is all a little confusing to understand from the Explanatory Memorandum what is the position of EU goods in Northern Ireland, whether produced there or not, and their labelling, should they be sold into Great Britain. This could have particular reference to goods from the Irish Republic. Am I correct to understand, from paragraph 2.30, that these goods must be rebadged as UK? The UK has yet to produce separate agreements conforming to EU standards, and therefore the existence of a UK mark will not be sufficient to secure marketing arrangements. In the event that no agreement is reached with the EU on the UK’s future relationship, will GB companies have to agree on an additional EU label over and above the UK label? Over time, there could be divergence between Northern Ireland and Great Britain on standards with reference to EU protocols. There will then arise many foreseeable anxieties over safety and other standards for consumers to understand their differences.
There is also no agreement yet on access by Northern Ireland to the EU product database, which informs ecolabelling and product standard activity. The UK should not, as a third country, have access to this database and needs to set one up on its own. Can the Minister update the Committee on how that work is proceeding and whether it will be ready to be implemented from 1 January? I presume the Minister will confirm that Northern Ireland will need to have access to the EU database if it is to continue to work to EU ecolabelling criteria.
What plans do the Government have regarding the declarations of conformity of goods to various standards in and out of Northern Ireland and their checking of these once divergence proceeds between the EU and the UK? What plans do the Government have to address the confusing picture that will be placed in front of the consumer? Which consumer bodies will be drawn into the communication to help with the explanations to the consumer, and how will this be done?
There was little information in the consultations undertaken with stakeholders, other than general agreement to the necessity of these regulations. However, stakeholders were anxious about the limited timeframe to implement the required changes to UK energy labels, and the Minister did update the Committee in the further communication between the Minister in the Commons and various stakeholders in October. Was anything agreed further with stakeholders that could help them comply with the reducing timeframes to agreements before the end of the transition period, and are stakeholders now content?
I thank the noble Lord, Lord Moynihan, for his further questioning on ecodesign in relation to after-use and the climate sensitivities to the lifetime of any product. These are important matters that he raised. He also forsesaw confusion in products that originate in Northern Ireland and in who is responsible for enforcement after the transition period. I also thank the noble Baroness, Lady Bennett, who also raised issues that affect small business traders and modern online platforms. Regarding ecodesign, how will the UK make further efficiency gains over and above those of the EU?
Having said that, it is very important that the UK continues with the commitment to the standards, ecodesign and energy labelling regulations that have proved so beneficial in reducing both energy bills and emissions.
I thank noble Lords for their valuable contributions to this debate. The Government are committed to providing certainty for businesses and, of course, the public in any scenario from 1 January 2021 by ensuring that the UK has a functioning statute book after the transition period, and these regulations will play their part in helping to accomplish that. They will ensure continuity for our ecodesign and energy labelling regime, which has to date helped us to achieve significant savings on energy bills and carbon emissions, making a realistic and noble contribution to our national carbon reduction commitment.
In response to my noble friend Lord Moynihan, the noble Lord, Lord Grantchester, and the noble Baroness, Lady Bennett, who raised questions regarding the operation of the policy in Northern Ireland, we are confident that the rules in Northern Ireland are workable. This has been communicated to stakeholders via our technical notice, and UK market surveillance authorities are confident that they have sufficient evidence to ensure compliance with this. Qualifying Northern Ireland goods are goods placed on the GB market by qualifying Northern Ireland businesses and, as such, are entitled to unfettered access to the GB market. This means that they are free to circulate without any customs supervision, tariffs or restrictions. Qualifying Northern Ireland goods are defined in draft regulations laid under Section 8C(6) of the European Union Withdrawal Act 2018 entitled the Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020.
My noble friend Lord Moynihan raised questions about the circular economy principles. They form a part of ecodesign requirements, and of course that is led by officials from Defra. In the UK, we will endeavour to support circular economy principles under ecodesign after the end of the transition period. My noble friend also asked about consultation. Formal consultation was not required, as I said, by the legal powers used, Sections 8 and 8C of and paragraph 21 of Schedule 7 to the European Union (Withdrawal) Act 2018. In addition to that, we concluded that no consultation was necessary as this SI makes the required changes only to ensure a functioning statute book in the UK, and the costs involved are minimal, as I said in my introduction.
On the issue of CE marking, the 12-month standstill approach was agreed by the Cabinet Office on advice provided by officials. Ministers are confident that this timeframe is sufficient. The Office for Product Safety and Standards is responsible for enforcement and has been for a number of years, and it is confident that it has the resources required to continue with those activities.
The need for QR codes has been communicated with stakeholders at many events over the summer and most recently in November. We have also published a technical notice on GOV.UK that supports business preparedness for the end of the transition period. Additionally, my department determined that this deficiency should be fixed from 1 January 2021 without a transition period to avoid creating potential confusion for consumers with the continued presence of EU flags on energy labels for goods designed to meet Great Britain ecodesign requirements from 1 January 2021.
I also thank the noble Baroness, Lady Bennett of Manor Castle, for her questions on whether businesses and traders are prepared for the changes brought in by this SI. We have communicated with a number of small businesses in the UK, through their various trade associations, that represent key sectoral interests in the UK. We have also responded to a large volume of direct communication from businesses, and we are confident that the majority of them are aware of the requirements. As I said in my introduction, a letter was written to the Secretary of State to this end on 14 September 2020, signed by a number of stakeholders, including the British Retail Consortium, Make UK, techUK, AMDEA, BEAMA, the Lighting Industry Association, GAMBICA and the British Home Enhancement Trade Association. However, as the market surveillance authority, the Office for Product Safety and Standards will take a proportionate and reasonable approach to market surveillance on this matter, we believe that the concern is somewhat mitigated. The noble Lord, Lord Grantchester, also raised a question on this point, and I hope that I have been able to reassure him on this matter.
The noble Baroness, Lady Bennett, also asked about the Manchester declaration. As recently announced in the Prime Minister’s 10-point plan, we will set out our world-leading product policy in 2021, continuing to work with international partners and across government to achieve the benefits of energy and resource efficiency.
The noble Baroness also asked a question on the Northern Ireland protocol. I covered that in my earlier response, so I hope that has already been answered. However, I would like to add that the Northern Ireland protocol has been implemented in such a way for ecodesign and energy labelling that it will continue to operate long into the future.
I thank the noble Lord, Lord Grantchester, for his concerns about the lighting regulations, on which officials have launched a consultation. We are closely monitoring amendments at an EU level. We will ensure that future policy meets our ambitions for high standards and consumer savings.
On the EU product database, there are no current plans to create a UK equivalent to the EPREL database. Businesses placing products on the market in Northern Ireland will, of course, have access to the EPREL database to comply with the relevant EU requirements, which they must do.
The noble Lord also asked how we will monitor and enforce the policy should requirements in the EU and the UK diverge. I reassure him that the UK market surveillance authority will continue to carry out its duties in Northern Ireland according to the relevant EU standards and in Great Britain according to the relevant UK requirements.
I hope I have been able to deal with all the questions that have been raised, and I will underline once more the four purposes of the instrument. It will use powers under Section 8 of the withdrawal Act to amend retained EU law to ensure that the ecodesign and energy labelling regimes continue to operate without hindrance in the UK after the end of the transition period. It will amend the first EU exit SI to take account of the new regulations that come into force at an EU level between 29 March 2019 and 31 December 2020, and therefore in the UK following the extension of Article 50 and the transition period. It will implement the Northern Ireland protocol and ensure the unfettered access of energy-related products that meet qualifying Northern Ireland goods requirements, as I outlined. Finally, it will enable labelling and marking requirements to take effect from 1 January 2021, replacing EU flags and language text with UK flags and text on energy labels, while implementing an end date to the recognition of CE marking 12 months after the end of the transition period. With that, I commend the draft regulations to the Committee.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
Committee adjourned at 4.53 pm.