EU Directive 2007/46/Ec

Part of the debate – in the House of Commons at 6:13 pm on 4 September 2013.

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Photo of Jonathan Reynolds Jonathan Reynolds Labour, Stalybridge and Hyde 6:13, 4 September 2013

There is no doubt that my motivation in seeking this debate has been the news communicated to me about the impact that the implementation of the directive will have on businesses in my area. The goal of the directive is not a bad one, but if it is implemented incorrectly, there is no doubt that some manufacturers and some jobs might go.

The directive was introduced to ensure that automotive goods—including cars, vans, lorries, trailers, caravans and so on—meet a minimum EU-wide set of regulatory, technical and safety requirements. That is entirely understandable and a good thing, in terms of both safety and potentially opening up a bigger market for our manufacturers. However, the directive has meant that manufacturers have to do much more to ensure that their products meet the standard, drastically altering their previous processes. Instead of needing approval to work on a certain manufacturer’s product, businesses now need approvals for different vehicles from the same manufacturer, even though the differences between models might seem minor. In the original impact assessment, back in 2009, the previous Government had two options. They chose the right option by offering a lower-cost approval scheme to businesses that wish to sell only in the UK. I am pleased that the current Government stuck to that. However, four years later, more issues are appearing, which I shall now explain in more detail.

The first issue, unsurprisingly, is the increased costs that the directive has imposed on businesses. The number of approvals needed has spiked massively, and obtaining each type approval costs money. Whereas costs were managed by needing only a few approvals, with the new European Community whole vehicle type approval, as well as the number of approvals that come with it, costs have risen sharply and quickly. Many SMEs are struggling. I have heard reports of businesses that will either scale down the products that they offer or simply pack in altogether when the directive is fully implemented next year. That is not encouraging manufacturing—quite the opposite—and that should concern us all.

The staff hours involved in obtaining new approvals have also risen due to the complexity, the amount of new approvals needed and the length of the process to obtain just one approval. The Federation of Small Businesses has told me that its members feel that the process is confusing and burdensome. That is particularly true of SMEs, which find the paperwork—something that they have to go through every time they want to start work on a different product, even if the differences are fairly minor—demanding and discouraging. Other areas of the business then suffer, as staff are taken away from other roles to spend what they believe to be a disproportionately large amount of time on securing type approvals.

A lack of communication to businesses by Government and government authorities such as the Vehicle and Operator Services Agency and the Vehicle Certification Agency is another issue. Some businesses were not even aware of the initial impact assessment in 2009. They feel ill-informed and still in the dark about what is required from them and any help that they can receive. Businesses have told me that they feel abandoned. Some businesses have also told me about what they feel to be a lack of consistency, with the process frequently changing. One managing director described it as the “goalposts constantly being moved”. There is a lot of confusion and worry out there in the industry at the moment, which needs to be addressed.

Let me present the House with a case study from my constituency. This issue was brought to my attention by Truck Craft Bodies Ltd—a small to medium-sized business in Stalybridge. It is deeply concerned about the effect that the directive will have on its business once it is fully implemented and about the ability of such SMEs to survive. The business has told me that it has gone from simply needing one approval per manufacturer to needing up to 30 approvals for just one manufacturer.

Like me, the company agrees with the premise of the directive, but it is particularly concerned about the resulting costs and increased staff hours. It is also unhappy about the lack of help and support on offer. The help that it could receive from organisations such as the Society of Motor Manufacturers and Traders has so far been inadequate. The Government should be speaking to companies such as Truck Craft Bodies. They are the ones in the field, and what they have to say on implementation is invaluable.

That leads me to my main point, which is the lack of scrutiny or assessment of the directive’s implementation since the initial impact assessment more than four years ago. I am concerned that as the date for full implementation—November 2014—looms closer, the answers to a number of questions are still not known, purely because of the lack of scrutiny. First, does the system provide value for money? The Vehicle Certification Agency is the UK’s designated approval authority, and it needs to be cost-effective for the businesses that use it. Secondly, do the Government know how the implementation of the scheme is going, given that no assessment has been carried out since 2009? Are the Government aware of the problems that are being experienced by many businesses? How will they address those issues and provide further help to businesses that need it? We need to know the answers to those questions if we are going to help the SMEs that are facing a testing and uncertain time.

The point of this debate, however, is not for me to stand here and criticise the Government. That would be unfair, especially on a matter that is so technical and complex. I want the debate to achieve positive outcomes and improvements, as my ultimate aim is to help businesses that are struggling and that are worried about the effect of the directive on their trade and their ability to survive. I have no doubt that the Minister shares that view. There are potential solutions to the problems that I have outlined so far, and I hope that the Minister will give them serious consideration.

Most importantly, I firmly believe that the Government need to carry out another impact assessment before the directive is fully implemented in 2014, and I call on the Minister to do that at the earliest opportunity. The lack of scrutiny so far worries me deeply. This cannot wait until after the full implementation of the directive; it needs to be done as soon as possible. If we wait until 2014, it will be too late, especially as some businesses are planning to stop their current operations once the directive comes into full effect, unless there are changes. An impact assessment now would help properly to identify the hurdles that businesses are facing because of the directive, and it would do so in far greater detail than I can describe in the debate today.

Carrying out a new, updated assessment now would have numerous benefits, and I hope that I can convince the Minister to do so. It would offer solutions and ways of dealing with the problems that the directive has caused to businesses, not to mention giving the Government an idea of how the directive’s implementation is going and an opportunity to improve it. Most importantly, it would involve the manufacturers and businesses. After all, they are the ones that are most affected; they currently feel abandoned and are not sure where to turn. This is of course their industry, and they are the ones that know it best. Overall, I believe that a new assessment should be carried out as soon as possible and definitely before full implementation. I sincerely hope that the Minister will give that suggestion some serious thought.

Certain specific suggestions are worthy of consideration. Indeed, any new assessment might come to similar conclusions. They include changes such as making the granting of licences easier. As previously mentioned, the VCA is the only body in the UK that can grant type approvals to SMEs that want to operate only in the UK. There is scope to funnel down the process, which at present appears top-heavy and cumbersome, to give manufacturers and businesses more involvement. That would take some of the work load off the VCA and run down costs on both sides. Businesses that I have spoken to are unhappy with the current process that the VCA operates. For example, the agency already has a lot of the information that manufacturers have to supply. The duplication that the companies have to undertake costs money and time, and seems unnecessary. Perhaps this has been overlooked, and it could be identified by a new, updated assessment.

Furthermore, a common complaint from the industry is that the support offered to it has been found wanting. Manufacturers feel left out of the loop and abandoned, and are unhappy with the general lack of communication about a matter that is so vital to their continued existence. The Government need to communicate their plans better. It is also imperative that the Government look at the UK system and make it as easy as possible for small and medium-sized businesses, in particular, to comply with the new regulations. The FSB supports that proposal and believes that that should happen.

Mr Speaker, I thank you once again for allowing this debate, and I look forward to the Minister’s response. I am sure that he and I both want the same thing: for manufacturing to thrive in the UK. The directive does not necessarily have to hinder manufacturing by firms such as Truck Craft Bodies. Improved safety and access to bigger markets are of course in everyone’s best interests. However, because the directive involves such a radical change from how manufacturers have previously operated, it is imperative that it should be monitored closely. That has not happened so far, as we have seen from the lack of any real assessment or scrutiny by the Government since the initial impact assessment in 2009. I sincerely hope that the Minister will take on board the suggestion to hold another assessment soon, before full implementation in 2014.