I beg to move,
That the draft REACH etc. (Amendment etc.) (EU Exit) Regulations 2019, which were laid before this House on
Madam Deputy Speaker, have you ever considered what life was like before you became a Member of Parliament? Well, I never had a dream come true until I was elected to Parliament, but if I take myself back to when I was at high school, I have to admit that my love of chemistry started when I was very young. I was very much inspired by colours, and it was only through chemicals that we had colours—whether it was the colour blue or a range of colours that appealed to us all. This got me excited in chemistry. Moving on a little bit further, I eventually ended up doing a PhD in chemistry. Little did I know that 30 years later, I would be here putting regulations in place.
Why do chemicals matter? Chemicals matter because they are not only part of our second-biggest manufacturing industry but critical to so many of the elements that we have around us, whether in the oil in people’s watches, in paint, or in the different chemicals that are applied not only in pharmaceuticals but in a wide variety of things that we just take for granted. They are even a key part of fireworks, because without chemicals—the inorganic chemicals, in particular—we would not get the wide range of colours. I do not know if you were here, Madam Deputy Speaker, on the night when we had chemicals in fireworks being exploded above Big Ben—that special evening when we were going to reach for the stars, but fortunately did not bring the House down.
I was rather hoping that the Minister might do that, because something incredibly important is at stake here. At a recent meeting of the Environmental Audit Committee, we had before us the Chemicals Industry Association, which said:
“No deal would essentially mean, if I can put it lightly, catastrophic effects on the chemical industry here in the UK.”
Does she agree with that assessment, and will she do her very best, then, to rule out no deal?
No, I do not agree with that assessment. Nevertheless, this SI is not about whether we have a deal or not—it is about having an effective regulatory system. It is not about changing policy or trying to make it stronger—it is about trying to make sure that we can have something that works and continues to work in future.
In line with the European Union (Withdrawal) Act 2018, these regulations simply make technical and legal amendments, including transitional arrangements, to maintain the effectiveness and continuity of UK legislation that would otherwise be left significantly inoperable, so that the law as today will continue to function legally following our exit from the EU. I recognise that the statutory instrument is long and makes many adjustments, but I can assure the House that they represent no changes of policy.
But the truth is that the statutory instrument will not be able to simply cut and paste the REACH database into UK law. We cannot cut and paste the chemicals framework established by the EU into UK law because it regulates, evaluates and authorises chemicals, and that is significantly different. That is why the Minister is asking this House to establish a UK chemicals database and asking the UK industry to make significant contributions towards that. That is the case, is it not?
That is right. These regulations will apply to the whole of the United Kingdom, with the exception of paragraph 1 of schedule 11, which makes amendments to existing domestic legislation regarding the disposal of polychlorinated biphenyls that, in the current regulations I referred to, extends only to England and Wales. This Government, and this country, have to be ready for the prospect of not being part of ECHA—the European Chemicals Agency—in future, and we therefore need to put in place the regulatory framework that means we will continue to have a safe chemicals industry in future.
The Minister will be aware, I am sure, of the concern that has been expressed by Rolls-Royce, and others, that the SI does not take account of all the scenarios. It mentions, in particular, an application for EU authorisation submitted by a European economic area entity for which a decision has not yet been made and on which a UK downstream user is dependent. Its concern is that post
Actually, I am not aware of the reference to that by Rolls-Royce. Yes, we do need, in effect, to replicate the database, and that is what part of these regulations establishes. However, I want to make it clear to the House that CEFIC—the European Chemical Industry Council—and the Chemical Industries Association in the UK have made a joint statement to their members that the contracts that currently exist between consortiums should be amended so that information or data is available both for REACH and for UK REACH in future. None of the consortiums can force their members to do that, but I believe that it is in their best interests to make sure that the data and information required is available to both chemicals regulation systems.
As I said, the regulations apply to the whole of the United Kingdom. This Government and the devolved Administrations have worked together closely on these regulations and have agreed that a UK-wide REACH system will mean a coherent UK market backed by consistent policies and chemical management. The devolved Administrations have been involved in the drafting of the SI and have given their consent. That includes the Labour-run Welsh Government and the SNP-run Scottish Government. Indeed, this was also scrutinised by the Scottish Parliament, which also gave its consent.
I am saying that, as it stands today, chemicals regulation is a devolved matter in how Governments can apply these things. We have a particular regulation that currently applies only to England and Wales. The Scottish and other Administrations will have made their own applications in legislation for that. That is why this is the only bit of the entire statutory instrument that does not apply to the whole of the United Kingdom.
Will the Minister confirm that there will be absolutely no reduction in safety standards—because we all want high safety standards—and does she recall that when REACH first came in, quite a lot of industry voices said that it was more bureaucratic and more expensive but no safer?
The costs are still going to be significant for administering our own chemicals system in future, but I can assure my right hon. Friend that the safety standards will be consistent and, indeed, we will continue to learn from ECHA in future. As he will be aware, in the future economic relationship that has been put forward through the political declaration, and in ongoing statements by my right hon. Friend the Prime Minister, we would seek to become an associate member of ECHA in future to share these things in order to try to reduce or mitigate some of the challenges that people like Rolls-Royce are anticipating. But that is not yet an agreed matter, and it is important that the Government set before the House appropriate regulations to make sure that we have that continued safety of chemicals.
Before I explain the provisions further set out in the SI, I want to emphasise that we are absolutely keeping the fundamental approach of REACH, with its aims of ensuring a high level of protection of human health and the environment, as well as enhancing innovation and competitiveness. The building blocks of REACH will all remain: industry’s primary duty to understand the hazards and risks of chemicals and to ensure safe use, all tied to the principle of no data, no market; registration by industry of the chemicals it produces and places on the market; dossier evaluation by the regulator of at least 5% of registration dossiers to check compliance and quality, exactly as ECHA is expected to do today; and substance evaluation, which is investigation by the regulator of outstanding concerns about a chemical often leading to a requirement on industry to fill the knowledge gaps. The UK has been responsible, through ECHA, for making sure that there have been 24 evaluations—for example, of the chemical climbazole, which is used in anti-dandruff shampoos but is suspected of causing feminisation in fish. Then there is the authorisation process that forces industry to apply for and justify continued use of substances of very high concern. Finally, there is restriction of the most dangerous chemicals where unacceptable risks remain.
On the definition of duty holders, article 3 of schedule 1 of the statutory instrument changes the definitions of the various industry duty holders so that they refer to the United Kingdom rather than the European Union. Obviously, this is a simple change, but essential. Without it, UK industry would have no duty to ensure the safe use of the chemicals it produces and uses.
UK REACH will continue with an independent regulatory agency to carry out a central role with a range of technical, scientific and administrative functions—the role that is currently carried out by ECHA. The statutory instrument allocates this role to the Health and Safety Executive under article 2A of schedule 1. The HSE will receive industry’s registrations of chemicals. It will make many technical decisions itself—for example, in dossier and substance evaluations, as well as in scrutinising authorisation applications and making scientific recommendations on restrictions. This builds on the HSE’s existing activities as the UK competent authority for REACH. At the same time, the Environment Agency and the devolved environmental regulators will have the role of providing the advice that the HSE will need on environmental matters, as set out in article 2B of schedule 1.
The HSE, as the UK agency, must also draw on independent expert scientific advice when developing its opinions on restrictions and authorisations. This will add to the robust evidence and analysis underpinning its opinions. We expect the HSE to obtain external advice, but there may sometimes be reasons why it does not feel it needs to do so, such as where ECHA has already published a robust opinion on a chemical. In such cases, where the HSE decides not to take further scientific advice, it must publish its justification, as set out in article 77. Finally, appeals against the HSE’s decisions will be heard by an independent body, the first-tier tribunal, as set out in article 91.
The Minister will be aware that I have some concern about the REACH regulations after we leave the European Union, but I am aware that we are talking about the statutory instrument and how it affects the United Kingdom leaving the European Union. She said in response to one of my written parliamentary questions that she wishes to have associate membership of REACH. Although I am not convinced that can actually happen, can she provide me with some kind of reassurance that the Environment Agency currently has the capability to ensure that compliance will continue after we leave the European Union?
I am conscious of my hon. Friend’s desire to have an ongoing relationship with ECHA. As I have already set out, that is the Government’s desire, too. The Environment Agency is recruiting an extra 10 staff, and the HSE will be taking on an extra 35 to 40 people to help fulfil the functions it already undertakes today. My understanding is that we have estimated the future cost of running UK REACH to be about £13 million a year. By way of comparison, ECHA itself costs about £80 million a year to look after 28 member states. That is why we believe that we are putting in the necessary resource to make sure that the HSE, the EA and, indeed, other regulators are able to play their part.
As I said, we are recruiting staff to undertake additional elements, but it will be open to the regulator to take advice from where it likes, whether that is from ECHA, from within the UK—we should remember that, in many cases, UK scientists are the people giving advice to ECHA—or, indeed, from further afield. We will not be restricting the regulator’s consideration, but it matters that we have an operational scenario for chemicals regulation. The House can be assured that we will continue to have a safe chemicals industry in the future.
The Minister will be aware that my Committee, the Environmental Audit Committee, held an evidence session in December 2018, subsequent to our report published in 2017, in which we heard from Elizabeth Shepherd, a partner at Eversheds Sutherland. She is one of the UK’s leading experts in chemical regulation, and she said:
“The UK regulator, HSE, is no longer involved in the evaluation of substances. HSE has, to date, played a very active part in evaluating chemicals… the chemicals that were assigned to HSE for the 2018-19 period have been moved away from the UK already to other evaluating authorities. Businesses are concerned that they will lose the insight that participation gave them and the opportunity to influence the shape of regulation.”
We are losing our influence, are we not?
I do not think we are losing our influence. The measure was taken by ECHA after the people of the United Kingdom voted to leave the European Union. Currently, a country can only be a member of ECHA by being a member state of the European Union, so this is forward planning. Some of these assessments can take time to go through the ECHA process, and therefore, given that the HSE would not be a relevant authority for future ECHA authorisations, I would not want to criticise ECHA for having made that decision. Meanwhile, the HSE has the competence, and it has started recruiting people to undertake the different activities it will need to do.
I will now move on to decision making and working with the devolved Administrations. Just as the HSE inherits the role and functions of ECHA, the responsibilities of the European Commission will pass to the Secretary of State. For example, the Secretary of State will make decisions to authorise the use of a substance of very high concern or to restrict chemicals on the basis of an opinion from the HSE, as covered by articles 60 and 73.
REACH also covers devolved matters such as environmental protection. For that reason, the Secretary of State must act with the consent of the devolved Administrations where a decision relates to an area of devolved competence, as set out in proposed new article 4A in schedule 1. A safeguard clause allows the devolved Administrations, and indeed the Secretary of State, to take urgent action where it is needed to protect human health or the environment. This must then be followed up with the normal restriction process to see whether there should be a UK-wide control, as set out in article 129.
On transferring existing UK registrants into the UK REACH system, the regulations contain a range of transitional provisions to provide legal continuity to business and to protect supply chains. All registrations held by UK companies will be automatically transferred, often known as “grandfathered,” to the UK REACH system at the point of exit, as set out by proposed new article 127A in schedule 2, which means there will be no break in their access to the UK market.
Companies will need to provide the HSE with information to support their registrations in two phases: initial information within 120 days and the full information within two years. That is set out in proposed new article 127B in schedule 2.
I have been reading worrying material. It is concerning that a civil servant recently confirmed that the IT system on which all of this will be based will not be fully functioning by exit day. Can the Minister confirm that it will? How do we know that the HSE has enough staff? There have recently been big cutbacks in HSE staffing. Are more staff being recruited for the HSE?
The Department for Environment, Food and Rural Affairs effectively contracts with the HSE to provide the necessary staff. The HSE covers a wide range of activities right across Government, particularly on safety at work.
The IT system is still being tested. I will be candid with the House that we will make a call this week on whether the system is ready to go live, or whether we will have to do our contingency plan of companies providing that information to us. I do not have an answer ready, because the assessment has not yet been made. In essence, the Government will still have the information they require to run a safe chemicals system. As I say, the decision will be made at the end of this week on whether companies or the Government will upload the information.
No, I do not need to give way on that point.
One way or another, the Government will have the information they need to ensure that we have a safe system.
As my right hon. Friend John Redwood set out, REACH places a registration duty on importers of chemicals. This will be new for companies that import from the EU or the European economic area, as they are currently covered by their supplier’s registration. That is why we are giving them a two-year grace period, which will give them time to adapt and will protect supply chains. In the meantime, they must send information to the agency within 180 days to provide assurance that they know how to manage the chemicals safely—that is set out in proposed new article 127E in schedule 2. We will keep both two-year deadlines, for grandfathering and for downstream user registrations, under review.
I would like to bring this to a close fairly soon, because I am conscious that some Members have put in to speak, as would normally be the case rather than the Minister taking interventions.
I am grateful to the Minister for taking interventions, which we are seeking to make because we have specific questions on which she can provide us with advice. Is it the Government’s intention, post-Brexit, to update regulations in compliance with REACH to ensure that the two systems work side by side?
In effect it will be for the HSE, as the regulator, to make decisions on each level of the process. I have no reason to doubt that the HSE and ECHA will have similar principles in how they go about this. We are not seeking a change in any policy to move away from the REACH process.
It is fair to say that the UK has been trying to get some chemicals restricted much more quickly than ECHA and other EU member states have sought, so there may be opportunities to move more quickly on some of these matters. Again, it will be a judgment call for the HSE on whether to make that recommendation to the Secretary of State.
As for stakeholders, we held a series of informal briefings last summer at which we outlined the proposed regulatory approach, and representatives from the chemicals sector and beyond and other stakeholders, including non-governmental organisations and scientific societies, came to those briefings. Since then, we published a technical notice in September and additional guidance in December and continued with more stakeholder engagement to explain in detail what UK REACH is and what it means for industry. The House will also be aware that I invited MPs, particularly those with chemicals companies in their constituency, to attend briefings.
I recognise the concerns about why businesses have to submit data to the HSE when they have previously registered with ECHA and the potential costs involved. Such concerns were also expressed in the report by the Secondary Legislation Scrutiny Committee in the other place. As the Government said in the White Paper, we want a strong deal under which the UK will continue to participate fully in EU REACH and the work of the ECHA. The impact assessment considered the question of data in detail, and the Regulatory Policy Committee stated that the assessment used a proportionate level of evidence to support estimates of the impacts, including impacts on business. We should not expect a repeat of the costs of complying with EU REACH. For example, businesses that have already invested in putting together the EU registration dossier will not face administration costs again.
To be clear about the importance of information. The “no data, no market” principle is fundamental to REACH, and we will not weaken that in any way. It underpins effective chemicals management by both industry and the regulator. We cannot rely on the fact that such data has already been sent to ECHA. It is simply not correct to say that a chemical is deemed to be safe once it has been registered under EU REACH. Registration is how a company shows its understanding of the hazards and how to control the risks, but it does not mean that ECHA and other regulators have approved that chemical or endorsed it as safe.
ECHA will not evaluate the UK dossiers that it received for the June 2018 deadline. ECHA has also stated that, in the majority of dossiers it opens for evaluation, it needs to follow up with requests for important safety information on chemicals, meaning that the company’s safety measures may also not be adequate. Only the UK agency will be able to provide the assurance that chemicals are safely managed in the UK. To give a sense of scale, we will be grandfathering over 12,000 registrations into UK REACH—35% of them from 2018—representing 5,700 chemicals. Looking forward, we would then expect 50 to 100 new chemicals to be registered each year. We have much less understanding of how many notifications there will be for chemicals imported from the EU, because there is currently no duty to report that information in most cases. That emphasises the importance of the notification process so that we know what chemicals are being used in the UK.
REACH is one of the largest and most complex pieces of EU legislation and Members and others have rightly wondered how we would transfer it into UK law. I am confident that the provisions in these regulations mean that we will continue to ensure the highest levels of protection for human health and the environment, based on robust evidence and strong scientific analysis.
I do not know the answer to that, but I will share the suggestion with my officials, some of whom are conveniently in the Box.
I want to assure right hon. and hon. Members that we are taking steps to provide the industry with the legal certainty it needs to operate and to preserve the supply chains for the chemicals on which we all depend.
Labour believes that this statutory instrument needs urgent modification to avoid disruption to UK businesses in the event of a no-deal Brexit. It shows insufficient understanding of how chemicals are actually managed in complex supply chains, and is therefore unworkable and will unnecessarily create supply disruption issues for UK businesses. Labour believes that continued participation in REACH is the surest way to avoid extra costs and burdens for business, to save jobs and to protect animal welfare, health and safety, and the environment.
The value of the UK chemicals industry cannot be overstated. The sector directly employs 88,000 people, and the industry is worth £6.4 billion to the UK economy every year. It is vital in the supply chain to many other sectors including automotives, pharmaceuticals and aerospace, as well as the production of everyday items such as cleaning products, clothes, and electronics. It is therefore extremely disappointing that we have only been given half a sitting day’s notice of this SI. It represents the second iteration that the Government have published, yet it does little to address the concerns with the first version. The Secondary Legislation Scrutiny Committee said of this re-laid SI that it remains
“concerned that the Department has provided insufficient information on the possible impact of the proposed changes”.
Given the concerns expressed by the Committee, industry, environmental and animal welfare groups and the Opposition, does the Minister agree that the prudent thing would be to take this SI back to the drawing board?
I am particularly worried because I am told that the Health and Safety Executive lacks the capacity, resource, experience and expertise in such a complex field to carry out the functions that the Government propose to transfer from the European Chemicals Agency. As with so many public sector organisations, the HSE has suffered brutal cutbacks. Between 2010 and 2017, its budget was cut by 40%, so why does the SI contain confirmation of its funding? Will the Minister confirm today that funding and resources will be available to the HSE and the Environment Agency for them to perform the proposed duties outlined?
The SI also removes layers of supporting committees at EU level that help to ensure that decisions are based on the best scientific advice and that there is proper scrutiny and oversight. Those committees allow stakeholders from industry, non-governmental organisations and trade unions to collaborate in informing decisions and to ensure balance. In the SI, that is replaced with a duty for the HSE to seek external advice, but no formal committees of experts and stakeholders are being proposed to review and scrutinise the scientific knowledge relating to chemicals.
Furthermore, the SI establishes that the Secretary of State for Environment, Food and Rural Affairs will make final decisions relating to the status of particular chemicals, whereas the European Commission makes them at EU level. Although we hope it is unlikely that a Secretary of State will diverge from HSE recommendations, they are not explicitly prevented from so doing. We know that the current Secretary of State is notoriously no fan of experts, but he may have gone too far in asking us to grant him powers to override recommendations from the HSE.
As my hon. Friend Mary Creagh said, the Government initially said that they could cut and paste data from the REACH database. However, there seems to have been a significant rowing back from that, with current guidance indicating that companies will provide all the data. As the Minister will no doubt be aware, in order to have copied data from the REACH database, the UK would have needed a licence from the European Chemicals Agency. Will the Minister confirm what progress she and Government colleagues have made in acquiring permission to access the REACH database after
Many UK-based companies do not own or have sufficient rights to use the data needed for registration, for a variety of complex reasons, including the fact that many REACH registration dossiers have been developed and submitted by consortia of companies under a joint submission agreement with specific and restricted access rights. A survey of 38 companies by the Chemical Industries Association found that 75% of them do not own the data that would be required for them to register chemicals under UK REACH. Does the Minister recognise that meeting the two-year registration deadline is an almost impossible and extremely costly task for many companies? Caroline Lucas asked about the current status of the IT provisions, and I was unconvinced by the Minister’s response that they will be ready and fit for purpose on exit day.
After Brexit, companies registered with REACH will no longer be able to sell into the EEA market without transferring their registrations to an EEA-based organisation. How many companies have taken such action to date, and what support has the Department for Environment, Food and Rural Affairs provided to them? Given the likelihood that companies will have to duplicate tests already conducted if the Secretary of State cannot agree access to information in the REACH database, there is a real risk that animal tests would have to be reconducted. In evidence to the Lords EU Energy and Environment Sub-Committee, the Minister refused to rule out the idea that a UK REACH system would not lead to more animal testing.
Surely global companies are used to selling into a variety of jurisdictions with different regulatory requirements, and each company has a body of intellectual property that it owns and sends to the appropriate regulator. I do not see any need to duplicate the work if that is already there. If a company wants to sell into the UK, it will share that with the UK authority.
I am afraid that that is not the information I have been given. As I said, the Minister did not rule that out to the Lords Committee, and when I went to Brussels to visit the REACH team, they confirmed that they believed this would be the case. Will the Minister categorically confirm whether these proposals have the potential to lead to further animal testing?
My hon. Friend has triggered a memory that I thought I had buried. On the animal testing point, when our Committee held an update hearing in December, one concern raised was about where the intellectual property that UK companies have submitted into the REACH database lives. There was a great deal of concern that the Minister’s reassurances that companies could just go and get that intellectual property, which they have paid for and registered, out of the database is problematic, because it is now owned by REACH, and once the UK leaves, we ironically will not have access to our own intellectual property. Does that not show the complete misunderstanding of John Redwood of how the world trades in chemicals, on which REACH sets the global standard?
I thank my hon. Friend for making that important point, and I will be interested to hear the Minister’s response.
If we voted to pass this SI, we would be voting for legislation that is likely to increase animal suffering through duplicate testing. It would also mean that critical decisions on chemicals were made by a body with little experience and layers of accountability and scientific expertise stripped away. Greener UK has said:
“As currently drafted, the chemicals SI significantly weakens the regulation of chemicals, including those with links to cancer and hormone disruption.”
How can we responsibly let this secondary legislation pass, in the light of these serious and grave reservations? Does the Minister recognise those risks, and can she guarantee that British people will continue to receive the same health and safety and environmental benefits that we currently do as a member of REACH?
In a no-deal Brexit scenario, we would become a third party to REACH on
My hon. Friend is making a good and interesting point. This issue does not only cover products and the environment. We have industries that use very dangerous chemicals, to say the least. It is important that we have the highest standards, if for nothing else than to protect people’s rights at work. Does she agree?
I completely agree. In fact, representatives of trade unions have made exactly that point to me, and they have deep concerns about this.
Companies wanting to transfer their registrations would potentially need customers to make importer registrations. That could lead to serious ramifications down the supply chain and interruptions to the many billions of pounds’ worth of trade between the UK and EU.
I thank my hon. Friend for giving way; she is making an excellent speech and being very generous with her time. I wanted to intervene on the Minister on the issue of grandfathering rights. Is not the truth that British companies are now in an invidious position where, if they want to keep trading with the EU after exit day, whenever that may come—goodness knows what will happen in the next 48 hours, let alone the next five weeks—they will have to transfer their registrations to an affiliate in the EU? How can they then grandfather those rights into the UK’s chemical regulation system when they have given them away in the European Union?
Once again, my hon. Friend makes an extremely important point. Of course, we also need to look at the huge costs to companies of these actions. The problems and difficulties that will be caused are not short-term but long-term.
Does the Minister acknowledge that a no-deal outcome brings with it huge risks to industry, jobs and our environment? Due to the numerous deficits and risks posed, we will be voting against this SI and would encourage Members across the House to do the same in good conscience.
This statutory instrument seeks to ensure a high level of protection for human health and the environment, including the promotion of alternative methods for assessing the hazards of substances, as well as the free circulation of substances, while enhancing competitiveness and innovation. Of course, it is necessary that the European Union regulation concerning the registration, evaluation, authorisation and restriction of chemicals, which took more than 14 years to develop, continues to work effectively in the UK. This statutory instrument will give the UK an independent capability to control the manufacture and import of chemicals into the UK and to understand the hazards and manage the risks connected to their manufacture and use.
However, as we have heard today, this is not a straightforward undertaking. Under the UK proposals, all transferring UK registrants need to submit registration data to the UK agency for a two-stage process potentially lasting up to two years. The Minister saying, 30-odd days from the Brexit date with no deal looming large, that staff are being recruited and that they are waiting to see if IT systems can go live is not particularly reassuring, given the complexity of this undertaking.
All of this underlines that the regulation and supply of chemicals is yet another of the long list of areas of huge complexity in the Brexit process, and we can see that prior to Brexit, those writing things on the sides of buses gave no thought to such complexities. As the Minister has pointed out, chemicals are woven into the very fabric of our daily lives. These last-minute statutory instruments are a desperate attempt to cover up the lack of forethought given to the complexities of Brexit. If the Prime Minister could assure us that she would simply not countenance a no-deal situation due to the damage it would cause across the UK, we would not have last-minute scrambling to deal with matters of such profound importance as those covered by this statutory instrument.
A report released on
It recently emerged that the threat of a no-deal Brexit has already prompted more than 50 chemicals companies to move regulatory approvals from the UK to the EU. The companies, which have operations in the UK, have applied to use EU regulators for critical authorisations to protect their ability to do business legally. Their current authorisations would become worthless if there were no transition arrangement following
Chemicals registration is one of the main areas in which the National Audit Office has found that the Department for Environment, Food and Rural Affairs is wholly unprepared, and there is a risk of disruption to the UK’s chemical manufacturing industry that DEFRA simply cannot address on its own. A negotiated settlement would permit UK chemical manufacturers to export their products to the EU, but without a deal that will not be possible as the registration of products with the EU will cease to be recognised by the EU. In a no-deal scenario, UK chemical manufacturers would no longer be able to export their products to other member states. Recovering market access would be a lengthy process, and it cannot even be started until the UK leaves the EU.
Yet again, we are seeing more complex Brexit aspects for industry that this Government are seeking to scramble to deal with at the last moment. It honestly looks to me as though the Government are acting like an errant pupil who, having forgotten to do their homework, is trying to complete it on the bus on the way to school. This is not good enough. We need a proper extension of article 50 to give this House the proper time to deal with the chaos into which we have been plunged by those who have taken us to the abyss with Brexit, ignoring electoral law to buy the referendum result they wanted and now, having fled the scene, leaving others to deal with the horror left behind. That is why we need, at the very least, an extension of article 50, instead of this House being threatened with a terrible deal or no deal at all.
The matter before us is important and extremely complex, and it should not be dealt with in a short debate on a statutory instrument like some kind of footnote. Yet sadly, this has become the new normal, as a collective madness seems to have gripped too many Members of this House. While I understand that what the Government are doing today is necessary, this is a most unsatisfactory process.
It is a pleasure to follow Patricia Gibson. I was getting my speech together as I was listening to what she said.
This is of course a very important sector for the UK economy. As the Minister said, REACH regulates not just chemicals but products—everything from the coating on a frying pan to the flame retardants in carpets and sofas, which my Environmental Audit Committee will be looking at very soon—and it is vital in the protection of human health. However, it is also a single market mechanism to ensure the free movement of chemicals across the EU and to enhance innovation in the EU chemicals market.
What British companies are asking themselves, as they look at this statutory instrument, is: what is to stop my EU customers going somewhere else? The answer in this statutory instrument is nothing. We are putting more costs on UK businesses, we are rendering them uncompetitive in the EU market and we are allowing the burden of excess regulation to fall on them both in this country and in their export markets.
What are companies doing in response to that? Many of them have already left. There has been an exodus of small chemical companies. Someone told me that a small mosquito repellent company—obviously, mosquito repellent is a very seasonal product—was concerned about what would happen to its business in the UK, making products predominantly for the EU market. It has shut down its factory, which I think was based in Gloucestershire, and has moved it to Italy. Quietly, it has moved tens of jobs and a manufacturing company out of this country.
REACH regulates about 30,000 substances bought and sold in the EU’s markets, and 60% of the UK chemicals industry’s exports go to the EU. This is our second largest export to the EU after cars. We have seen in the car industry—with Honda’s announcement last week, as with Jaguar Land Rover and Nissan—just how important access to the EU single market is for our automotive industry, as it is for the parts that go into those cars. Of course, chemicals, chromium in particular, are absolutely vital to the automotive and aerospace industry.
We export almost £15 billion of chemicals a year to the EU, and all our businesses have to comply with REACH. So far, companies have made more than 12,000 registrations. The Environmental Audit Committee looked at this back in April 2017, and we have seen this problem coming at us down the track for the past two and a half years. We heard that UK businesses had at that point spent about £250 million on registration. Since then, there has been another registration deadline, in May 2018, for smaller volumes of substances. The estimate now is that about £600 million of UK companies’ money has been spent registering chemicals with the European Chemicals Agency up to last May.
What happens to those sunk costs? What is happening is that those companies now only have their own representative in the EU up to
The Minister has said that she is going to spend £13 million on the new HSE database, but the fact is that REACH costs €100 million a year to run. We are therefore going to have a tiny shadow of the European chemicals database here in the UK.
REACH is difficult to transpose into UK law because it is a governance structure, not just a list of substances. Even if it was just a list of substances, our registrations and the intellectual property that goes with them have, in some cases, been lost by UK companies, or transferred to different places and are difficult to track down. So many of the regulations apply to data sharing, co-operation and the facilitation of free trade in chemicals between companies in member states. If we are not in the single market and not in the EEA, we will not have access to that data.
The Minister has said that she wants associate membership of the European Chemicals Agency, but she did not say in her opening remarks whether that is still being pursued, and if so, how progress on that associate membership is going. I understand that Norway is a member of it through its membership of the EEA.
We are clearly duplicating regulation if we have our own version of REACH, and companies trading in the EU and the UK will incur duplicate costs. We are doubling the costs of chemical regulations by leaving the EU. We know that uncertainty is having an impact on long-term investment and decisions. The Chemical Industries Association and the Chemical Business Association have indicated that a significant number of their members are considering moving their operations out of the UK to preserve their European business.
I would certainly prefer to see us remaining in REACH. Again, in the current system planned under this statutory instrument, there is silence on enforcement responsibilities, compliance and whether we remain in lockstep with the EU REACH system. There is no real stakeholder involvement in who gets to decide on that, which I think is very detrimental to the UK’s competitiveness. REACH is the global gold standard in chemicals regulation, and it has been copied by South Korea, Turkey and the USA. My Committee visited the USA and heard about its Toxic Substances Control Act—which, sadly, President Trump and his various Environmental Protection Agency heads have tried to row back on, but even the ToSCA is now about 10 to 15 years behind the EU.
To come on to the detail of the regulations, a very concerning deficiency in the statutory instrument is in relation to article 10 on the composition of the agency. We are not replicating the committees that inform decisions at the EU level, which will remove vital checks and balances in the form of stakeholder participation. ECHA has a management committee and technical committees, with stakeholders from industry, environmental and health non-governmental organisations, and trade unions permitted to participate in these meetings, but without a vote. There will be no such stakeholder participation in the UK chemicals agency, as formulated under this statutory instrument. This means that the best information will not be available for these discussions, and it will be ruled by fiat, rather than by discussion.
Article 76 of the original EU version created several committees, including one for risk assessment, one for socioeconomic analysis and a member state committee responsible for resolving potential divergences. The draft statutory instrument completely omits that article and replaces it with a much weaker duty to simply take scientific knowledge into account but with no formal standard mechanism comprising standing committees of experts to do so. We will have no committees of experts, or other committees, to take these registrations into account and help the agency to form its opinions.
The same deficiency appears elsewhere, including in relation to title 7 on authorisation. Article 58 concerns the inclusion of substances in annexe 14, but the duty to take into account the opinion of the member state committee is simply removed and the decision left to the Secretary of State. This is what my Committee has been warning against. Important democratic oversight mechanisms are being lost in translation and in the cut-and-paste process, and quietly, through the back door, in half-empty Chambers such as that in which we are sitting this evening, environmental regulation is simply being downgraded.
As I said earlier, I am very concerned about the budget. REACH was very expensive to set up. The Health and Safety Executive is going to run the UK version, but it has experienced considerable budget cuts over the past 15 years. Its annual accounts indicate that it currently spends just over £1 million for chemicals regulation testing in the UK. Page 98 suggests that it receives £1.2 million for provision of REACH services to the Department for Environment, Food and Rural Affairs, but that is a reduction from the £1.4 million it received in 2016-17. By contrast, I repeat that the spend per year for REACH is €100 million.
There is no commitment to mirror EU outcomes on chemical regulation. The draft statutory instrument has no automatic provision for copy across of EU restrictions and further improvements, so the UK’s controls on chemical use could rapidly diverge from those in the EU. If the UK fell behind those in the EU, protection of human health and the environment would be reduced. We do not want to end up in a situation where chemical regulation is diluted.
I have shared my concerns about the outcomes and the stakeholders. My final point relates to the Government’s better regulation agenda, which has a commitment to bring in regulations only if three times the amount of regulation, measured on the basis of cost to companies, is removed. My Committee has been pressing the Cabinet Office on the issue. In a written statement on
All of the regulations are going to be subject to the bizarre and ridiculous one in, three out rule. If we want to strengthen environmental law, protect new organisms or habitats, or ban a new chemical, the UK must calculate the business cost and ignore the benefits, and then the Department concerned must justify how it fits with the overall reduction target. This rule creates a massive disincentive for Ministers, Departments and civil servants to improve regulation
The National Audit Office report on DEFRA’s progress in implementing EU exit had grave concerns about the long-term function of the UK’s chemical regulatory system. It was very critical, although I acknowledge that some progress has been made. CHEM Trust told me in a meeting that it is also concerned about the rapid warning systems. UK environmental health officers could discover, for example, lead paint on children’s toys or dangerous chemicals in baby products and baby foods, but because of the downgrading of their work, and that of trading standards, we are no longer going out looking for those problems and are very reliant on colleagues in other EU member states alerting us to the need to take such products off the market.
In conclusion, we have been gravely concerned for the past two years. When people voted to leave the EU, they did not vote to have weaker chemical regulation standards or for UK companies to leave the country in order to have better access to EU markets and to not have to pay twice for the same registrations. They certainly did not vote for a flood of cheap imports to come into this country without any customs checks or for our children to be less safe from toxic chemicals. I hope that that is not where we end up. It shows the need for us to have a proper transition period and to remain in the single market and the customs union, to avoid such a devastating outcome.
I associate myself with the concerns raised by the Chair of the Environmental Audit Committee, Mary Creagh, by the Opposition spokesperson, Sue Hayman, and by the Scottish National party spokesperson, Patricia Gibson. For those who raised the specific point about the risks of no deal, the most serious concerns could be avoided by the Government simply ruling it out. That is why it is so important for Parliament to assert its authority this week, to prevent the disaster of leaving the EU with no deal.
I will confine my main remarks to a question raised by Rolls-Royce, which contacted me in my capacity as Chair of the Select Committee on Science and Technology. I challenged the Minister during her opening remarks, but I have to say that I was not convinced or satisfied with her response so I want to return to the issue. The concern is that, as it stands, the draft statutory instrument looks as if it is flawed, and that flaw could have very serious consequences for UK companies.
The UK REACH SI takes account of a number of scenarios, addressing, for example, the issue of an EU authorisation held by a UK entity on which a UK downstream user is dependent and, equally, that of an EU authorisation held by an EEA entity on which a UK downstream user is dependent. However, it has been put to me that the scenario that is not addressed—I really would like the Minister to deal with this specifically—concerns an application for EU authorisation submitted by an EEA entity for which a decision has not yet been made and on which a UK downstream user is dependent.
According to Rolls-Royce, approximately 10 applications for authorisations to use or supply particular chemicals are waiting for a decision by the European Commission, which, as its decision-making process proceeds, takes advice from the European Chemicals Agency and from member states. The likelihood is that the applications currently submitted will not be decided by
I would be delighted if the Minister intervened on me to address this specific question: what will happen to those companies, including many small and medium-sized enterprises that probably have no idea about all this complexity, that will immediately become non-compliant after
I, too, have been contacted by Rolls-Royce and Make UK, the former Engineering Employers’ Federation, which says that the chemicals affected—these in-flight chemicals, if you like—are a range of chromates using coatings, sealings, paints, primers and touch-up preparation, including chromium trioxide, which is used in the chrome plating industry and is significant for the automotive supply chain. It says that limiting the use of these substances would affect a wide range of component part manufacturers, processing houses, and maintenance and repair facilities, as well as other equipment manufacturers. This is exactly what the Environmental Audit Committee warned about two years ago: market freeze, where we simply freeze our automotive supply chains. Does the right hon. Gentleman agree that in a heavily regulated industry such as aerospace people cannot just switch suppliers from one day to the next?
I do agree. One is left reaching the inevitable conclusion that this is chaotic. The party in government prides itself as being the party of business, yet it is putting very many companies in this country in an invidious—indeed, impossible—position unless that is properly clarified.
It is really important that this does not proceed. I know these issues will be raised in the House of Lords, but I hope that this House defeats these regulations this evening. I again urge the Government to withdraw and think again.
It is a real pleasure to follow the Chair of the Science and Technology Committee, Norman Lamb, and my colleague the Chair of the Environmental Audit Committee, Mary Creagh. If I was worried about this statutory instrument before I came into the Chamber this evening, I am even more worried now. As a general point, I cannot help but point out that it is simply extraordinary that 32 days before exit day and the end of the article 50 deadline, the Government are only now seeking to pass this vital secondary legislation. This statutory instrument should in theory provide an absolutely minimum protection to human health and the natural world in the event of a catastrophic no deal. It is now almost three years since the referendum vote, the last-minute rushing through of these vital laws is unforgiveable.
The protections offered by REACH and other EU-led regulatory regimes are not nice optional extras; they are the basics of a system designed to keep people healthy and to protect the environment not just in the UK and the EU but across the world. They create a common rule book and they set higher standards. Let us be clear: if the UK leaves the EU without a deal, without even a deal on chemicals, it will immediately lose access to REACH with seriously adverse consequences. In that scenario, the UK would lack a functioning system to regulate the use of chemicals.
One example, as we have been hearing, is that there is not yet a functioning UK-based IT system to replace REACH. That is truly, truly shocking. DEFRA has apparently spent £5.8 million on that new IT system, but it is not yet able to say whether it will be functioning by exit day. Anyone involved in public procurement and IT systems will tell you that if you are not quite sure three weeks from a particular deadline, then, actually, you are sure—it is not going to be ready in three weeks. DEFRA also confirmed that the Health and Safety Executive will run the database. As others have observed, however, the HSE has had a decade of cutbacks and staff losses. It is unclear whether it has the capacity or expertise to deliver. We need much greater clarity about the IT system. The Minister said earlier that a judgment would be made about it later this week. I urge her to bring a statement to this House, so we know whether that IT system will be up and running. If it is not, this House has a right to know that. We also have a right to know whether there is sufficient recruitment of staff at the HSE. What guarantees can she give that those staff have the relevant expertise and skills?
Aside from not yet having a functioning UK-based system, if we leave the EU without a deal we lose access to vital information on thousands of chemicals held in the REACH database. All that data is subject to copyright. In the event of a no-deal Brexit, British companies would need to obtain permission to get that data back. The burden on the UK chemical industry would be huge, costing vast sums of money to either re-register the chemicals here in the UK, or, if unable to obtain key data, to re-test chemicals. Both of those processes would require using a yet-to-be-online IT system. What, if any, assurances can the Minister give to the thousands of companies across the UK who rely on REACH to operate their businesses? Will she admit that a no-deal Brexit and crashing out of REACH would represent a catastrophe for the UK chemicals industry?
We have heard figures about how important the industry is to the UK economy as a whole. It is the UK’s second-biggest manufacturing industry, after the food and drink sector, and it employs half a million people in the UK. Some 61% of chemical exports went to the EU in 2017, with a value of £18 billion, and 73% of chemical imports came from the EU. UK companies hold 12,449 REACH registrations. To put that in context, that is 13% of the total. That includes about 5,700 substances, 26% of the total, and 1,773 companies, which is 12% of the total. Trade in chemicals is highly integrated with the rest of the EU. Complex supply chains mean that products often cross the UK-EU border multiple times. We simply cannot afford to be playing games with the livelihoods of thousands of workers in the chemicals industry. The Government absolutely must be in a position to provide those assurances now.
Those serious questions about our readiness to leave the EU aside, this SI, as others have said, contains a number of serious flaws. Many have been pointed out by a number of parliamentary Committees, both here in the Commons and in the other place, and they need to be addressed urgently. I just want to summarise a few of them again very quickly.
The SI confirms that the chemical regulation will be administered by the Health and Safety Executive, but does not commit to a budget or provide any assurance that the HSE will be equipped with the necessary skills and capacities. The working budget for the European Chemicals Agency is €100 million a year, compared to the roughly £2.2 million the HSE currently spends regulating chemicals. Given the recent budget cuts to the HSE, it is worth noting that it took the EU five years to fully staff the European Chemicals Agency. As it stands, DEFRA has not provided any analysis of the additional resources that the HSE, the Environment Agency or DEFRA itself might need to develop a UK-led chemical regulatory system.
Secondly, as the Chair of the Environmental Audit Committee set out, the new system proposed in the SI strips away layers of supporting committees at EU level that are hugely important. They ensure decisions are based on the best scientific advice. The SI removes article 76, which establishes a committee for risk assessment, a committee for socio-economic analysis, and a member state committee
“responsible for resolving potential divergences of opinions on draft decisions”.
Those committees allow for stakeholders from industry, non-governmental organisations and trade unions to help inform decisions. In this SI, all of that is replaced by a duty on the HSE to seek external advice, but no formal standing committees of experts and stakeholders to look at the scientific knowledge relating to chemicals.
That is simply not good enough. We need clear and accountable processes for industry, civil society and academia to feed into this process. Decisions cannot be made in a dark room without scrutiny and oversight. There are obvious changes that should have been made already, but even then serious questions remain about what the Government have been doing to prepare for leaving the EU.
I just want to echo the shadow Secretary of State’s concerns about animal testing. The idea that we would gratuitously redo tests, with all the pain and suffering of animals that that would include, is simply not conscionable. But that is what we would have to do if we cannot agree access to information in the REACH database. That would be senseless, needless and unacceptable. The EU referendum vote was not a mandate to increase animal suffering. What assurances can the Government provide to ensure that animal testing will not expand in the case of a no-deal Brexit?
This SI represents what is, in reality, a catastrophic failure on the part of this Government when it comes to Brexit. It is an example of how crashing out of the EU without a deal represents a huge blow to UK industry, as well as to vital protections for human health and the natural world. As well as making the changes outlined by the Environmental Audit Committee and the Lords EU Select Committee, the Government must urgently take no deal off the table.
My constituency is home to some of the most complex international chemical companies in the world. It is a foundation industry that depends on smooth trading arrangements with the rest of the world—not just the EU—but from what I hear from the sector, it is clear that, as others have said, significant gaps remain in this statutory instrument. That is making the companies particularly nervous in relation to the movement of chemicals between the UK and other countries for all manner of manufacturing.
The Minister seems to think that a cosy chat, sitting down with the industrialists, is going to sort this, but it will not. The Chemical Industries Association tells me that while there is a limited two-year transition to register chemicals currently manufactured in the UK, there are no transitional arrangements in the SI for chemicals currently being imported to the UK from non-UK suppliers through third party-based representatives. In practice, that would mean that existing registrations would cease to exist, bringing a halt to imports from non-EU countries to the UK manufacturing sector after March.
Another concern expressed by the CIA is that there is no level playing field for all existing registration holders. As my hon. Friends the Members for Workington (Sue Hayman) and for Wakefield (Mary Creagh) said, the current approach in the SI forces existing EU suppliers to use a UK representative, and I add that they have to register within six months whereas all other existing duty holders have two years. For one UK-based multinational company, that will affect 400 chemicals that it is importing into the UK. It will inadvertently put UK importers, including those on Teesside, at a competitive disadvantage if they are unable to obtain information directly from the suppliers to register themselves. The CIA tells me that the process could be a lot more simplified and avoid additional compliance problems if all existing registration holders, including UK representatives of EU suppliers, could benefit from the two-year transitional arrangements. I hope that the Minister will consider that transition period very seriously indeed.
The Chemical Industries Association also says that the proposed timeframes are absolutely impossible to comply with. There are various timeframes to submit information to the UK regulator—120 days, 180 days and two years—all of which are unrealistic given that EU REACH provided 10 years to register and other global REACH regimes provide a much longer timeframe with a much smaller portfolio of substances.
In particular, the level of initial information that should be submitted within 120 days goes far beyond basic. To put this into context, that amounts to over 100 pages of information, including a detailed breakdown of composition for every chemical currently being manufactured or imported into the UK. Given that the objective is to confirm that a business legitimately owns an existing registration, the initial information needs to be kept to a minimum. I am told that the alternative would be to extend the existing timeframe to minimise the impact on businesses, who will have a number of Brexit-related challenges to overcome.
This brings me to the conclusion—we in the Opposition share this view—that the SI remains unfit for purpose. When we consider how many companies, goods and jobs are affected by it, we can be more than nervous about how it fails to provide the reassurances needed by industry. I had previously raised these shortfalls with the Prime Minister after one of her many EU discussion sessions and in my speech on the EU agreement, but there were no answers from the Prime Minister or the Minister answering the debate that day, and there have been no answers from this Minister today either. It is time they came up with answers.
I really feel that the Government ought to take this away today, listen again to what the sector has to say and come back to the House with those companies satisfied that they can do business under the regime that the Minister is proposing. Anything short of that and I believe we will be in a game of riding roughshod over the concerns of some of the biggest companies in the world—companies who I fear will take their investment and jobs elsewhere, as some of them already are doing, if they are forced to live with the chaos predicted. That is not good for the chemical industry, it is not good for Britain, and it is certainly not good for Teesside either.
I thank all right hon. and hon. Members who have contributed to this debate. I assure the House that the Government remain committed to supporting all the aims of REACH: to ensure a continuing high level of protection of human health and the environment; to promote alternative, non-animal methods for assessing chemical hazards; and to promote the free circulation of chemicals and enhance competitiveness and innovation.
By putting the regulations in place, we will make sure that we can operate a UK REACH regime after leaving the European Union. We are working closely with the HSE and the EA, as well as other regulators, to prepare for that national regime so that the change is as smooth as possible. We know the functions that are needed. I hope that in my opening remarks, I was able to convey the information that we will be providing the resources to fund the staff that are needed. I remind the House that the HSE will be building on the expertise that it already has from acting as the UK competent authority in the EU system and that it will be recruiting more staff to reflect its new and expanded role, as indeed, is the EA.
I do not agree that the arrangements that the REACH SI provides for on scientific advice are in any way weak. The UK agency must publish its scientific opinions, and when forming those opinions on authorisations and restrictions, the HSE must commission scientific knowledge and advice from suitably qualified or experienced persons who are independent of the agency. In a particular case, for example, where ECHA had already published robust evidence, the HSE must publish its justification for deciding not to take further advice. I assure the House that the HSE is not limited to getting its scientific advice from the UK, or indeed, even the EU.
The HSE must consult on and publish a statement about how it will comply with all these duties. That must happen within three months of exit, so we intend to have arrangements in place in UK REACH to allow stakeholders to observe discussions and considerations where this scientific advice is provided.
I will not be giving way in my closing remarks—[Interruption.] Well, I am trying to answer the questions that I have already been asked. On what industry needs to know to do, we have had extensive discussions with a number of businesses and trade associations. We have launched a business readiness campaign targeting downstream users, in particular, and we continue to engage with the industry in that regard.
A question was raised about intellectual property. It is fair to say that the intellectual property remains with the company that submits it, but if companies already own the data, they can of course submit that to UK REACH. If not, they will need to arrange access and, as I pointed out, some are already starting to do so. Some—I mentioned CEFIC and the CIA in the UK—have encouraged their members with consortium registrations to make sure that they make that information readily available. Companies can, of course, employ ORs—only representatives—to hold a registration in the EU, just as they may do for access to other markets around the world, while maintaining their UK registration.
I will not be giving way, as I have already made clear to the House. I am trying to answer the questions that I have already been provided with. On the other elements of registration, I am conscious that some companies have started to set up relationships with not only ORs, but other companies and to establish offices in the EU. Ireland is a particular favourite.
I want to clarify elements about animal testing—I know that this matters to the House. Within the EU—currently within ECHA—HSE and the EA have been at the forefront of pushing for alternatives to animal testing, and that will continue. UK REACH will continue to follow the “last resort” principle when it comes to possible animal testing. That works alongside other REACH drivers to reduce the amount of testing, for example, where industry must get the regulator’s agreement before carrying out a test. We will continue to work closely with the OECD to develop new alternatives so that we can understand chemical hazards without testing them on animals. We are determined that there should be no need for any additional animal testing for a chemical that has already been registered, unless it is subject to further evaluation that shows that the registration dossier is inadequate or that there are still concerns about the hazards and risks of the chemical.
Norman Lamb asked particularly about Rolls-Royce and products that have not yet been authorised. The point is that the EU has not authorised those chemicals for use. Therefore, we cannot say that they will be authorised by the time we leave on
Mary Creagh referred particularly to products that include chromium. I can categorically say that chromium is a clear carcinogen and it really matters that we have to keep strong controls on how it is used. That is why it concerns me that the Opposition are considering voting against this SI. I pointed out earlier that the Welsh Labour Government have endorsed this SI and want it to pass today. Without these regulations we would not have a chemical regulatory regime that was effective in maintaining human health, and the environment would be put at risk, which makes me even more astonished that the Green party would also contemplate that.
We need to make sure that our regulators have the tools to understand the hazards of the chemicals that we use, and without this SI we would not have the information available on how to mitigate those risks. I invite the House to approve the regulations.
The House divided:
Ayes 297, Noes 240.