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Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Caton. In August, I visited a cable factory in Washington, in my constituency, which supports more than 100 local jobs and is part of a company that employs more than 1,350 people across the UK. It produces some of the highest-quality cabling in the world—the kind of cable that is used in everything from laptops to submarines. I met Paul Atkinson, chief executive officer of the cable company Prysmian UK, to discuss the challenges facing the industry. Despite the fact that his company faces similar economic pressures to many other companies, one of his chief concerns was the issue of counterfeit substandard cabling. I was shocked to discover that the cable that we so often take for granted in our homes, hospitals, schools and even in the Palace of Westminster is largely unregulated and potentially dangerous. Some 20% of all cable in the UK is suspected of being counterfeit and therefore at risk of overheating and emitting toxic fumes.
Electrical fires are soaring in number in parallel with the increase in counterfeit cabling that is being imported into this country. As a result of improper regulation, this unsafe cable is hard to detect and is often installed by professionals who are unaware that it is counterfeit. A council in my local region recently had to reinstall all its newly fitted data cables after it detected, at the last minute, that cheap and dangerous material had been used within the cable. That came at a cost of tens of thousands of pounds, which the council had to bear.
Counterfeit cable not only poses risks to our safety, but is harming the British cable industry, which is a world leader for high-quality cables. Over the past few years, more than 30 producers of safe high-quality cable have been forced out of business at the gain of cut-throat distributors of unsafe and counterfeit cable from overseas. This export-led, globally respected domestic industry will shrink further if we do not act now. The problem of counterfeit cabling could be substantially mitigated by suitable enforcement of basic regulation for the detection of unsafe cables.
The cable industry is not asking for anything other than for the UK to catch up with global standards for regulation, in order to halt the victimisation of British manufacturers and to ensure that our schools, hospitals and homes are safe from the dangers that substandard cables can cause.
Customs and Excise statistics show that the UK has become a global target for distributors of counterfeit and substandard cabling, and it is now estimated that a fifth of all cabling in the UK is suspected to fall into that category, and therefore be potentially dangerous. To put that in perspective, the Olympic venues alone required more than 350 miles of cabling, so if they followed the national trend, that would mean that more than 70 miles of that cabling was counterfeit.
On a national scale, there is potentially hundreds of millions of miles of cable that is not only substandard but potentially life-threatening. That is backed up by the official fire statistics for 2010-11, which show that electrical distribution caused more than 4,000 fires in homes and 3,000 in other buildings.
According to statistics from the Department for Communities and Local Government, fatalities caused by faulty electrical distribution systems have tripled since 2004. The incentive to source cheap cabling has been greatly increased by the dramatic increase in the cost of copper, which now accounts for more than 90% of the total cost of the cable. Therefore, manufacturers of counterfeit cable are able to undercut quality cable by cutting down on the amount of copper they use. However, doing that leads not only to more faults, but to overheating, which dramatically increases the risk of fire. The fire itself is not the only life-threatening risk. Due to the present lack of regulation, substandard cable distributors are also free to cut costs by using cheap material that emits toxic fumes, and which falls below fire-resistant standards. If such cable is used as part of emergency lighting or fire alarm systems, which should function for up to two hours to allow people to escape safely, those systems could fail within minutes, thereby increasing the risk of casualties.
The Minister will share my deep concern that, because of a lack of any real regulation, cables in our schools, homes, and hospitals will almost certainly contain counterfeit cabling, which could lead to deadly consequences.
Ian Lucas (Wrexham) (Lab)
I congratulate my hon. Friend on securing this important debate. My father worked in a cabling factory in County Durham for 40 years, and Prysmian is also based in my constituency. She is emphasising a hugely important point. There have been a number of very serious fires that have led to deaths. There was one recently in Prestatyn, in north Wales. This is an urgent problem, which we need to address.
Mrs Hodgson
I agree, and I thank my hon. Friend for his contribution. I am so pleased that he was able to come along this morning because he is as passionate as I am about this issue.
In addition to the serious safety issues that we have been discussing, unregulated counterfeit cabling is also undermining British jobs. As I said earlier, more than 100 people are directly employed at the Prysmian factory in Washington, and even more may be employed in my hon. Friend’s constituency in Wrexham. However, high-quality cable manufacturers operating in Britain are struggling to survive because of the unfair competition from counterfeit cables. Britain’s domestic cabling industry is a world leader because of the refusal by its companies to compromise on quality and safety standards. However, that integrity and sense of responsibility to the end user has left the members of that industry under threat from cut-throat distributors of unsafe, substandard products. At a time of rising unemployment, my understanding is that the entire cable industry, which includes manufacturers as well as supply chain jobs and distributors, provides more than 150,000 private sector jobs nationally, and also helps support efforts towards an export-led recovery, with exports totalling more than £300 million. However, those jobs are constantly under threat due to the lack of protection that basic regulation would provide.
The extent of the damage that counterfeit cabling is doing to the British cable industry can be seen clearly in the rapid decline of jobs in the sector over the past 15 years. In 1995, there were 70 domestic cable manufacturing firms, providing 110,000 jobs. Now there are just three cable manufacturing firms, providing 5,000 jobs. All the other manufacturers have fallen victim to cheap and often substandard imports from abroad. By sacrificing product safety and misleading consumers, distributors of dangerous counterfeit cabling are able to undercut UK suppliers, potentially putting more of them out of business. Such manufacturers ceasing operations not only means that jobs are lost, but further increases the market share available for distributors of counterfeit and substandard products to exploit.
The problem of counterfeit cabling risking jobs and lives in Britain can be solved with relatively simple regulation and suitable enforcement. However, the issue has been largely neglected by Government, falling victim, as it has, to being caught between the responsibilities of the Department for Business, Innovation and Skills, and the DCLG. Indeed, I believe that there was some discussion last week about which Department would answer this debate today.
The British cable industry has been clear; it believes that fair competition incentivises innovation and higher standards. I do not for one moment want to stop fair competition in the cable industry, or to stop cable manufactured overseas, whether in Europe or elsewhere, from being imported and distributed in the UK. This is not about doing British manufacturers special favours, even when they employ our constituents. This is about creating a level playing field for competition, based on the fundamental point that cabling is a product that needs to be up to standard because of the potentially fatal consequences if it is not.
British manufacturers, including Prysmian, do not believe that the safety of the British public should be compromised, especially in public buildings such as schools and hospitals. In the present marketplace, however, this belief costs them competitiveness and therefore customers, who are often uneducated about the dangers of counterfeit cables. Consequently it is vital that the tide of counterfeit and dangerous cable is halted and that safety standards are enforced.
Dangerous cable could be tackled by revising legislation to incorporate four checks on the market. First, there should be quality checks on cable at ports of entry, ensuring that products coming into the country are up to the standards that we require of British-made products. Secondly, there should be a requirement that, at the very least, all cable used in public buildings in the UK is third party-certified, meaning that it has been tested and proven to be of the quality that we expect. Thirdly, cable inspection and verification should be added to the list of mandated checks performed by building inspectors, ensuring that any counterfeit product is identified as early as possible, so that it can be replaced. Fourthly and finally, there have to be consequences for those who are found to be endangering life and property knowingly by installing substandard cabling, and at the very least that should mean prosecution for those found to be doing so in public buildings. Similar measures already operate internationally, so implementing them would merely be addressing an anomaly that leaves Britain uniquely vulnerable to the kind of dangerous electrical cabling that causes deaths, casualties and damage to property, while undermining British jobs.
Ian Lucas
I am grateful to my hon. Friend for giving way to me again. She has made a compelling case about the dangers of cable that is not health and safety-certified. Does she agree that it is regrettable that we sometimes have soundbites that criticise this type of regulation, whereas in fact it creates an opportunity for good manufacturers who have safe systems in the UK and the absence of such regulation penalises those good manufacturers at the expense of those that do not provide safe cables?
Mrs Hodgson
Yes. On that very point, I know that the Minister announced last week that he is going to tackle Europe’s “regulatory machine” and that he is committed to reducing red tape for small and medium-sized businesses. However, I hope he will agree that, as my hon. Friend just said, cabling is very different. I hope he sees that this kind of regulation for cabling would be welcomed and would definitely help British businesses, as well as reducing electrical fires and ultimately saving lives. I look forward to hearing his response to the debate.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
It is a pleasure to serve under your chairmanship, Mr Caton.
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) on securing the debate and on raising important issues, and I recognise that she has a particular constituency interest in this issue. I also welcome the hon. Member for Wrexham (Ian Lucas) to the debate and welcome the interest that he has shown in it.
I will begin by describing some of the regulatory regimes that electric cables fall under, so that we are clear about them. As far as safety is concerned, there are robust safety regulations that apply to manufacturers, importers, distributors and retailers, which require products to be safe. How do we interpret “safe”? We do so on a case-by-case basis, taking account of good engineering practice, the extent of scientific knowledge, the ability of engineering to provide solutions, and the reasonable expectations of the user of the product, among other factors.
A “safe” product means that a product does not present any risk, or only the minimum risks compatible with its use, consistent with providing a high level of protection for the safety and health of persons. It is important that we distinguish between the requirements of legislation and the requirements of standards. There is no requirement in the legislation for compliance with a standard, and there is a good reason for that. While compliance with a relevant standard provides a presumption that a product is safe, there has to be a route for innovative products and advances in technology. Standards generally cannot prejudge advances in technology, and therefore are amended and updated in the wake of innovation and scientific advances.
I now turn to a specific issue that the hon. Lady raised, which is misusing trade marks to mislead consumers deliberately. Counterfeiting is an issue that the Government take very seriously, because—as she set out very clearly—it threatens legitimate businesses and the economy, and of course it also poses a risk to consumer health and safety, as well as undermining consumer confidence in these products.
The infringement of an intellectual property right is a civil matter. However, the infringement of trade marks can also be a criminal offence. Trading standards officers are primarily responsible for enforcing the criminal IP laws, with support from the police and investigative assistance from the owners of the IP rights. Government and the associated public enforcement organisations continue to engage actively with British businesses to raise the profile of the threat of counterfeit products entering relevant supply chains, including supply chains in the electrical cabling sector. For example, the IP crime toolkit, which was launched by the Intellectual Property Office in November 2011, aims to make businesses more aware of the growing risk from counterfeit goods entering supply chains, and it also gives guidance on how to strengthen and protect IP assets.
There is also legislation for addressing issues relating to falsely described goods, and it is applicable when such goods are supplied to a business or a consumer. The supply of cables that are falsely described by any means to a consumer is likely to be a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008. Businesses enjoy similar protection against misleading advertising and marketing, including false statements, under the Business Protection from Misleading Marketing Regulations 2008. Both of those sets of regulations are enforced by local authority trading standards officers.
I now turn to some of the concerns that the cabling industry has expressed. It initially raised safety concerns about cabling with my Department back in 2009. Those concerns were referred to the Health and Safety Executive, which is the relevant enforcement authority. The HSE then approached my Department for funding for a special project. A special market surveillance exercise undertaken by HSE was agreed, to determine the state of the UK market given the serious concerns that had been raised. That exercise commenced early in 2010.
The market surveillance project had the overall objectives of determining how the cable supply sector was functioning and whether there were any market failures that needed to be addressed. Once the HSE had performed an initial study of how the sector functioned, it was able to proceed to taking samples from across the sector. It had to take a sufficiently large number of samples to determine whether the cables available on the market were safe or not. Those samples were not taken at random; they were a biased selection taken from cables that were considered by HSE inspectors to be the most likely to be non-compliant.
That project has now concluded, but the final report is still to be produced; it is expected very early next year. I understand that the findings of the report will show that, with the exception of one large batch of cable that had copper content that was 50% underweight and of two samples with questionable origin, there was no justification from the other samples that were found for the HSE to remove any product from the market. The samples that were found to be non-compliant were voluntarily removed from the market without any formal action being taken by the HSE.
Part of the administrative requirement of the legislation is for those in the supply chain to be able to provide a copy of the declarations of conformity that the cable complies with the legislation. These declarations were found not to be generally available, but they were provided within the 10 days requested by the HSE. If the HSE had formally requested them, it would have had to allow 21 days for them to be produced, rather than the initial 10 days. The HSE found that some manufacturers outside the EU were reluctant to supply declarations of conformity and that there was evidence of hostility from those manufacturers towards importers who requested the declarations of conformity, however they were supplied. The HSE is not an enforcement authority for counterfeit goods, but it should be reported that it did not identify any counterfeit product during its market surveillance assessment.
While it was assessing the sector, the HSE found that the market is dominated by a small number of importers, most of whom had a low level of awareness of the administrative requirements, although some were fully aware of their obligations. The industry is standards-led, and considers that the standards provide all the protection that it needs. However, it was generally unaware of the general failure to meet the requirements of the standards. The industry also suffers from a poorly developed system of product recall. The HSE has therefore advised that on the basis of its assessment most products on the market are safe. Although they may not always be compliant with the standards with which they are claimed to be compliant, they meet the requirements of the safety legislation.
While carrying out the assessment of the market, the HSE identified a considerable lack of awareness of the administrative requirements of the legislation. It has now put in place measures to increase awareness of them. The measures led to distributors and importers demonstrating a greater understanding of their obligations and of the risks—financial liability and reputational risks—that they expose themselves to. I understand that that has led to a significant improvement of best practice by some of those in the supply chain. The HSE’s recent follow-up visits to a leading UK distributor-importer have verified that it has adopted processes to identify substandard, non-compliant cable before it enters the UK wholesale-domestic market. The HSE will facilitate awareness of that best practice at an event that it is planning, to engage other distributors.
The current HSE assessment of the market demonstrates that most cables on the market are generally safe and that there are robust regulations in place dealing with safety, counterfeiting and false declarations. Traceability is an issue and all cable needs to be marked, but market surveillance hands are tied until the industry puts its house in order on marking. The thorough HSE market surveillance assessment provides a reassuring and clear statement of the market: that it is functioning satisfactorily. There are cases where non-compliant products are identified. Those should be referred on a case-by-case basis to the relevant enforcement authority. In matters of product safety that is the HSE for workplace products and trading standards officers for products supplied to consumers; in relation to false marketing declarations it is trading standards officers for both business-to-business and business-to-consumer transactions; in relation to counterfeit goods, or in cases of suspicion of counterfeiting, evidence should be supplied to trading standards, Her Majesty’s Revenue and Customs and the police.
Mrs Hodgson
I have been listening intently to the Minister’s response, as has my hon. Friend the Member for Wrexham (Ian Lucas). So, I am sure, have the industry experts in the business world, who are far more cognisant than I am of the finer points of what he says. I am not an expert in the field, although I am trying to represent my constituents as well as I can on the issue. Will I therefore be able to enter into correspondence with the Minister, for follow-up, if we want to drill down on some of the points in his response?
Michael Fallon
I am certainly happy to engage with the hon. Lady in correspondence on any of the technical points I have raised. If anything is not clear I shall get back to her about it. I, too, am not an expert on cabling regulations. The hon. Member for Wrexham may be the only expert in the Chamber—apart from you, Mr Caton. I know that you have some knowledge of the area.
Michael Fallon
It is kind of the hon. Gentleman to say so. Perhaps it is a process of lifelong learning for all of us.
I do not want to introduce too much levity into the discussion. There are concerns about conformity of the distribution chain with the administrative requirements of the product safety legislation, but the products on the market, which I have accepted may often be non-compliant with the current standards, are generally considered to be adequate for the purpose intended and are safe. However, I assure the hon. Member for Washington and Sunderland West that we take the concerns seriously. We believe that the legislative framework is robust; but I urge her and the hon. Member for Wrexham to report directly to me at the Department any evidence that they have in connection with the points they have made, so that we may look at it. If they have any specific evidence of counterfeiting or false marketing, that should be reported directly to trading standards officers in the specific local authority areas.