The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate. He said in his opening remarks that he had a passion for manufacturing and for small and medium-sized enterprises, and he was generous enough to suggest that he suspected I shared those passions. He was right. He was also right that tonight’s debate provides an opportunity for us to discuss the effect on businesses of directive 2007/46/EC. I would like to thank him and his office for their assistance on some of the thoughts he might express tonight; I hope that my response will thus be more informed.
I am aware that the hon. Gentleman has recently asked a number of questions about this directive, so I am pleased to respond to this evening’s debate. Before I talk about the directive, it would be right and proper to reflect on the significant progress made by the UK automotive sector. This is explained in the automotive strategy that was published in July, which was the culmination of work led by the Automotive Council. It is very encouraging for all of us to note and learn that the UK car industry is currently vibrant, particularly at a time when other European markets face significant challenges.
The UK produced 1.58 million vehicles in 2012, with £6 billion of investment in the industry by vehicle manufacturers over the last two years. That is good news for the UK. Some challenges have been presented at ports, and I am pleased to help the industry overcome them. I am sure that the hon. Gentleman—and, indeed, the Associate Parliamentary Manufacturing Group—would welcome that.
I turn, if I may, to the matter in hand. Clearly, the hon. Gentleman is concerned that the directive could have a detrimental effect on businesses. Just as he set out his concerns, I shall set out exactly how I think on the issue and briefly explain what the directive is all about. It concerns the approval of new road vehicles at EU level. It covers new road vehicles with four or more wheels, and there is a mandatory obligation on the UK, as on all member states, to apply its provisions.
The directive was implemented in the UK on 29 April 2009 by the Road Vehicles (Approval) Regulations 2009, SI No. 717. The hon. Gentleman was right to point out that the key element of the directive was to establish a single European market for motor vehicles, meaning that a vehicle approved to pan-European standards can be registered anywhere within the European Union, without further testing or obstruction to placing it on the market anywhere within the EU. The dates of application depend on the vehicle category: it has already been implemented for most vehicles, and will be fully implemented in October 2014, as the hon. Gentleman rightly said, for the largest goods vehicles.
Approvals under the directive are available from member states’ approval authorities. In the UK, this means the Vehicle Certification Agency, supported by the Vehicle and Operator Services Agency and the Driver and Vehicle Agency in Northern Ireland. Approvals are enforced through the registration scheme operated by the Driver and Vehicle Licensing Agency. Only motor vehicles with the appropriate certificate can be registered for use in the UK. Manufacturers can choose whether to use the UK approval authority or one from another member state for the pan-European approval.
Approval of the directive is a regulatory simplification matter, as it avoids manufacturers having to comply with potentially 28 different sets of national regulations and requirements. On that basis, it was supported at the outset by the high-volume producers. Producers of specialist and low-volume vehicles are also covered by the small series or the individual approval schemes created by the Department. These are essential provisions and are key to helping overcome the burden of EU-wide rules for UK SMEs, and throughout the process the Department has always sought to provide clear advice and assistance to such companies. If the hon. Gentleman has evidence that companies, including SMEs, have not considered that to be the case, I shall be delighted to consider his representation.
Prior to implementation, during 2007-08, officials worked closely with the various sectors affected by the new requirements. That included hosting, in conjunction with the Society of Motor Manufacturers and Traders, a road show involving 12 events around the United Kingdom to build engagement with industry.
At the time of the implementation of the national regulations, a full impact assessment was undertaken and published by the Department. Its objective was to determine how to implement the directive in a way that would minimise the burdens on UK businesses while maximising the safety and environmental benefits. Two options for implementation of the recast framework directive were assessed, the first being to implement only the pan-European scheme and to accept and issue only European approvals, and the second being to implement the pan-European scheme together with national schemes for small series approval and individual approvals.
A “small firms impact test” considered the financial and business implications for the companies. Some 250 SMEs were consulted as part of a telephone survey, and face-to-face interviews were conducted with 20 members of an overall group of 35 SMEs that had been carefully selected from the sub-sectors to provide a representative and balanced assessment. In addition, the Department sought the views of the Small Business Service and its successor, the Enterprise Directorate, in the Department for Business, Enterprise and Regulatory Reform, as well as the views of the Federation of Small Businesses and a number of other stakeholders.
The SMEs that were consulted advised the Department that type approval would be too onerous for some companies, and it was therefore important to have the option of national approval schemes. It was clear that the EU-wide scheme could have a fairly major adverse impact on SMEs, which are defined as businesses with fewer than 250 employees, so UK regulations were developed to incorporate option 2—the national approvals option—alongside the mandatory pan-European scheme.
I accept that, on the face of it, the provision of national schemes under option 2 would appear to be gold-plating, as it goes beyond the EU minimum. However, I agree with the hon. Gentleman that the last Government adopted the correct course of action, which the present Government have continued. It does have a beneficial impact on SMEs.
I have engaged in correspondence with the hon. Gentleman about Truck Craft Bodies Ltd and the effect that the directive has had on its business. As he will recall, I explained in a reply to him in May that the cost that the company had incurred for the approval of its vehicles was significantly less than the original estimate. I think he will accept the macro-point that the cost burden on UK business of accepting option 2 is significantly lower than the pan-European option would have been.
Officials at the VCA met representatives of Truck Craft Bodies Ltd on 8 November 2012. I believe that they have supported the company and helped it to prepare the relevant documentation for its product range. Two more other site visits were made to the company’s premises in April and May 2013 to carry out approval work. The company now has seven vehicle types approved, with a fee cost for work by VCA of less than £11,000. On the basis of its current rate of production, that indicates an average certification cost of £18 per vehicle over three years. It is worth noting that the VCA fees are set on a cost reimbursement basis, following the public consultation. That reflects the cost of providing the approval service to industry.
The hon. Gentleman made several comments about the impact assessment. I can assure him that the VCA does not request information that it already holds. Again, I make the offer that if he can produce evidence that the VCA has asked for information that he believes it already holds, I will be happy to consider that. However, we do not believe that the agency requests information it already holds. It is also true that every vehicle converter must have a commercial relationship with the original vehicle manufacturer, and there are competition and confidentiality issues if information supplied to one company is made freely available to another. That would have an impact on any decision to undertake a further impact assessment.
This is a matter that the wider motor industry and trade associations may wish to address, rather than have Government create more rules or regulations. The Department and its agencies continue to work with industry, both directly and through its trade bodies, to identify any matters where there is a lack of clarity in the application of regulations or a need for administrative adjustments.
It is important to recognise that the directive was finalised six years ago and the UK regulations were created four years ago, so the opportunity for any changes before the regulations are fully implemented is relatively minimal. However, the Government are not complacent about our commitment to removing unnecessary regulatory burdens, and if there is evidence that that is not happening I will instruct officials to redouble their efforts. Indeed, there will be a meeting between the VCA and the industry trade bodies to discuss that on 30 September.
The hon. Gentleman should also by now have received a reply from my colleagues at the Department for Business, Innovation and Skills about whether any funding was available to help mitigate the costs that Truck Craft Bodies Ltd has incurred. I understand that information has been provided on checking for possible sources of funding and on the business link helpline, which provides advice to those who wish to improve and grow their operations.
To summarise, under its European obligations the UK had to implement the directive. The Department worked towards doing that in a manner which offered a high level of consultation and of assurance in respect of safety and environmental aspects, while limiting the burdens on UK businesses. There is a long history of regulating certain aspects of safety and environmental protection on road vehicles to provide a level playing field for industry, and in order to protect consumers, road users and society in general.
I hope I have satisfactorily explained the Government’s position on the approval of new vehicles. I have invited the hon. Gentleman to write to me about any evidence he feels he has about any specific occasions, and I will be delighted to see it. We are aiming to limit the impact of the directive wherever possible. We are aiming to limit the burdens on industry, and I hope the hon. Gentleman will be reassured by what I have said, but if he has any further issues he wishes to raise, I will gladly respond to them.
Question put and agreed to.