CE Marking (Structural Steelwork)

Wednesday 26th February 2014 Westminster Hall

16:38

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Williams. Most people will be familiar with CE marking. Some goods have had it for years, from kids’ toys to kitchen appliances, from bike helmets to our hot water boilers, among other things. CE marking was introduced as a means to create a level playing field in the internal European market, starting way back in 1988. It is, of course, a consumer protection device to ensure that manufactured goods are made to standards that are harmonised across the European Union.

Recognising the challenges involved in providing a standard certification mark on manufactured goods, it was decided to phase in the introduction over a long period. That has led to different dates set for various goods since 1988 and it is still continuing to this day. The most recent incarnation of the mark was in 1995 and it continues in most product areas without a major problem. However, there is a problem for the Government and steel fabrication industry with the requirement for CE marking on all fabricated steelwork and construction in civil engineering to be in place by 1 July 2014. I want today to draw the Government’s attention to the implications of that requirement.

Let me give some background. The Government have championed the idea that they are a friend of small business, and that is indeed a sensible approach. Just last month, for example, speaking to the Federation of Small Businesses, the Prime Minister announced a plan to scrap 3,000 rules affecting small businesses, saying that he wanted to

“get out of the way of small business success.”

We can all agree with that laudable aim, but the reality on the ground can be different.

It was in that context that I was first contacted by a firm local to my constituency, T&D Cruickshanks, based in Kirkintilloch. Cruickshanks, a third-generation family-run business established in 1948 with four employees, is exactly the kind of small manufacturing business that the Government hold up as an example of an enterprise that they are setting out to support and that we all need to succeed. It is in the spirit of cross-party support for small businesses of that kind and others that I bring this issue to Parliament. Mr Cruickshank is absolutely clear about the impact on his business. Businesses that do not comply with the new CE marking certification by 1 July 2014 will be trading illegally, and Mr Cruickshank is very clear that certifying products involves significant costs for a small business such as the one his family have run for generations.

That focus on the lack of awareness in the fabrication industry of the necessity of meeting the new certification standard has been echoed by another business in my constituency, Highland Galvanizers, based in Cumbernauld. Geoff Crowley, the managing director, is very clear that upwards of 700 companies just in Scotland are unlikely to be compliant by 1 July. Geoff has been at the forefront of efforts to warn of the impending introduction of CE marking on fabricated steelwork in construction and civil engineering, and to make firms and the Government aware of it—it is coming up very fast.

It appears that the steel fabricators, suppliers and manufacturing industry, especially at the small business end of the chain, are largely unaware of what comes into force on 1 July, and are therefore unprepared. The preparation to comply with the CE certification marking, according to my industry discussions, takes perhaps six months. Many have not started. There are notable exceptions, especially the members of the British Constructional Steelwork Association, which has made CE marking compliance a condition of membership and is training its members in becoming compliant with the EU regulation.

In advance of the debate, I asked the Minister a number of parliamentary questions. In his response, he directed me to a 2009 impact assessment. With help from those on the front line in the fabrication industry, I have identified a number of issues about the impact assessment, on which I am sure the Minister will be pleased to respond.

First, the 2009 report relates to the whole construction products directive, whereas today we are seeking to address specifically the subsection that relates to the steel fabrication industry. [Interruption.] Members of the press are looking increasingly fascinated as I proceed. Secondly, the consultation was with larger bodies—trade associations, large companies and the like—which were within easy reach of civil servants. That makes the results unreliable because it ignores the challenges faced by small companies, which are often not members of trade bodies.

The impact assessment estimates the number of businesses affected to be about 18,000 and a total cost to them of £66 million, with an annual cost for maintenance of £12 million. I wonder how those estimates stand now. Will the Minister provide more clarity on the cost of meeting those marking certification standards? Anecdotal evidence from Scottish steel fabricators who have already implemented CE marking is that implementation costs of £20,000 are not unusual for larger businesses, and that quotes from consultants to help smaller fabricators to meet the new standard range from £5,000 to £10,000.

Further to that, the impact assessment, at paragraph 29, removes half of those who might be affected by the new certification standard, because—this is the impact assessment’s own description—half of those who would be affected will have voluntarily become CE mark certified on the basis that they might want to do business abroad. We have to be aware of the impact assessment in that context. Does the fact that business might be certified for another reason mean that that cost should be removed from the impact assessment? Are those calculations accurate enough for hon. Members to make a judgment about the potential implications of the certification and ensuring that the industry across the board is compliant?

The impact assessment recognised that small businesses would be affected disproportionately. We are talking about small businesses that only sell locally and that are not exporters. There is little benefit for them in CE marking in itself. Of course, they are already at a disadvantage compared with larger suppliers in the industry, which can easily afford to absorb the costs of meeting the new standard. That creates obvious financial and compliance challenges for small steel fabricators such as Cruickshanks in Kirkintilloch.

There was clearly some recognition of the potential problems with the new CE standard—an impact assessment was undertaken in 2009—but, five years later, it appears that not much has happened to ensure that small steel fabricators are aware of the requirement, which has to be met by 1 July, and aware of any support that can be given to meet it.

In paragraph 61, the impact assessment asks those consulted how they think the certification standard will impact on competition. Larger companies thought that the impact would be positive, whereas small businesses saw it as negative and thought that the measure would reduce choice and drive smaller businesses out of the marketplace. Paragraph 65 recognised that smaller businesses, particularly those that are not members of trade bodies, would suffer from poorer communications—it is much more difficult to get the message out to small businesses. From the discussions I have had with the Scottish part of the steel fabrication industry in particular, but not exclusively, I think the problem is that many of the small fabricators are simply unaware that the requirement is coming. Some just do not believe it. Some have heard and are hoping they will be unaffected.

I say again that the British Constructional Steelwork Association is doing sterling work in trying to shed light on the requirement and has made compliance with CE standard marking a condition of membership. The Federation of Small Businesses is also alerting its members to the deadline. However, those few bodies in the UK that are authorised to assess and certify companies seeking CE accreditation, such as the Steel Construction Certification Scheme and the Welding Institute, are under-resourced and already booked up beyond the 1 July deadline. That is what I am told.

Since I secured the debate, I have been contacted by a number of small businesses—steel fabricators, welders and the like—across the UK. Organisations that procure large quantities of steel, such as those behind large-scale construction projects, are already beginning to demand that smaller suppliers be CE accredited. There is a real issue in that the vast majority of Scottish fabrication businesses will not be eligible to tender for that kind of work after 1 July, because they will not have met the certification deadline. Local authorities are starting to wake up to that, and I hope the Minister will tell us what action his Department is taking to ensure that local authorities are acting, and what Government guidance and help has been given.

Businesses that recognise that they need to act—that requires having some training and subsequent qualification, putting some administrative procedures in place and having an audit by a notified body—find that there seems to be a lack of available resource. There are few trainers and fewer assessors, and they are booked up beyond 1 July. My understanding is that trading standards has to be responsible for the enforcement of the CE marking standard. What action has trading standards taken to inform those in the industry that the standard must be met? Has trading standards taken it upon itself to offer advice?

I look forward to the Government grasping the matter. There is a significant problem for small businesses—smaller fabricators lack awareness of the requirement to meet the standard by 1 July. The Government have a role to play, and if they believe that small businesses are the engine room of the economy, I hope they engage in a positive and constructive spirit. I am sure the Minister will agree that it is a serious matter. Businesses may not be compliant by 1 July, and all hon. Members should be aware of the potential implications for those businesses and their staff. I look forward to the Minister informing me and those at the sharp end of the industry how the situation will be resolved before 1 July.

16:52

[The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)]

Diolch, Mr Williams. Prynhawn da—good afternoon to you. I congratulate the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) on securing the debate. We were not entirely sure what points he was going to raise. I gather from his introductory remarks that he was speaking on behalf of at least two construction steel producers in his constituency: T & D Cruickshanks from Kirkintilloch and Highland Galvanizers from Cumbernauld. We almost had the full set; we did not get a company from Kilsyth, but the fact that two of the three communities in the hon. Gentleman’s constituency contacted him about the matter demonstrates its importance to the firms that he represents.

I have a comprehensive brief to get through, and I believe that it anticipates all the points that the hon. Gentleman made. The area is complex, as I am sure that he realised when he briefed himself up on it. The construction products regulation is European Union legislation, which came into force across the European Union on 1 July 2013 except in the construction steel industry, which has until 1 July 2014. That legislation is applicable across all member states. It is a free trade measure that requires construction products covered by a harmonised product standard to carry the CE marking. The regulation also requires manufacturers to provide robust and reliable information in a consistent way, which benefits industry and reduces potential barriers to trade.

There are four main elements in the regime, which I will outline briefly. First, there is a suite of harmonised technical specifications that exist to establish a common approach across Europe to product standards. Industry is responsible for developing those standards, and business and the British Standards Institution play an active part in their development. Secondly, there is a requirement to affix CE marking and to provide a declaration of performance to accompany the product, setting out how it performs against the essential performance characteristics in the standard.

Thirdly, there are agreed systems to ensure the accuracy and reliability of the performance set out in the declaration of performance, which are called the assessment and verification of constancy of performance—I said that this was a complicated area. Those systems reflect the level of risk associated with the product and the potential for performance to vary. Finally, there is a framework of notified bodies, which are independent third-party organisations involved in the assessment and verification of performance. That package is designed to provide certainty for industry and remove barriers to trade while ensuring that proper safeguards are in place relating to safety.

There are more than 400 harmonised standards relating to construction products. All those, apart from in the area of construction steel, came into force on 1 July 2013. Some in the industry expressed concern about the introduction of those regulations last year. However, we have since discovered that there were significantly fewer practical problems than were feared in the other 399 areas last year.

The standard on structural steelwork is covered by BS EN 1090-1, which deals with products such as piles, columns, beams and stairs. Unlike most other construction products, the CE marking of fabricated structural steel products is not required until July 2014. That means that the industry will have had three and a half years since the publication of that standard to prepare for its implementation. The European Commission gave the industry that additional 12 months’ leeway because it recognised that there were a large number of small steelwork fabricators who would benefit from the extra time. It was anticipated that the sector might need a little more time to adapt and prepare.

The hon. Gentleman asked several questions about how prepared industry should be and whether the changes had been publicised. My Department, which leads across the UK for this area, has been working with a wide range of organisations to ensure that industry is aware and prepared. Both my Department and the Department for Business, Innovation and Skills have produced a range of information about what is required under the regulations, and there is further information and guidance on the planning portal.

However, industry is also responsible for raising awareness, and trade associations have been at the forefront of that work. I have with me the brochure produced by the British Constructional Steel Association, with assistance from Tata Steel, in July 2013—just as all the other construction standards were being introduced—to publicise further the changes that would be required this year. Larger firms in the industry, such as Tata, have played an active role in raising awareness right across their supply chain. I gather from the hon. Gentleman’s remarks that T & D Cruickshanks and Highland Galvanizers will be involved in the supply chain for larger users of their product.

Trading standards in England, Wales and Scotland will be responsible for providing advice at a local level to businesses, and they will police the regime once it is in place. In answer to a specific question asked by the hon. Gentleman, not only have officials from my Department arranged events for trading standards departments in English councils, but we have done the same for Scottish councils in general. An event was held in Motherwell in April last year to enable Scottish councils to prepare in plenty of time for the changes that will take place this year.

The hon. Gentleman also made some points about costings. I understand that the industry has expressed concerns about the costs of implementation, which principally result from the need to involve a third-party notified body to establish the performance of the product and ensure that systems are in place to maintain performance. The extent of the costs depends on the product type and generally reflects the fabricators’ existing quality systems, how involved the notified body is in establishing performance, and the ongoing monitoring of production.

For structural steelwork firms, the safety-critical nature of the product means that there is not only an initial inspection by the notified body, but subsequent routine checking of the factory production control. Many larger firms will already incur similar costs through their voluntary adoption of third-party quality control schemes. Nevertheless, we recognise that for small firms, such as those in the hon. Gentleman’s constituency, incurring such a cost could be a more significant additional burden. However, the costs arise as a result of the standards that have been developed by the industry itself and determined as proportionate to the level of risk involved. Of course, some costs may be offset against future efficiency savings resulting from quality improvement—for example, by avoiding mistakes because compliance processes are in place.

Small businesses have clearly made representations about assistance. I can speak for the situation in England, where BIS funds the manufacturing advisory service, which has been running workshops with small manufacturers. It has not only been raising awareness but providing financial assistance in the form of grants of up to £1,000 for consultancy support to help small manufacturers to comply. We understand from the Welsh Government that similar help is available in Wales—in fact, according to the figures I have found, it looks more generous. I believe that no such assistance has been provided by the Scottish Government, so I suggest that the hon. Gentleman raises the issue with his constituency counterpart in Scotland who will no doubt want to raise it in Holyrood.

The other key issue raised by the hon. Gentleman was about whether there is enough time for companies to comply with the new standard. As I have already mentioned, come July there will have been three and a half years for companies to prepare. I understand that there are also concerns about the number of bodies that can provide certification. Currently, six notified bodies are able to carry out the third-party tasks for checking the factory production control systems of structural steelwork fabricators. Officials in my Department are fast-tracking another notified body and will do the same for any other notified body that comes forward—provided, of course, that there is no risk of standards slipping as a result.

The hon. Gentleman said that Cruickshanks and Highland Galvanisers were worried that if they did not comply by 1 July 2014, business would effectively cease and operations would be suspended. There is nothing that any EU member state can do to change that date—that would be unfair to firms in the United Kingdom that have complied with it, and also to the other member states of the European Union single market. However, the policing of the regime from 1 July will be down to local authority trading standards bodies. If they discover that a firm has not complied by that date, or, indeed, if they have been notified already as a result of this debate that some firms anticipate not being able to comply, in the first instance we would expect trading standards to work with such firms and seek an explanation of the problems they are encountering.

At this point in the process, we can safely say that rumours that firms will be closed down are scaremongering. Perhaps this debate will give more publicity to the situation than would otherwise be the case. There is still plenty of time for conversations with trading standards to ensure that compliance problems and sanctions do not arise. Nevertheless, the important point that I want to get across is that all firms must get on with the process. There has been plenty of time for the rest of the construction products sector—the deadline passed last year, since when compliance problems have not been reported to us. We would urge structural steel manufacturers to adopt the same approach.

Regulations are part of an approach that seeks to promote trade and benefit business while ensuring that we have safe construction products. I am sure that the hon. Gentleman and I would be united on that, as well as on ensuring that small firms in his constituency and elsewhere in the United Kingdom do not find themselves unable to comply. There is still time for conversations with local authority trading standards officers, and with the British Constructional Steel Association itself, to find a clear way forward.

Question put and agreed to.

17:06

Sitting adjourned.