Road Vehicles and Non-Road Mobile Machinery (Type-Approval) (Amendment) (EU Exit) Regulations 2019
(Limited Text - Ministerial Extracts only)
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Baroness Sugg
That the draft Regulations laid before the House on 21 January be approved.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, if it is convenient, in moving this Motion I shall speak also to the draft Road Vehicle Emission Performance Standards (Cars and Vans) (Amendment) (EU Exit) Regulations 2019. These draft regulations will be made, for the most part, under the powers conferred by the European Union (Withdrawal) Act 2018, and—in the case of the type-approval SI to align the definitions of type-approval certification used in Northern Ireland with the rest of the UK—under the powers conferred by the European Communities Act. These regulations will be required if the UK leaves the European Union without a deal.
I shall speak first to the type-approval regulations. Currently, motor vehicles can be registered and placed on the UK market only if they have a valid EU type approval. The legislation governing this is a mix of domestic and directly applicable EU regulations. Of the two SIs, the draft type-approval regulations were put forward originally as a negative SI and considered by the sifting committees of both Houses. Both committees recommended that they be upgraded to affirmative, given the potential impact on manufacturers. I thank the committees for their considerations of this and other statutory instruments.
The draft type-approval regulations under consideration ensure that we will continue to have control over the registration of vehicles in the UK while also ensuring that we minimise the burden on manufacturers. The SI achieves this by amending the Road Traffic Act 1988 in GB and the Road Traffic Order 1981 in Northern Ireland to create a UK approval scheme, enabling the Vehicle Certification Agency, the VCA, to issue provisional UK approvals to manufacturers holding a valid EU type approval, without requiring additional, costly retesting.
In addition, the SI amends the Vehicle Excise and Registration Act 1994 to provide that vehicles entering the UK after exit day can be registered only if they have a UK approval. Maintaining control over registration ensures that in the event of another VW emissions scandal, we would be able to prevent those vehicles from being put on the road. Minor amendments are proposed to the Road Vehicles (Approval) Regulations 2009, and to the three retained frameworks for motorcycles, agricultural vehicles and engines for non-road mobile machinery, to ensure that this retained EU legislation will remain operable after we leave the EU.
I assure noble Lords that we have consulted widely since last autumn on our proposals. This has been primarily with the major trade associations, such as the Society of Motor Manufacturers and Traders, as well as smaller, more specialised trade associations, such as the Wheelchair Accessible Vehicle Convertors Association.
Baroness Sugg
My Lords, I thank noble Lords for their consideration of the draft regulations. The regulations will ensure that we can continue to control the registration of vehicles in the UK and also to combat climate change in the transport sector after we leave the European Union. I shall now respond to some of the points raised.
The issue of type approval and the standards that apply was raised by many noble Lords. Future changes to the standards that apply to vehicles approved and registered in the UK will be laid before Parliament for approval in the form of statutory instruments. At the point when we leave the EU, all existing standards, including those for safety and environmental performance, will continue to be applied to new vehicles registered in the UK. There will not be a drop in standards or a resultant effect on road safety or environmental performance when we leave the EU.
As for future decisions on remaining aligned with EU standards, it will be for the Government to propose legislation for Parliament’s consideration, and the process by which the legislation will be considered will be an SI, subject to the affirmative procedure, establishing a new full UK approval scheme. As discussed, that will be laid later this year. I reassure noble Lords that, as has been highlighted, the SI will create an interim arrangement, which will be valid for a maximum of two years. The department is undertaking a comprehensive review and reworking the UK’s type-approval arrangements in the case of a no-deal outcome, in order to ensure continuity for manufacturers. This absolutely is about maintaining the status quo. That is why we are having the interim measure for two years.
The review is not intended to make policy changes. We would remain aligned with existing standards, but we would amend the retained EU legislation on type approval, which runs to 3,700 pages, to eliminate remaining deficiencies and, if possible, to streamline the legislation to make it more accessible. There will, of course, be a formal consultation on that process, to ensure that we get it right. This is an interim measure for two years, maintaining the status quo pending a large piece of work with a formal consultation to ensure that, should we leave with no deal, we would have the best possible functioning type-approval system.
Lord Adonis
But what is the point? Why not simply continue to maintain EU 27 approvals? If we do not intend to diverge, what is the point of this big piece of work?
Baroness Sugg
By leaving the European Union through the European Union (Withdrawal) Act, we will take EU legislation on to our statute book. So we are carefully looking at that legislation to make sure that it functions in the best way for us. As I said, this is not intended to make policy changes and is intended to remain aligned with existing standards. But there are more than 3,700 pages of type approvals, and we want to make sure that they function correctly on our statute book. That is a significant piece of work, which we will be doing alongside a formal consultation to make sure that this continues to function.
The consultation on type approval was conducted by discussions and working groups, largely through the main UK trade bodies covering the various categories of vehicle that require type approval. We have had a range of meetings that included members of the SMMT, the Motorcycle Industry Association and the Agricultural Engineers Association. Through these meetings, we refined our proposals and addressed sector-specific issues as well as informing people what is expected in a no-deal scenario. Obviously, we have also spoken to the European trade associations.
Lord Rosser
I ask this in a genuine spirit: I hope that the Minister will accept that. If there were meetings and discussions with the bodies that she just mentioned, which are referred to in the EM, did they agree that what is in front of us today maintains the status quo—because they would have been told that that was the objective? Can I just check, because the Minister did not mention it, that the trade unions were not consulted?
Baroness Sugg
I am afraid that I do not have an answer on trade unions; I shall have to get back to the noble Lord on that.
The organisations we consulted do not wish for no deal—I should be very clear on that—but we are attempting a pragmatic approach to make sure that we continue trade with the EU should we have a no-deal exit. They are supportive of the proposals. The SMMT told the Lords Select Committee on the EU Internal Market that the department had put in place a system of temporary type approval, initially, which is probably as sensible as we can have during the interim period. The Motorcycle Industry Association confirmed that it had no immediate concern with the proposed text, which it expects to alleviate some of the short-term pressures on manufacturers and importers arising from the UK leaving the European Union without a deal. So I think that it is fair to say that industry does not want no deal but, in the event of no deal, it accepts that this interim measure is the right way forward. We published our technical notice of the changes to type approval last September.
On the question of the cost of type approval asked by the noble Baroness, Lady Randerson, the total cost to manufacturers of provisional approval is estimated to be around £800,000. That includes their internal administration costs and familiarisation costs. Normally, to obtain type approval for a single model costs at least £250,000, including the hire of test facilities, internal costs and fees to the VCA. It takes the VCA a couple of hours to prepare a UK approval following an application. As noble Lords would expect, the VCA has engaged extensively with industry and is well placed to issue provisional UK approvals. It has recruited additional temporary staff to manage the additional workload. So far, it has taken on 23 additional staff and is on target to have 40 in place by mid-March. The assessment found an estimated annual cost of the VCA of £800,000 per year, which would be recovered from manufacturers—so, combined with the administrative costs of using the scheme, the estimated total cost to business is £1.6 million per year.
Baroness Randerson
I thank the noble Baroness for those details, but I am still not clear about why the Government are suddenly so suspicious of EU type approvals. What grounds do they have to need to do this all over again rather than simply accepting, certainly for the first two years, that vehicles can come in with EU type approval, which we have trusted in the past and could trust for the next couple of years?
Baroness Sugg
Under no deal, EU-based manufacturers will also need to obtain UK approval from the VCA. That will be granted on the basis of a valid EU approval. The VCA retains the right to retest in the unlikely event that there are doubts about the authenticity of the EU approval. There are certainly no grounds for suspicion on that, but, if we leave the EU, it is only right that we have our own approval. We will no longer be a member of the EU, so we will no longer recognise its type approval.
On the VCA’s progress, as I said, engagement is continuing. It is actively working with customers and manufacturers on approvals from EU countries selling into the UK to ensure that they can deal with this. The VCA has already obtained approval data from manufacturers. Used cars and vans make up 99% of new registrations, and that engagement continues, so it is well placed.
The noble Baroness, Lady Randerson, also asked about the powers. The VCA currently has powers but, in the event of a no-deal exit, it will lose its powers as we will no longer be an EU member. That is what the SI brings in.
Several noble Lords asked about the national small series type-approval limits. They are being doubled for this year, and only for this year, because by next year we will have this new statutory instrument in place which will have our new type-approval process.
Baroness Randerson
Can the Minister explain why they are being doubled? On what grounds is their historic level now inappropriate?
Baroness Sugg
Before, it was for the whole of the EU. Now it will be for the UK only, so this is a temporary measure until the new type-approval statutory instrument comes in.
Lord Adonis
The Minister referred to a statutory instrument, but the regulation refers to legislation. What is the relationship between the legislation, which is scheduled for mid-2019, so will be introduced very shortly, and the statutory instrument to which she referred?
Baroness Sugg
The new type-approval regime will be a piece of legislation through a statutory instrument, which will be affirmative and will follow full consultation before it is published. A statutory instrument is the methodology by which it will come in.
I turn to emissions, on which, happily, we did consult. They were the subject of public consultation in November last year, and the Government’s response was published on 18 December. In parallel to that, we offered meetings with any stakeholders who wanted to discuss the proposals further. Again, I shall have to get back to the noble Lord on the specific point about trade unions. In addition to that formal consultation, DfT officials have been in regular contact with stakeholders for many months to help develop proposals to make sure that we have consistency with the existing EU regime. In the government response to comments from stakeholders, we provided clarification on the pooling and eco-innovation arrangements and set out a worked example of how a vehicle manufacturer’s target under the proposed UK regime might be established.
Through the statutory instruments, there are no specific impacts on UK manufacturers. If we were to leave the EU without a deal, the new UK regime would continue to operate as the EU regulation does for any vehicle manufacturer that registers new cars or vans in the UK. Manufacturers’ CO2 emission reduction targets would be calculated in the same manner, and they would still be expected to meet the existing headline reduction targets and report new registrations, as they do now. UK manufacturers’ vehicles registered in the EU would count towards the EU’s regime, as they do now.
Lord Dykes
I am very grateful to the Minister for giving way, and I apologise for interrupting at this stage. Would she forgive me if I again raise the point that has just made by the Opposition Front-Bench spokesman about trade unions being included in the consultations? I note that she has now said twice that she does not know the answer to that, but I should have thought that her team would have provided her with a list of people who were consulted, so she could refer to it. Is it not a matter of alarm if the trade unions were not included, bearing in mind that in the high-technology motor industry, it is well known, as we see from the tragedy of the Honda closure in Swindon, that car workers are not just workers in a general sense: they are highly skilled operatives and proud of their long years of training. Therefore, they often know more than those owning or running the company and managing them about the intricacies of motor vehicle production and manufacture. The trade unions therefore really need to be consulted.
Baroness Sugg
I take the noble Lord’s point and of course agree that the staff who work in the manufacture of vehicles play a really important role, and we should ensure that their views are taken on board.
We expect the cost of moving to a UK regime for CO2 emission reduction standards to be minimal. The registration of vehicles and the collection of required data is already handled by the DVLA on behalf of the DfT, and that will not change after EU exit.
With regard to emissions standards, the Government remain committed to our international and national environmental obligations. When we leave the EU, we will maintain them. If there is no deal, the SI we are considering will ensure that existing CO2 emission reduction standards are maintained. The formula to set those CO2 reduction targets and the headline targets themselves will be retained by the statutory instrument.
The noble Lord, Lord Rosser, asked about vehicle mass changes. As the UK average vehicle mass is above the EU average—we make heavier vehicles than the EU, on average—one consequence of adopting the current regime is that the sum of individual manufacturing targets in the UK will be slightly higher than the sum of targets in the EU. That might appear to be a slight loosening of standards, but that impression is incorrect. The goal that manufacturers must achieve remains the same. The SI specifically retains the headline targets that manufacturers must achieve by 2020. It maintains the level of effort that manufacturers must make under the current regime and ensures that regulations are as ambitious as under the existing arrangements.
On improving CO2 standards, as per the terms of the withdrawal Act, amending SIs must only correct a deficiency. However, the Government are still committed to ensuring that the standards will be as high as or higher than those required to allow importation into the EU.
I hope that I have addressed the points that were raised in the debate. If I have missed any, I will follow up in writing. Maintaining vehicle approval and emissions standards is vital to the broader government commitments to tackle climate change and improve road safety. These SIs are essential to ensure that we maintain control of vehicles on UK roads and that the system of vehicle type approvals and emissions standards continues to function from day one after exit. I beg to move.