Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022

Tuesday 13th December 2022 Grand Committee

Considered in Grand Committee

17:20

Moved by

[Lord Callanan]

That the Grand Committee do consider the Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, since 1 January 2021, the post-exit UK conformity assessment—UKCA—marking has been in use alongside recognition of the EU’s CE and reversed epsilon markings. For most product sectors, recognition of the CE marking in Great Britain is due to end at 11 pm on 31 December this year. The main objective of this instrument is to reduce immediate cost increases and burdens for businesses, given the current cost of living crisis and global supply issues, by providing businesses with additional time to transition to UKCA requirements. This means that businesses will continue to have flexibility in how they can legally place products on the market in Great Britain while maintaining high levels of product safety for British consumers. Without the measures implemented by this instrument, industry will have to meet UKCA requirements from 1 January 2023 at a time of economic hardship for many businesses.

By way of background, the UKCA marking was introduced in Great Britain to replace the EU’s CE marking. As a result of Brexit, we have the autonomy to set our own product regulations and ensure that they work for businesses and consumers in this country. To place products on the market in Great Britain, manufacturers must ensure that products meet the essential safety requirements of relevant product legislation. Compliance is achieved by following a conformity assessment procedure. For lower-risk products, manufacturers can self-declare compliance; for higher-risk products, manufacturers may need to go to a conformity assessment body—a CAB—for product testing.

We have of course engaged with businesses on the challenges that they face in transitioning to UKCA. The feedback that we received from industry informed the decision to announce a range of measures in June to make it easier for businesses to use the UKCA marking. However, given the current cost of living crisis and economic challenges that businesses are facing, we need to go further in our support. The SI will not only implement the measures announced in June but provide flexibility to allow businesses to use CE marking or UKCA marking for their goods for a further two years.

Over the past 12 months, officials have delivered an extensive programme of domestic and international engagement to support businesses transitioning to the UKCA regime. Officials have also engaged with UK conformity assessment bodies and worked closely with the UK Accreditation Service to ensure that organisations that wish to become UK CABs can do so.

Despite the work we have done to support industry to transition, industry engagement has indicated that the additional costs and burdens of fulfilling UKCA requirements may be impacting UKCA business uptake. Although we recognise that a further extension to the recognition of CE marking may raise questions about the future transition timescales to the mandatory UKCA regime, we believe that the benefits of reducing immediate burdens and costs for industry in the current economic climate outweigh the potential risk of business hesitancy to prepare.

The UKCA marking remains valid when placing goods on the market in Great Britain. We will continue to engage with industry closely to provide businesses with support and to understand how to take a pragmatic approach to improving regulation to the benefit of businesses and consumers.

I turn to the key elements of the instrument. First, this instrument extends the time for existing transitional provisions allowing certain products meeting EU requirements and markings to be placed on the market, or put into service, in Great Britain. This will give businesses the option to choose to use the CE marking for a further two years until 31 December 2024.

Secondly, this instrument provides that where a manufacturer has undertaken any steps under EU conformity assessment procedures in the period up to 31 December 2024 but those goods have not been placed on the Great Britian market, those steps will be taken to have been done under the equivalent UK conformity assessment procedures. This applies for only as long as any certificate issued is valid or until 31 December 2027, whichever is sooner.

Thirdly, this instrument extends time for existing labelling easements. This will allow businesses to affix the UKCA marking and to include importer information for products imported from EEA countries, and in some cases from Switzerland, on a label affixed to the product or an accompanying document, rather than on the product itself.

The SI does not cover all product areas that require UKCA marking, and there are different rules in place for medical devices, construction products, cableways, transportable pressure equipment, unmanned aircraft systems, rail products, and marine equipment.

Without the measures implemented by this instrument, most businesses will have to meet UKCA requirements from 1 January next year for product sectors covered by this instrument, at a time of cost of living increases and global supply chain challenges. From 1 January 2023, if businesses are unable to meet UKCA requirements, most businesses will not legally be able to place their products on the Great British market. This could cause short-term market and supply chain disruption across different sectors. In turn, reduced product availability could translate into higher costs for commercial supply chains and consumers.

In conclusion, I hope noble Lords will recognise that, at a time of cost of living increases and global supply chain challenges facing UK businesses, it is vital that the UK Government continue to support businesses. Without this legislation in place, recognition of the CE marking in Great Britain would end at 11 pm on 31 December 2022 for most product sectors. The main objective of the instrument is to provide businesses with additional time to transition to the post-exit independent UK conformity assessment marking by providing flexibility to use either CE marking or the UKCA marking, while maintaining high levels of product safety for UK consumers. Therefore, I commend the regulations to the Committee.

[Baroness McIntosh of Pickering (Con)]

While my noble friend pauses for breath, I thank him for introducing the regulations. What will their status be in the context of the EU retained law Bill? Will this be one that the department seeks to keep or to dispense with?

[Lord Lennie (Lab)]

My Lords, I thank the Minister for his detailed introduction to this instrument, the main objective of which is to provide businesses with additional time to transition to the post-exit independent UK conformity assessment, the UKCA. As has been said, the UKCA is a conformity mark that indicates conformity with the applicable requirements for products sold within GB.

The purpose of the instrument, without compromising on safety or consumer and environmental protection, is to correct a deficiency arising from EU exit by preventing immediate cost increases and burdens on businesses, which the Minister set out. It will ensure that businesses continue to be provided with flexibility and choice on how they comply with product regulations. The instrument’s provisions will also prevent potential temporary and short-term market and supply chain disruption that may have occurred at the start of 2023 if the recognition of products meeting EU requirements and markings came to an end at the end of December 2022.

We support the instrument overall, but I have some questions in response to the provisions that the Minister set out. First, this is the second extension and it is significantly longer than the first one. What are the Government getting wrong? Is it entirely down to cost of living and supply chain challenges? How sure are they that this will be the last time? If they are not, what needs to change for there not to be another extension?

On the second set of provisions that the Minister set out, the instrument provides for where a manufacturer or other relevant persons has undertaken steps under EU conformity assessment procedures. This applies only as long as the certificate is valid or until 31 December 2027. This seems sensible and the benefits of reduced costs are self-evident, but does it come with any risk? If so, are the Government taking any steps to mitigate this risk? If not, why not just carry over everything? Why is that date specified?

17:30

The third point made was that, if this solution is workable in the interim, why can we not continue in this manner to further make UKCA compliance easier and less costly indefinitely?

The fourth point is to correct a drafting error.

There are three key components of this instrument that directly affect businesses: acquiring conformity, marking and labelling products, and costs associated with businesses familiarising themselves with the changes in legislation, as the Minister pointed out.

Conformity assessment certification will be a net benefit to businesses, because those that still hold conformity assessment certificates with EU-recognised CABs will have more time to transfer them to UK CABs carrying out conformity assessments. Overall, the combination of the impacts of these three components results in a quantified annual net impact that is de minimis. In addition, there are indirect benefits from this measure associated with avoiding potential temporary and short-term market disruption that could arise if this measure were not introduced. Despite significant previous engagement with businesses and other stakeholders, it has not been possible to quantify these impacts due to uncertainties over the scale of products affected and the extent to which sales would be forgone rather than delayed.

Lastly, earlier amendments made by the Product Safety and Metrology etc. (Amendment etc.) (UK(NI) Indication) (EU Exit) Regulations 2020, No. 1460, and the Product Safety and Metrology etc. (Amendment) Regulations 2021, No. 1273, were also assessed as de minimis. This instrument will impact a subset of the original business population in scope of the 2021 and 2020 regulations, and the quantified net annual costs of this instrument are also de minimis. If all the impact is seemingly de minimis or unquantifiable, why have the Government decided to do this? Why did they not give any consideration to not making these changes in order to force the changeover to UKCA to happen more quickly? I would like that question answered.

Briefly, the House of Lords Secondary Legislation Scrutiny Committee raised concerns that businesses have already incurred substantial costs and that this is being deferred again. This is one element of post-Brexit policy-making that has proven much more complex than we expected. Is there more to come or is this it?

[Lord Callanan (Con)]

I thank my noble friend Lady McIntosh and the noble Lord, Lord Lennie, for their forbearance and for being the only ones to turn up and talk about my regulations. They deserve special Christmas medals for that and for the valuable contributions they made to the debate.

The regulations under consideration today are essential to support businesses within the context of the rising cost of living and the many global supply chain challenges they face. As I said in my introduction, for most product sectors, recognition of the CE and reversed epsilon marking in Great Britain is due to end at 11 pm on 31 December. This legislation will therefore provide industry with additional time to transition to the UKCA regime, for most product sectors. It will give businesses continued flexibility in how they can legally place products on the market in Great Britain, by allowing them to use either the CE marking or the UKCA marking, until 31 December 2024.

If this legislation is not implemented, and businesses are therefore unable to comply with UKCA requirements by the end of this year, most businesses will not legally be able to place their products on the Great British market. Industry will also not be able to benefit from the transitional labelling and retesting measures provided by this instrument.

My noble friend Lady McIntosh asked how this instrument relates to the passage of the retained EU law Bill. I would remind my noble friend that the Bill is a separate piece of legislation, with its own aims. Sunsetting retained EU law will help to review and simplify our statute book, ensuring that we understand and utilise what is left and do away with any unnecessary legislation. The deadline is not about a cliff edge but about having a focused date to create the impetus for change, enabling the UK to make the most of its new-found freedom from the EU and build a domestic regime that works for the British people. We will use the additional time under this instrument to address challenges that businesses have raised regarding transition to UKCA, and consider whether we can reduce regulatory burdens in the longer term. The short answer to my noble friend’s question is that these regulations are unaffected by the REUL Bill.

The noble Lord, Lord Lennie, asked whether there would be a further extension and what needs to change to present a further extension. This instrument shows that the Government are committed to taking a pragmatic approach to implementing post-Brexit rules. We have engaged and listened to industries’ concerns, and have responded accordingly on our approach to implementing the UKCA markings. Over the next two years, we will continue to engage with businesses to understand whether there are any further actions that we need to take to minimise burdens on them.

The noble Lord also asked whether the measure on testing would come with any safety implications and whether this could not be done for the longer term. We are confident that extending recognition of the CE marking will not impact product safety or consumer protection. We have made this decision because we want to support industry as much as possible, while maintaining high levels of consumer protection. However, it is important that we introduce our own regulatory approach. An autonomous domestic product regulation regime allows us to set our own product regulations and make them better for UK businesses and consumers, while ensuring high levels of protection from unsafe goods.

The noble Lord also asked why these changes must be made when they are effectively de minimis. We know that lots of businesses are already ready; however, it is right that we provide additional support in the current economic context. In October, 89% of UK manufacturers subject to the UKCA market were either using or planning to use UKCA. However, the risks that we outlined remain, which is why we have acted.

Lastly, the noble Lord noted the Secondary Legislation Scrutiny Committee’s report, which highlighted concerns that businesses have already spent money to prepare for the UKCA regime and may have concerns about future changes. Ultimately, the UKCA marking remains valid when placing goods on the market in Great Britain and can still be used by businesses. We will continue to engage with industry closely, and to understand and manage any implications that are flagged up to us.

I underline once more that these regulations are essential to support industry in a time of economic hardship. They will provide businesses with the flexibility to use either the CE marking or the UKCA marking to avoid potential economic impacts, supply chain disruption and the likelihood of limited product availability. We will continue to engage closely with industry to provide support to businesses, and to understand how to take a pragmatic approach to improving regulations for the benefit of businesses and consumers, while maintaining our commitment to high levels of protection for UK consumers. I therefore commend these draft regulations to the Committee.

Motion agreed.