REACH etc. (Amendment etc.) (EU Exit) Regulations 2019

Lord Fox Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Lord Fox]

To leave out from “that” to the end and to insert “this House declines to approve the draft Regulations because Her Majesty’s Government has provided insufficient information on the impact of the proposed changes, in particular in relation to (1) the additional responsibilities being transferred to the Health and Safety Executive and its readiness to act as the national regulator, (2) the potential costs for the chemical and advanced manufacturing industries in the United Kingdom, (3) the potential duplication of testing on animals, and (4) the need to uphold environmental protections; and calls on Her Majesty's Government to lay new regulations following full consultation with the chemical, manufacturing and consumer goods industries, and the environmental sector, with the aim of delivering a regulatory regime of the highest standard”.

[Lord Fox (LD)]

My Lords, I declare my interests as in the register, but everybody in this Chamber has an interest because chemicals touch every part of everybody’s lives in this country. That is why the Minister is completely correct that it is vital for this country to have a safe and effective management regime for chemicals. Safety should be the primary concern, alongside environmental sustainability.

Along with other Peers, I worked on the Nuclear Safeguards Bill, which the Government rightfully decided deserved primary legislation, not least because it involved an international treaty but also because it is a complex and important safety regime. During the proceedings on that legislation, which the Government brought to this House and the other place, it was improved and full debate was had. The chemicals and chemical regulation regime is just as complex and important, if not more so, than nuclear safeguarding, and this should have been brought to your Lordships’ House and the other place as primary legislation. It is regrettable that this was not the case.

It is also extremely unfortunate, to say the least, that the Government have left it so late to bring this statutory instrument in front of your Lordships. When this was tabled it was anticipated that this could be three days before the measures in this statutory instrument would be required. Given its importance and complexity, that is beyond remiss and looks like brinkmanship. Despite the fulsome description of consultation, roadshows and so on, the response I have had from industry and civic society—a broad range of stakeholders—has been that this is not a satisfactory statutory instrument, which is why I have tabled this fatal amendment.

I will try to highlight some of the flaws. I am afraid to say it will not be a short speech, because there are quite a lot of flaws. I apologise—but not much, because this issue has to be laid before your Lordships and these issues need to put on the public record. I will ask a number of questions. As the Minister has set out, this regime is effectively ready to roll, so I am sure he will not have trouble answering these questions.

In the months and years to come, it is important people understand what the Government think they have laid before your Lordships in the regrettable event that we have to use this statutory instrument. However, there is another reason why this debate is important. The instrument clearly indicates the direction of travel. In his preamble, the Minister talked about the objective of having a common rule book, frictionless trade and co-operation—I am not sure that is the word the Minister used—with the ECHA. In the event that we leave the European Union, these are all ambitions I would share. However, none of them is a done deal, and this statutory instrument sets a direction of travel for what regime might follow in any case.

The Government have succeeded in unifying one part of the country: those involved in the manufacturing and use of chemicals in the industry are pretty united in their concerns about this statutory instrument. As the Minister set out, much time and effort has been invested in creating and delivering REACH—over more than a decade. Many in the industry and civil society feel that, just when this regime is beginning to deliver, we are walking away from it and potentially creating another parallel exercise. And those who have been involved in this will know what a big exercise it is. As we have said, the political agreement points to co-operation, but we cannot be certain we will get that.

Can the Minister confirm to your Lordships’ House that, as well as the process of discussion with the chemicals industry and green organisations, the concerns put forward by these bodies have been represented to Her Majesty’s Government? Can he confirm that those consultations have happened?

The economic impact on the UK of the development of an equivalent national chemicals regulation is considerable, and the Minister set out some of the complexities that will be taken on board by the United Kingdom. Furthermore, REACH substance evaluations and authorisations are not small affairs. The Minister mentioned substances of very high concern, or SVHCs. My understanding is that around 488 of those are being re-evaluated by REACH. At the moment, that process is shared across member states, and it is a long and complex process. If the United Kingdom is going to take on board that process individually and separately from the EU, it will take a great deal of time and money, and, frankly, it will require more tests, whether the Minister is seeking to avoid that or not. It is quite clear that, in taking this course, the United Kingdom will face a significant burden, taking on the duplication of a previously shared workload.

The Minister talked about preparation. I understand there is an IT framework, which cost around £5.8 million to create. In July 2018, in a parliamentary committee, a civil servant confirmed that it would not be fully functional on exit day, and I noticed that the language from the Minister was slightly hedged on that issue. The official said that some of the fuller functionalities would not necessarily be required on day one and are on a slower timescale. Perhaps the Minister can clarify what functionality will be available on exit day and what will not.

As the Minister said, Defra has confirmed that the HSE will run this database and lead the overall process. He set out, as Minister Coffey did when presenting this SI in the other place, that the Government anticipate a future budget increased by £13 million—I believe that was the figure. That equates to around 40 to 50 additional staff. Given that the number of chemicals used in the UK will not be drastically lower than the number used at EU level, the HSE will deal with a similar number of chemicals—the Minister talked about grandfathering, and we will come to that—to those under the jurisdiction of the ECHA. I should point out that its annual budget is €100 million and it has nearly 600 members of staff. Consulting with people in the industry, I am told that around 300 to 400 people would be a reasonable assumption of what the HSE would need in order to deliver the very complex tasks that the Minister has set before your Lordships. So I challenge the idea that £13 million would be sufficient resources to deliver this programme. Can the Minister comment on that particular supposition but also, within the framework of his own constraints, tell us how many people have been recruited already by the HSE in order to deliver this, because we could have been delivering this within a few days? I imagine that a recruitment process is already under way. Will the Minister update us on that?

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The noble Lord, Lord Fox, mentioned making data available and relying on what trade associations say. It is not naive to rely on EU trade bodies such as Cefic; indeed, Cefic’s model contract has been widely used across the EU. I did not realise it, but Cefic is a very influential body and is widely listened to.

[Lord Fox]

I was not implying that there was something wrong with the trade association. My point was that it is wrong to hide behind that statement and not acknowledge that there are serious copyright and confidentiality issues around this data which make the whole cut-and-paste exercise much more complex and expensive than the Minister seemed to present.

[Lord Gardiner of Kimble]

I understand the point from the noble Lord. However, as I said in my opening remarks, it is the case that Cefic and other bodies are working extremely constructively, as there is a mutual benefit.

As a prelude to today, I read last Thursday’s Hansard—my noble friend Lady Buscombe was very helpful in taking me through that interesting debate. To be pedantic, let me be clear that the 488 approvals mentioned are part of a programme under the biocidal products regulation and not REACH. All of government is looking in great detail at what needs to be done and what resources are necessary to make sure it happens.

The noble Lord, Lord Krebs, and my noble friend Lady McIntosh asked about the benefits of a UK system. I have said already—and will say again, because the noble Lord, Lord Whitty, raised it—that our preference is obviously to maintain participation in the European Chemicals Agency. That is the Government’s aim, and I will go into further detail on it. However, we are here because we have to consider all eventualities. In his report, the noble Lord, Lord Teverson, made it very clear that although sometimes we do not wish to be in a certain place, we have to do the responsible thing. Indeed, his committee considered how we deal with all scenarios.

The noble Lord, Lord Teverson, also asked how many UK companies have taken advantage of the Brexit window. I do not have any details from the ECHA on that, but if I receive any further information, I will make sure it is passed to the noble Lord.

The noble Lord, Lord Fox, mentioned the duplication of costs. It is the case that, unfortunately, if there is no deal and we have to set up a UK REACH system, or if at the end of the negotiations participation is not possible, we would, as other countries do, have to have a regulatory system. However, I emphasise that, through our transitional measures, we are seeking to minimise the costs; for companies registering new chemicals, the requirements will be the same.

I understand the concerns of business and civil society. That is why we have had such a considerable number of discussions, as I referred to in my opening remarks, with business, all representatives who have an interest and Ministers in BEIS.

I was struck by last Thursday’s intervention from the noble Lord, Lord McKenzie of Luton. He described the Health and Safety Executive as,

“one of the jewels in the crown of our regulatory firmament”,—[Official Report, 21/3/19; col. 1602.]

and said he had no doubt about its intellectual capability. I agree with the noble Lord and with the points made by the noble Lord, Lord Whitty: no other organisation is better placed than the HSE to act as the UK agency.

As I said, we intend to scale-up resources to £13 million at full operation. I say to my noble friend Lady McIntosh that this funding is primarily for human resourcing in Defra, the HSE and the Environment Agency, to make sure that: we have the necessary levels of technical specialist input into risk and socioeconomic assessments of chemicals for the UK; first-rate policy advice can be provided; we can increase engagement with UK businesses and appropriate international fora; and we can take forward legislation as we seek to become a global leader in promoting the sound management of chemicals. As the noble Lord, Lord Teverson, rightly identified, the HSE will at this stage take on about 35 to 40 people. We will have a strong and effective regulator by building on the expertise of the HSE and the Environment Agency to operate REACH in the UK. As for the estimated number of staff, we think we will need 135 full-time equivalents across the three organisations of Defra, the EA and the HSE for the work I have outlined.

The noble Lord, Lord Whitty, raised the matter of independence. As the UK agency, the HSE must also draw on independent expert scientific advice when developing its opinions on restrictions and authorisations. This will add to the robust evidence and analysis underpinning its opinions. If there are reasons the HSE does not commission independent advice—for example, where ECHA has already published a robust opinion on a chemical—it must publish its justification.

The noble Lords, Lord Fox, Lord Teverson and Lord Whitty, raised the potential costs to industry. The instrument puts in place transitional arrangements to provide business continuity. We are bringing all UK registrations automatically into UK REACH, so there is no break in market access. We are making sure that companies can continue to buy chemicals from the EU from day one. Grandfathering means that there will be no break in industry’s duty to identify and apply the appropriate risk management measures in businesses. We will not weaken the “no data, no market” principle because that is fundamental to REACH. But we have engaged closely with industry stakeholders about costs and how to mitigate them. As I said, the UK Chemical Industries Association and Cefic have published their joint recommendation that data used to register under REACH should be available for UK REACH at no extra charge.

On grandfathering, we acknowledge the existing ECHA registrations. That is why we have the grandfathering system and will accept reduced information for the first two years. But that is not a tenable position in the long term if we want to have an effective regulatory system that protects human health and the environment.

A number of noble Lords, particularly the noble Lord, Lord Trees, mentioned animal testing. This instrument preserves the built-in mechanisms to reduce the amount of animal testing. This is the last-resort principle that means that companies and the regulator can turn to animal tests only if they have exhausted all other ways of getting the information they need to complete the understanding of the chemical. There is also the testing proposal mechanism, which means that in many cases industry cannot proceed with animal testing unless it gets the regulator’s agreement first. The UK’s regulations preserve these provisions. Without this instrument, we would not have those powers to stop animal testing.

The UK’s record on these matters is acknowledged internationally, which was mentioned by the noble Lord, Lord Whitty. The UK has been the forefront in ECHA in opposing animal tests where alternative approaches are available. I should say to the noble Lord, Lord Trees, that we will aim to harmonise as much as possible. We will accept existing animal tests produced for EU REACH. We will not ask for new ones. Looking forward, we will work on the basis of mutual acceptance of data and the EU follows the same principle.

The noble Lord, Lord Fox, raised the important issue of environmental protections. The Government have repeatedly made clear their commitment to environmental standards. The policy paper that we published alongside the environment Bill in December last year reinforces the regulatory provisions throughout REACH that are fully preserved in the instrument today.

I also say to the noble Lord, Lord Krebs, that we will continue to need robust scientific evidence to make sure that we are properly protecting human health and the environment. That is why we have put in place strong arrangements for scientific advice. The HSE must seek external knowledge and advice when forming its opinions or otherwise justify why it has decided not to. It must act in a way that ensures a high level of transparency and it must publish its opinions. The HSE will have access to the best advice and will not be limited to the UK or even the EU. Indeed, we think by contrast that a UK statutory committee runs the risk of rather narrower membership and limiting our access to expertise. We are also committed to transparent processes. We will have arrangements in place in UK REACH to allow stakeholders to observe discussions and considerations where independent scientific advice is provided and to read publicly available minutes of these meetings.

The noble Lords, Lord Krebs and Lord Fox, raised divergence. It is the case that industry and NGOs have expressed views on that matter. First, the UK will not diverge from EU regulatory standards, at least not if that means reducing our standards. In other words, that we will retain the highest possible standards is the whole basis of this regulation. We will look very closely at what the EU does, but it is right that our regulators should apply their own judgment based on independent, expert advice on individual chemicals.

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I will assess the quite considerable number of other questions that I have not been quick enough to handle, but I respectfully say to the three noble Lords, all of whom I know have a deep understanding of this issue, that it would be much appreciated if they felt able not to press their amendments and to support the instrument.

[Lord Fox]

My Lords, I thank the Minister for his response. He should not apologise for going to length. This is an important issue and it could shape the future regulation of a very important part of our national life. My noble friend Lord Teverson said that his committee had the impression that Defra did not grasp the scale of the undertaking of chemical regulation. After noble Lords’ contributions today, that will not be the case with the Minister or with Defra. All noble Lords contributed something different in setting out the problems with this statutory instrument. There are problems with cost duplication. There is a likelihood that the number of animal tests will increase. There is no assurance that the HSE has the resources or systems to deliver this.

Tied to all this is that it has been left too late. This statutory instrument is not fit for purpose, yet by running it down to the wire, by literally leaving it to the last possible moment, as my noble friend Lady Bakewell said, there is not time to replace it with something that is fit for purpose. The purpose of this debate is to set out the big issues that face this statutory instrument. This is Defra’s statutory instrument, the Government’s statutory instrument and, frankly, the Minister’s statutory instrument. I hope we never have to see it in action because I believe it to be deeply flawed and that the country would suffer. I shall not press this amendment to a vote today because I think the Minister can live with this statutory instrument in the future. I beg leave to withdraw my amendment, but I shall support the noble Lord, Lord Whitty, if he presses his amendment.

Amendment to the Motion withdrawn.