UK Chemical Industry: Regulatory Divergence

Alex Cunningham Excerpts

Wednesday 26th February 2020 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

I beg to move,

That this House has considered regulatory divergence in the UK chemical industry.

If we buy a car, house, cleaning products, food or clothes or visit the swimming pool or cinema, chemicals are involved in making the products we use. Chemicals are ubiquitous in our lives, and the chemical industry is a vital part of our national economic wellbeing. Chemicals are vital to the jobs of thousands of workers. Contract Chemicals is an SME in Knowsley that manufactures chemicals, and Blends is another that sells products made from chemicals. Both employ some of my constituents, whose livelihoods could be at risk if the Government do not get the chemical regulatory regime right. In the Liverpool city region, Jaguar Land Rover, Ford and Vauxhall employ thousands of workers in car production in which chemicals are vital components. Without a robust system of regulation, safety and quality will be compromised and our chemicals market will be open to the dumping of cheap chemicals from markets that do not have our high standards.

The consequences of poor regulation are spelled out in “Dark Waters”, which will be released on Friday in the UK. The film depicts what can happen to tens of thousands of people and to wildlife without adequate safeguards. In our addressing the climate crisis and moving to net zero, the chemical industry has a vital role to play in ending the use of fossil fuels, recycling plastics and finding sustainable alternatives, including for the types of forever chemicals depicted in the film.

The chemical industry employs 102,000 well-paid people in the UK, with 24,000 in the north-west alone. The industry is worth £31.4 billion in exports and £34.6 billion in imports, and its products feature in their thousands in the production of goods across the entire economy. Some 57% of those exports are into the EU. The importance of the industry around the country is also spelled out by the productivity of the sector compared with the rest of the economy. In the north-east, it is three times more productive; in the north-west, four and a half times more productive; and nationally, it is twice as productive. We cannot afford to undermine such a key part of our economy.

Chemicals are the subject of REACH—the registration, evaluation, authorisation and restriction of chemicals—the strict European-wide regulations that make sure the chemicals used here are the safest in the world and help to produce the highest quality products.

[Alex Cunningham (Stockton North) (Lab)]

My hon. Friend rightly says that REACH regulations are central to chemical production not only in this country but across Europe. Does he share my concern, and that of companies in my constituency, that without the same REACH regulations in Britain as in Europe, the movement of chemicals between countries will be inhibited?

[Bill Esterson]

My hon. Friend is absolutely right. I know he has a good relationship with the chemical industry in the north-east and has spoken many times on this subject and in support of people who work in the industry. I will come on to make the point that he touches on in more detail.

REACH regulations protect human health and the environment. In chemical regulation, the high standards for chemicals used in our manufacturing also sustain the reputation that encourages people around the world to buy British. Before the current Prime Minister took over, the Government indicated a willingness to negotiate associate membership of REACH, and that is still the preferred option for the industry. The system delivers assurance to the industry and its downstream operations, including our entire manufacturing sector, all of which uses chemicals at some stage of production.

[Bill Esterson]

My hon. Friend is absolutely right. I have been told that estimated costs of between £50,000 and £100,000 per chemical are likely if a UK REACH system is introduced in the way the Government appear to be proposing. I will cover that in more detail as well.

The Government have made clear their opposition to regulatory alignment in general, and given that UK REACH is the default option, they appear to not want to make an exception for the chemical industry. The British Coatings Federation speaks of the practical and real problems that businesses will face with such a system. For example, REACH will continue to apply in Northern Ireland at the end of the transition period, even if a separate UK-based regime applies in the rest of the UK. It is not yet clear how that would work in practice. There is obvious concern that EU and UK REACH will, in theory, apply at the same time in Northern Ireland and will contradict each other.

Let me quantify my hon. Friend’s point. BASF employs 5,000 people in the UK. It estimates that it will have to find up to £70 million to re-register all existing lines. Its alternative is not to offer many of its smaller volume products in the UK, but many are critical to manufacturing. In the car industry, an average of 1,300 different chemicals are used in the production of each vehicle. If many of those products are not available in the UK, car manufacturers will have to import them; it will fall to car companies to register the chemicals and to develop the skills and facilities for storage. This would apply to all chemicals where usage volume was more than 1 tonne per year. Registration costs of £50,000 to £100,000 per chemical are likely to apply, as the Government have confirmed. At that cost, chemical companies would find it uneconomic to continue the production or import of many chemicals. Meanwhile, car producers would find it much harder to compete with EU-located production facilities in the manufacture of vehicles destined for the EU market.

The chemical industry exports 57% of UK-manufactured chemicals to the EU27. A UK manufacturer will have to register its products to comply with UK REACH, as they are made here, and also EU REACH if they are exported into the EU. If our regulations diverge, as the Prime Minister appears to favour, and as may be required as the price of a trade deal with the United States, manufacturers would need not only to demonstrate compliance with both sets of regulations but have two production lines—one to comply with UK regulations, the other for the EU’s. The alternative is to move production to the EU for the EU-compliant product, meaning a loss of exports and jobs from the UK.

[Alex Cunningham]

Will my hon. Friend give way?

[Kate Green]

Will my hon. Friend give way?

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[Bill Esterson]

I am glad my hon. Friend mentioned the real concern about animal testing, which we can minimise currently because we are members of EU REACH, so testing does not need to be repeated in the UK. The industry has raised that as a real concern, which I will return to.

[Alex Cunningham]

Both my hon. Friends are right to raise the issue of cost. One company in my constituency is already up against it trying to making any profit at all because the regime is changing for carbon credits. The current proposals mean it will soon no longer receive the relief it currently does. That company is a supplier to other chemical companies within my constituency and elsewhere, so if it falls over and that product is no longer available, there will be a knock-on effect on many jobs across the area. Does my hon. Friend agree that this is another reason that we cannot have the divergence that the Prime Minister seems to favour?

[Bill Esterson]

My hon. Friend has explained well that the problem goes across the economy because chemicals are crucial to every manufacturing process.

I was talking about the problem of having to comply with two different sets of regulations and the impact the industry predicts, including a loss of exports and jobs in the UK. Products cross borders multiple times during manufacturing. The integrated nature of supply chains in manufacturing is a big reason why it would be difficult to manufacture in the UK for the EU market in the event of different chemical regulations.

Despite the Government’s presumption in favour of regulatory divergence in general, the Minister may want to say that the Government do not intend to change the regulations that are introduced with a UK REACH. I am interested to hear her comments on that point. The suspicion that divergence is likely has been reinforced by part 8 of the Environment Bill, which gives the Secretary of State the powers to diverge. If the Government do not intend to change the regulations, why have that in the Bill? In his speech on Second Reading this afternoon, the Secretary of State did not mention the section of the Bill that deals with regulation of the chemical industry, which is disappointing because the industry is so vital to the wider economy. Likewise it is disappointing to the industry and those who rely on it that there is no news about a sector deal for the chemical industry.

[Alex Cunningham]

Perhaps that was not mentioned because the Government have seen sense and realised that they cannot have these tremendous changes. This is about not just day one—when we might say, “We will have the same regulations on day one”—but the future regulations, because every day something changes in the REACH regime, which means one part of a process may no longer be compliant in Europe and Britain at the same time. Therefore, we need to ensure we have common regulation across the piece.

[Bill Esterson]

My hon. Friend has explained well why the industry is worried about this: sooner or later divergence leads to the problems that he and I have outlined.

Some 54.8% of cars produced in the UK are exported to the EU, so preferential access to the European market and avoiding regulatory divergence on chemicals is therefore extremely important. The automotive industry uses 13,000 chemical substances, only 1,181 of which are exclusively registered by UK companies. Many of the remaining 98,000 chemicals registered by the European REACH system could need to be re-registered in the UK. According to the Society of Motor Manufacturers and Traders, the cost to the automotive industry alone could be up to £1.3 billion. The Government have not denied those figures in their own analysis. The car industry is deeply concerned about the impact on its competitiveness and on the future of volume car manufacturing in the UK if we move away from a single European regulatory system.

UK REACH will either require access to the chemical testing data, as my hon. Friends mentioned, held by the European Chemicals Agency, or have to repeat and duplicate testing, hence the cost of registration for each substance, which I quoted earlier. Consortia of European companies own most of the data, and UK companies pay a fee for access to the data, which is held by the ECHA. Selling access to the data is a commercial decision not governed by EU data sharing rules.

The Health and Safety Executive, which is due to become the UK chemicals agency—perhaps the Minister can clarify when that will happen—will need to build its own database if it cannot access the ECHA database. According to the plans for UK REACH set out in the European Union (Withdrawal Agreement) Act 2020, basic data about the market and each substance will need to be submitted within 120 days of the end of transition, while full information appropriate to the registrant’s tonnage band will need to be submitted within two years. It took 10 years to build the ECHA database. How can that be replicated in two years, given that many companies will have to carry out testing from scratch and many importers are not specialists in the chemical industry?

Concerns have also been raised about the capacity of the HSE and the legal framework it will follow. It could either repeat the work of ECHA or rely on the work ECHA has carried out. The former would be hugely expensive, time consuming and dependent on a level of scientific expertise that may not be available. The latter could leave it open to challenge on the grounds that it should not be reliant on EU evidence and should have made its own assessment of risk. Either approach is potentially problematic.

An additional concern of the industry is that, as some registration of chemicals in REACH has relied on animal testing, a UK REACH would mean the introduction of animal testing—a point my hon. Friend the Member for Stretford and Urmston made earlier. Steve Elliot, the chief executive of the Chemical Industries Association, said

“The EU remains our biggest customer and supplier, so securing a tariff-free, frictionless free trade agreement is essential. Most crucially creating a parallel UK regulatory regime for chemicals, whilst still needing to meet the legal requirements of our biggest market place under EU REACH will, in our view, bring no commercial or environmental benefit and could put businesses and jobs at risk right across the country, including seeing a whole new programme of animal testing, something that none of us wants to happen.”

In a written answer on 4 February, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Taunton Deane (Rebecca Pow), said that UK REACH will maintain the “aims and principles” of EU REACH. In the light of the industry’s importance, is that not an argument for staying part of the current system and avoiding the problems of implementing a separate version? In a recent British Coatings Federation members survey, 90% of members expressed their fear of having a duplicate set of chemical regulations through a UK REACH and all the extra bureaucracy and costs that would bring. The BCF said:

“We need government to understand the complexity of the integrated chemicals supply chain and come up with an appropriate free trade deal to prevent—or at least minimise—substantially added costs or disruption to our members.”

I place on record my thanks to the Chemical Industries Association, the British Coatings Federation, the Chemical Business Association, the Society of Motor Manufacturers and Traders, the ADS group, the CHEM Trust, BASF and multiple trade unions, as well as the specialists of the House of Commons Library. They have all helped with this complex, technically demanding subject. They have all helped confirm just how serious the issue is for our economy and for safety, too. I hope the Minister and her colleagues are listening to their advice.

Steve Elliott of the CIA said:

“The isolationist approach doesn’t work for us. I can’t think of a member company who isn’t exporting at least 50/60 per cent of its production.”

We have to remember that most of that exporting is into the EU. ADS gave me the example of potassium dichromate, which is a crucial chemical coating that protects aircraft structures from corroding. The example makes Mr Elliott’s case: there is no viable alternative to the use of that chemical in aircraft structures. It is produced in the UK and marketed in the EU. It is registered with REACH, so if the UK is removed from REACH, the registration would become non-existent and it would not be possible to import or sell it in the EU, to manufacture the mixture or to apply it to aerospace components. That would cause huge commercial damage to the aerospace industry in the UK and in the EU.

That story is repeated many times for UK-manufactured chemicals, so what is the plan for products like potassium dichromate and for aircraft manufacturing? What is the plan for the regions that rely on the chemical industry for their productivity? What is the plan for all other industries that rely on chemicals in their processes? What is the plan for multiple cross-border manufacturing supply chains? What is the plan for exports and imports, for safety, for data analysis, for testing and scientific expertise, including animal testing, for the creation of an alternative database, or for access to the existing ECHA database? What is the plan for capacity and expertise in the HSE? What is the plan for a sector deal? Tell us, Minister, what is the plan?

[Dave Doogan (Angus) (SNP)]

I am very happy to sum up for the Scottish National party in this important debate, whose importance belies its attendance. In the first instance, I echo the sentiments of the hon. Member for Sefton Central (Bill Esterson), who secured the debate, by pointing out that little or no manufacturing takes place without almost total dependence on the chemical manufacturing sector and the regulation that underpins that—both domestically in the United Kingdom and, just as importantly, around the world.

Across all manufacturing sectors, we see the clearest indications from stakeholders, whether commercial, trade union or in processing, that we live in a world of very integrated international supply chains, and we have done for some time. They are dependent on regulatory alignment. It is also worth pointing out the amount of research and development money that goes into the chemical industry, much of it private—how that interacts with our higher education sector, the role the United Kingdom plays in that and how we discharge that role with our international partners, many of whom are in the European Union.

[Alex Cunningham]

The hon. Member mentions research and development, and we are of course dealing with multinational companies with plants all over the world. If they are going to do research and development, surely they will do that in areas where they have common regulations such as REACH, rather than in a future British chemical industry, which could be a backwater.

[Dave Doogan]

The hon. Member is right, and the risk that the United Kingdom runs in seeking to pursue some alternate regulatory framework is exactly as he sets out: industry will produce its products to be compliant with the regulation consistent with the size of the market opportunity—it is not a blanket approach. If a market is subject to a particular regulatory framework, but that market is not big enough for the industry to comply with the framework, they simply will not comply and those products will not be available in a post-Brexit, post-REACH-regulation United Kingdom.

As we roll the dice on this issue, it is important to understand the slightly rarefied position occupied by the chemical industry in the United Kingdom. It has a turnover of £56.6 billion, but a very enviable gross value added of £19.2 billion. The Government must tread carefully and pay close attention to the members within trade organisations, such as the Chemical Industries Association and others, who are very clear with their call for regulatory alignment.

We have heard an awful lot about the cost of the re-creation of some successor to EU REACH, which is as yet unspecified, but I genuinely, thoroughly believe that the point is moot. As Members have said, the industry will offshore the UK manufacturing of chemicals. Other industries within the UK that rely on the products of the chemical industry will be subject to buying from another market. That will in all likelihood be the European Union, so we will then face the farcical situation of having dispensed with REACH regulations here—which will have cost us our industry, or a large part of it—and of then being in possession of the very same standard of product purchased from the EU, just without the £56.6 billion of turnover, or a large part thereof, and the jobs that went with it. The stakes are no lower than that! Having said that, were the UK to press ahead with some parallel regulatory framework for chemicals, the resultant animal testing, as others have mentioned, would be held in contempt by society, and rightly so. It is important to bear that in mind.

The regulation and supply of chemicals is yet another area of huge complexity in that Brexit ambition. Brexit will have an impact on the chemical industry driven by changing regulatory requirements, as others have mentioned, and by other trade barriers, potentially including tariffs and quotas. The REACH chemicals regulations are but one example of directly applicable EU legislation that is not straightforward to copy across into UK law. The principal objective remains, however, to ensure that those regulations still have priority in a post-Brexit United Kingdom dynamic. That is because the regulations rely on the European Chemicals Agency and are closely tied to the needs of the single market. The UK and EU chemical industries both want trade deals to ensure frictionless trade and regulatory consistency between the UK and the EU. That points to the complex supply chains that exist for the manufacturing sector.

I am very glad that the hon. Member for Sefton Central, who secured the debate, mentioned potassium chromate. As a former aircraft engineer, I still remember keenly the sweet smell of that sticky green substance which was difficult to get out from under the fingernails. Its role in preventing dissimilar metal corrosion in aircraft is well known and vital. That had the effect of taking me slightly down memory lane.

In conclusion, as a Scottish and a Scottish National party MP, I have no hesitation in supporting the ambitions of the hon. Member. The UK is a key global player in the chemical industries just now. As far as I can tell, the only chemical company in the UK in the top five chemical companies in the world is INEOS, which has a major presence in Grangemouth in Scotland. The Chemical Industries Association also covers the pharmaceutical industry, and I am very privileged to have in my constituency of Angus an extraordinarily large and important GlaxoSmithKline plant. Nowhere does interdependence and mutual reliance on common regulation apply more than in that plant.

[Alex Cunningham]

INEOS has been in my constituency as well, but it is actually closing down a plant there; the plant has finished because it is past its use-by date. INEOS can invest billions of pounds in the middle east, but nothing in Britain at this time. For me, the main issue is what the hon. Gentleman has talked about: the integrated nature of the chemical industry. The industry is losing a key component; if there are changes in regulations over time, more and more of those parts will disappear. We will therefore be reliant on the imports that the hon. Gentleman mentioned.

[Dave Doogan]

Indeed. I am not here to defend or uphold the commercial decisions of INEOS, but what the industry more generally needs at this minute is clarity and certainty from Government, as far as that is possible. I look forward to the Minister explaining how the Government will give the industry the confidence and certainty that will enable them to invest in plants in Scotland and the rest of the UK. Those plants’ return on investment may take decades, and it is extremely important that we give them every opportunity to invest in infrastructure and jobs, with the attendant benefits that those bring to our communities.

Over and above the material contemporary considerations of the chemical industry, this issue is important for the livelihoods of many people in Scotland and in my constituency of Angus. Of course, industrial production of chemicals first began in Scotland, with the industrial production of bleach just north of Glasgow. We have moved a long way in the intervening 150 years, and I would hate for us to start moving back as a consequence of Brexit.

--- Later in debate ---

[Alex Cunningham]

I, too, welcome the Minister to her place. I hope that she will accept an early invitation to Teesside, which I extend to my hon. Friend the Member for Newport West (Ruth Jones). As a lawyer, the Minister knows that the EU REACH regulation is extremely complicated. What on earth are the impediments to simply adopting it? What is the additional flexibility that she talks about that we actually need to trade with the rest of the world?

[Victoria Prentis]

As a lawyer, I tell the hon. Gentleman that that is an extremely long and complicated question, to which I will endeavour to provide some of the answers, but not all, because, as he knows, it is a live negotiating situation. I recognise that that brings uncertainty for business—I really do—which is uncomfortable for many of us, but it is important that the country voted to leave the EU and through various—[Interruption.] The hon. Gentleman has been here for the last few years, as I have.

Through various emanations, we have reached a position where we are definitely leaving the single market and the customs union, and we will no longer participate in the ECHA or the EU regulatory framework for chemicals. I will set out what the Government’s position is in the immediate future. I ask the hon. Gentleman to accept that we do not have all the answers, but I emphasise that my door, and the door of the Minister with responsibility for the issue, will be open as we go through the negotiations this year.

[Victoria Prentis]

In many ways, the hon. Gentleman will find that we are on exactly the same page, so I ask him to listen to the rest of what I have to say. We can then discuss the position as it emerges in the negotiations this year.

As I said, we are leaving the single market and the customs union, so we need to prepare for life outside at the end of this year. Many in the sector have already started to prepare and we will help them as much as we can. First, we must create our own independent regulatory regime, which is called UK REACH, as we have heard. Hon. Members will note that that is not a million miles away from the name of EU REACH. That will ensure continuity and minimise disruption for businesses and consumers, and will give us the freedom to do things differently where we consider that in our best interest. UK REACH will be our own framework but will retain the fundamental approach of REACH, including its aims of ensuring a high level of protection for human health and the environment, and of enhancing innovation and competitiveness. We have developed transitional measures, such as grandfathering and downstream user import notifications, that address the industry’s concerns about maintaining continuity of supply between the UK and Europe.

The building blocks of REACH will all remain. Through the Environment Bill, we will make provision to allow us to amend REACH in future to ensure that our chemicals management remains fully up to date. All change will remain consistent with the fundamental aims and principles enshrined in EU REACH. There will also be a series of protected provisions that cannot be changed, such as the last resort principle on animal testing, which will be included in the Environment Bill, as has been said. The UK will, of course, continue to be at the forefront of opposing animal tests where alternative approaches can be used. We have led the way on that in the EU system to date.

I recognise the concerns that several hon. Members have raised during the debate about the UK diverging from the approach taken in the EU to the regulation of chemicals, which are obviously shared by all our stakeholders. We will not diverge for the sake of it. If we diverge, it will be done in the best interests of the UK and the environment, and of course we will take account of the impact on industry. What matters is that the decisions we take will be our own, reflecting our new autonomy. Robust scientific evidence lies at the heart of the decisions we take, and that will continue, as provided for in the UK REACH legislation. As I said, we are continuing to develop the proposals, to make sure that we take decisions transparently and with stakeholder engagement. I am keen that we go forward in that vein.

[Alex Cunningham]

I bear in mind what the Minister is saying, but it frightens the life out of me, because the regulation changes every day. I do not know how we will manage to keep pace with that in Britain. Industry will incur considerably greater costs as a result of the changes. What assistance will the Government give to chemical companies and the chemical industry as a whole to overcome the additional burden that the Government are placing on them?

[Victoria Prentis]

While I am unable to tell the hon. Gentleman exactly where we will end up, I am also unable to answer that question as fully as it deserves. If I may, I will continue to tell him where we are now. As matters progress with the negotiations, I remain willing to talk to him about specific industry difficulties, and I am sure the Department for Business, Energy and Industrial Strategy will too.

[Alex Cunningham]

Will the Minister give way again?

[Victoria Prentis]

I think I had better carry on, if the hon. Gentleman is happy.

[Alex Cunningham]

The hon. Gentleman is not happy.

[Victoria Prentis]

Well, as we have time, I will make the hon. Gentleman happy.

[Alex Cunningham]

I am grateful to the Minister for giving way. She says that she cannot answer the questions, but they are the questions that the chemical industry is asking us. We are talking about a matter of months before the changes actually kick in and affect industry in this country. That involves thousands of jobs in my constituency and tens of thousands across the country, so I am naturally anxious, and I can understand the industry being anxious as well. When are we going to get some answers?

[Victoria Prentis]

I understand the hon. Gentleman’s anxiety. What I will say to reassure him, in so far as I can in a live negotiating situation, is that we will avoid change for change’s sake. We will do our best. We are fully cognisant of the need to minimise the burdens on business. That lies at the absolute heart of all that we are doing to put UK REACH in place.

Let me give the hon. Gentleman an example. In building the UK REACH IT system, we have made sure that it will work very much like the ECHA REACH IT system, including the same software requirements and many of the processes that businesses have been using and understand. I am aware that we will require businesses to provide us with the data that supports their registrations. I understand the concern that that may not be as straightforward as they would like and may generate costs. That is why we have introduced the transitional arrangements that I mentioned earlier, which give businesses two years, starting from the end this year, to provide that information. We will keep those timeframes closely under review.

We are often asked why we need the data and why information that has already been provided to the ECHA needs to be reprovided to UK REACH. In short, we need it because we will not be able to rely on the fact that the data has already been sent to the ECHA. Registration is how a company shows its understanding of the hazards and risks of a chemical. It does not mean that the ECHA has, in legal terms, approved a chemical or endorsed it as safe. The data is necessary for any regulator, such as the Health and Safety Executive, to operate an effective regulatory regime, to understand the hazards and risks of chemicals, and to ensure their safe use. We are making sure that the HSE as the UK regulator, the Environment Agency and the Department for Environment, Food and Rural Affairs have the resources and evidence they need to ensure the safe management of chemicals and to protect public health and the environment.

With the UN projecting a doubling in the size of the global chemicals industry by 2030, it matters more than ever that the UK continues to be a world leader in the management and regulation of chemicals. Our internationally recognised scientific expertise and evidence-led, risk-based approach give us a strong and influential voice as we advocate for ambitious global action on chemicals and waste management after 2020.

I want to finish by saying something about the chemicals strategy we are developing, which will set out our priorities and approach to domestic regulation now that we have left the EU. It will be our first such strategy for 20 years. We aim to drive sustainability, circularity and innovation in the chemicals industry, while protecting human health and the environment from harmful chemical exposure. A call for evidence will be published very shortly—this spring—and we will then undertake a public consultation on a draft strategy before its final publication, which is scheduled for 2021-22. We genuinely want to hear from the industry.

[Victoria Prentis]

As the hon. Member says, the export market is very important. There are exports worth £28.3 billion, with 57% of that going to the EU and 43% going elsewhere. It is clearly important that we get to the end of our trade negotiations as soon as possible, so that certainty can be provided. He knows as well as I do that the situation is fluid at the moment, and I am unable to give him all the answers he seeks. What I can say is that we have a new and exciting chemicals strategy, on which we will be consulting.

[Alex Cunningham]

I have a very simple, straightforward question. Will we accept European REACH regulations for imported goods, or will they also have to be compliant with the UK REACH regulations? Will we just accept that products coming in are fine because they are covered by EU REACH, when we have our own independent regime as well?

[Victoria Prentis]

As a new Minister, I am not sure that I am qualified to answer that question properly.

[Alex Cunningham]

Will the Minister write to me?

[Victoria Prentis]

Yes, absolutely. I undertake to write to the hon. Gentleman with the correct answer. It is really important that we do not misspeak at this point of a live trade negotiation. I am also conscious that the matter is not directly within my brief but within that of the Secretary of State for Environment, Food and Rural Affairs, who is currently leading the debate on Second Reading of the Environment Bill in the main Chamber. I do not want to answer that question without full instructions, for which I apologise.

I thank the hon. Member for Sefton Central for securing a debate on this important industry at this critical time in the negotiations and for stressing that it is important that we do not diverge for the sake of it, and that we ensure we have a regulatory regime that works for us and fulfils all the aims we hope for, and that makes life as easy as we can for people who work in the chemical industry, including those in his constituency.

Environment Bill

Alex Cunningham Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Ways and Means resolution: House of Commons
Monday 28th October 2019 Commons Chamber

[Sue Hayman]

I agree that we need to look at such issues extremely carefully when making planning decisions.

[Alex Cunningham (Stockton North) (Lab)]

If the Government are really serious about air quality, surely it is time for them to adopt a 100% standard, to include carbon capture and storage, in any environment Bill that they may introduce, and to give our industry an opportunity to thrive and survive.

[Sue Hayman]

It is a shame that funding for CCS was stopped some years ago. If that had not happened, we might be quite a bit further ahead.

All the targets in the Bill, including the interim targets, must be legally binding, and must be set to be achieved as soon as possible. It is commendable that the Bill confirms the creation of statutory environmental improvement plans to ensure legally binding environmental targets in areas such as air, water, waste and biodiversity by 2022, but Greenpeace has pointed out that it does not contain any provisions to hold the Government to those legal commitments until 2037. Given the climate and environment emergency that we face, can the Secretary of State explain why she is allowing a delay of nearly two decades before the Bill can have any real bite?

Exiting the European Union (Consumer Protection)

Alex Cunningham Excerpts

Monday 25th February 2019 Commons Chamber

[Dr Coffey]

I am conscious of my hon. Friend’s desire to have an ongoing relationship with ECHA. As I have already set out, that is the Government’s desire, too. The Environment Agency is recruiting an extra 10 staff, and the HSE will be taking on an extra 35 to 40 people to help fulfil the functions it already undertakes today. My understanding is that we have estimated the future cost of running UK REACH to be about £13 million a year. By way of comparison, ECHA itself costs about £80 million a year to look after 28 member states. That is why we believe that we are putting in the necessary resource to make sure that the HSE, the EA and, indeed, other regulators are able to play their part.

[Alex Cunningham (Stockton North) (Lab)]

I am not terribly sure that the Minister has reassured the hon. Member for Hendon (Dr Offord). I want to know how we will ensure that the British regime will actually parallel the regulations and approvals of Europe so that we can have the trading arrangements that are critical to areas like mine on Teesside.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

My constituency is home to some of the most complex international chemical companies in the world. It is a foundation industry that depends on smooth trading arrangements with the rest of the world—not just the EU—but from what I hear from the sector, it is clear that, as others have said, significant gaps remain in this statutory instrument. That is making the companies particularly nervous in relation to the movement of chemicals between the UK and other countries for all manner of manufacturing.

The Minister seems to think that a cosy chat, sitting down with the industrialists, is going to sort this, but it will not. The Chemical Industries Association tells me that while there is a limited two-year transition to register chemicals currently manufactured in the UK, there are no transitional arrangements in the SI for chemicals currently being imported to the UK from non-UK suppliers through third party-based representatives. In practice, that would mean that existing registrations would cease to exist, bringing a halt to imports from non-EU countries to the UK manufacturing sector after March.

Another concern expressed by the CIA is that there is no level playing field for all existing registration holders. As my hon. Friends the Members for Workington (Sue Hayman) and for Wakefield (Mary Creagh) said, the current approach in the SI forces existing EU suppliers to use a UK representative, and I add that they have to register within six months whereas all other existing duty holders have two years. For one UK-based multinational company, that will affect 400 chemicals that it is importing into the UK. It will inadvertently put UK importers, including those on Teesside, at a competitive disadvantage if they are unable to obtain information directly from the suppliers to register themselves. The CIA tells me that the process could be a lot more simplified and avoid additional compliance problems if all existing registration holders, including UK representatives of EU suppliers, could benefit from the two-year transitional arrangements. I hope that the Minister will consider that transition period very seriously indeed.

The Chemical Industries Association also says that the proposed timeframes are absolutely impossible to comply with. There are various timeframes to submit information to the UK regulator—120 days, 180 days and two years—all of which are unrealistic given that EU REACH provided 10 years to register and other global REACH regimes provide a much longer timeframe with a much smaller portfolio of substances.

In particular, the level of initial information that should be submitted within 120 days goes far beyond basic. To put this into context, that amounts to over 100 pages of information, including a detailed breakdown of composition for every chemical currently being manufactured or imported into the UK. Given that the objective is to confirm that a business legitimately owns an existing registration, the initial information needs to be kept to a minimum. I am told that the alternative would be to extend the existing timeframe to minimise the impact on businesses, who will have a number of Brexit-related challenges to overcome.

This brings me to the conclusion—we in the Opposition share this view—that the SI remains unfit for purpose. When we consider how many companies, goods and jobs are affected by it, we can be more than nervous about how it fails to provide the reassurances needed by industry. I had previously raised these shortfalls with the Prime Minister after one of her many EU discussion sessions and in my speech on the EU agreement, but there were no answers from the Prime Minister or the Minister answering the debate that day, and there have been no answers from this Minister today either. It is time they came up with answers.

I really feel that the Government ought to take this away today, listen again to what the sector has to say and come back to the House with those companies satisfied that they can do business under the regime that the Minister is proposing. Anything short of that and I believe we will be in a game of riding roughshod over the concerns of some of the biggest companies in the world—companies who I fear will take their investment and jobs elsewhere, as some of them already are doing, if they are forced to live with the chaos predicted. That is not good for the chemical industry, it is not good for Britain, and it is certainly not good for Teesside either.

European Union (Withdrawal) Act

Alex Cunningham Excerpts

Thursday 10th January 2019 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

People in my Stockton North constituency voted two to one to leave the EU. They wanted to take back control, they wanted £350 million a week more for the NHS, and many had genuine and understandable issues with freedom of movement and immigration. They voted for other reasons too—they were discontent with their lives after six years of Tory austerity, and unemployment in my constituency is still double the national average. They felt ignored in a society where the rich were getting richer, poverty was, and is, on the rise, services were being cut, and they saw limited prospects for their lives to get better. Worse still, they believed that their children faced an uncertain future.

However, people did not vote to be worse off, or to see chemical and other energy-intensive industries on Teesside devastated, with a huge impact on jobs and investment. They did not vote to weaken food standards, for their own movement to be restricted, or for hard-won rights for workers to be set aside. They did not vote for a backstop arrangement to protect Northern Ireland, leaving us to abide by EU rules without influencing them for who knows how long. Yet that is exactly what they will get with the Prime Minister’s deal.

We are on the cusp of shattering the hopes of our people. If we vote for isolation from Europe with the Prime Minister’s deal, not only will we find ourselves on the outside, but we will face an indefinite period of uncertainty. If we were to find ourselves with no deal at all, we would be cast aside from our most lucrative markets, left floundering in the world, dependent on countries across the globe for trade deals, and face the prospect of surrendering our standards for everything from food to chemical manufacturing.

I am always mindful and respectful of that voting statistic from people in my constituency, but my constituents are not daft. They know that the false promises made about NHS funding, immigration, taking back control, and so many other things, will not be delivered. They also know about the controversy over the illegality of the leave campaign.

I cannot possibly vote to satisfy everyone in my constituency, from the no-deal leavers to those demanding a second referendum and many in between, but I can vote to protect them from a bad deal and from no deal. The Government are failing to deliver a prosperous deal for our country. I favour a general election or, failing that, a second referendum, which, according to my own and national surveys, the majority of my constituents now want.

My votes are also for the north-east of England, which is a huge net exporter of goods to the EU and depends on markets there for cars, chemicals and countless other manufactured goods. It also depends on the EU for expertise, grants and tourists. Much of that is starting to go wrong, as evidenced by members of the North East England chamber of commerce, whose quarterly economic survey results recently reported less international trade activity, citing Brexit uncertainty as the key reason. The region looked set for a record year of trade, outperforming 2017 in the first and second quarters of 2018, according to the chamber of commerce, but a 10% decline in exports to the EU represented a reduction of £200 million in business, dwarfing other gains.

As some Members might know, I have a long-standing interest in UK energy, having spent a large part of my career working in the gas industry. A year on from the launch of the Government’s industrial strategy and the Helm review into the cost of energy, a new report published last month by UK Steel shows that UK producers face electricity prices twice those of their direct competitors in France, and 50% more than those of German producers. Gas prices also remain high, at more than twice those of US manufacturers and three times those of Russian producers. Carbon prices have also sustained new peaks during the autumn period. In short, the cumulative impact of the cost of decarbonising energy risks becoming unaffordable for chemical businesses in my constituency. The truth is that this deal does nothing to help that and little to allay the fears of industry in any of those areas.

Ministers are also trying to replicate all manner of regulations in British law, but companies in my region—international companies—tell me that it is not good enough. One set of EU regulations, the REACH—registration, evaluation, authorisation and restriction of chemicals—regulations, are critical to my region. I have been contacted by many of the companies affected. SABIC is an international petrochemicals company and an employer in my constituency. Its chemical products and technologies are utilised in a vast number of everyday essentials, such as medicines, food, drinks, tele-communications, IT, clothing and much more. The volume of its activities, in terms of exports and imports, and the complexity of just-in-time supply chains, with multiple border crossings involved in moving raw materials to finished products, mean that any disruption will adversely affect the competitiveness of its business and the potential for future trade and investment. That is industry telling us that we cannot simply trust that things will work out and that we can go it alone. Industry employers—the people who pay the wages of millions of people—are saying that this is a problem.

By voting against this deal and against a no-deal Brexit, I am standing up for my constituents and their industry. If the Government cannot secure a deal that has the confidence of Parliament, and if Parliament cannot persuade the Government to change tack and seek a different kind of agreement, based on a strong customs union and other links to guarantee trade, investment, jobs and people’s rights, we should either have that general election or return the matter to the people in a second referendum.

Oral Answers to Questions

Alex Cunningham Excerpts

Thursday 25th January 2018 Commons Chamber

[Dr Coffey]

When the Government made the decision to have a six-year plan for funding, they dramatically changed the situation for householders and businesses. The decision allowed the Environment Agency to have long-term plans instead of having a year-to-year hand-to-mouth existence. The hon. Lady should welcome the fact that we have that in place, and we will be working on future budgets at the appropriate time.

[Alex Cunningham (Stockton North) (Lab)]

7. What steps he is taking to safeguard UK food safety and animal welfare standards in future trade deals.

[The Minister for Agriculture, Fisheries and Food (George Eustice)]

The Government are proud of the high food safety and animal welfare standards that underpin our high-quality Great British produce. We have no intention of undercutting our own reputation for quality by lowering our food and animal welfare standards in pursuit of a trade deal.

[Alex Cunningham]

On that basis, then, does the Minister know whether his boss, a former Education Secretary, would be content to serve our schoolchildren American chlorinated chicken?

[George Eustice]

The point I would make to the hon. Gentleman is that, when we leave the European Union, the withdrawal Bill will bring across all existing EU regulations, including those on chlorinated chicken. As my right hon. Friend the Secretary of State has said many times, animal welfare is the issue here, and the issue of chlorinated chicken can sometimes mask animal welfare concerns.

Air Quality Strategy

Alex Cunningham Excerpts

Monday 24th April 2017 Commons Chamber

[Andrea Leadsom]

My hon. Friend makes a very good point. It is interesting that several of Gordon Brown’s and Tony Blair’s advisers have come out in recent months to say that they were wrong to encourage the uptake of diesel vehicles to the extent that they did. Even the shadow International Trade Secretary has admitted that

“there’s absolutely no question that the decision we took”—

on diesel—

“was the wrong decision.”

This Government, as ever, are trying to clean up the mess that was started by Labour.

[Alex Cunningham (Stockton North) (Lab)]

Emissions from industry are a major contributory factor in poor air quality, but great strides could be made to improve air quality in areas such as Teesside if the Government backed carbon capture and storage. We have been promised a Tory policy on that since the Tories ditched the funding two years ago. When will we get it?

[Andrea Leadsom]

As a former Energy Minister, I can assure the hon. Gentleman that we have always been clear about the fact that carbon capture and storage will play a part in our future plans, but that has no impact on the NO₂ plan that we are talking about today.

Oral Answers to Questions

Alex Cunningham Excerpts

Thursday 2nd March 2017 Commons Chamber

[Dr Coffey]

Biosecurity is one of the key elements for the agencies at our borders, and they are proactive in trying to identify risks and threats coming into this sector. That is why we will always encourage people to buy trees grown in this country.

[Alex Cunningham (Stockton North) (Lab)]

7. What recent assessment she has made of the potential effect on food prices of the UK leaving the EU.

[The Minister of State, Department for Environment, Food and Rural Affairs (George Eustice)]

The main drivers of changes in food prices are energy costs and exchange rates, and those forces affect all countries, whether or not they are members of the EU. In 2008, there was a steep spike in food prices, which continued to rise until 2014. Since 2014, food prices have fallen by 6%. Despite the depreciation of sterling last summer, retail food prices have remained relatively stable, with an overall fall during 2016 of 0.5%.

[Alex Cunningham]

Large numbers of people in my constituency are in work, but they are still in poverty. They are feeling the effects of increases in food prices over recent months. Given that they are so dependent on cheaper EU food products, what will the Minister do to protect them in the longer term?

[George Eustice]

As I said, the facts do not bear out what the hon. Gentleman says. Food prices have fallen by 0.5% over the past year and by 6% since 2014. We monitor the situation closely. The annual living costs and food survey closely measures the poorest households in particular and how much they spend on food, and the situation has remained remarkably stable over the past decade.

Oral Answers to Questions

Alex Cunningham Excerpts

Thursday 5th May 2016 Commons Chamber

[Elizabeth Truss]

I congratulate my hon. Friend on his campaign. Food safety standards are one of the reasons why British food is so respected around the world, and our exports are growing because people respect the work of the Food Standards Agency. It is important for consumer confidence that we have transparency in the safety of food, and I look forward to hearing more about my hon. Friend’s discussions with the Department of Health.

[Alex Cunningham (Stockton North) (Lab)]

The Secretary of State will be aware that our largely foreign-owned water companies made £2.1 billion profit in 2014-15 and paid out £1.8 billion in dividends, but fell well short of paying full corporation tax. She will also be aware of the complicated structures that the companies operate, which can bamboozle us all. Does she agree that the expected water Bill to introduce competition into the domestic market could be used to ensure that companies are more open and transparent, and pay more tax in the UK?

[Elizabeth Truss]

We are introducing further measures to improve competition in the water industry and to carry on driving efficiencies. Under the Labour Government, water bills rose by 20%, whereas Ofwat’s most recent decision will lead to a fall of 5% in customers’ water bills.

[Alex Cunningham]

I had hoped that the Secretary of State would have proved a greater water, consumer and taxpayer champion, so I will give her a second chance. Water UK, which represents the water companies, told the weekend media:

“Water companies are also providing more help than ever before for customers in vulnerable circumstances including social tariffs and other schemes to reduce bills.”

She will know, as I do, that such schemes are arbitrary and variable. Does she agree that the next water Bill could provide an opportunity to introduce a fair scheme for all vulnerable customers?

[Elizabeth Truss]

More social tariffs are being introduced right across the country, but the key point is that everybody is seeing a reduction in their water bills overall, because we have a good regulator and an efficient industry, and we are introducing further competition.

Oral Answers to Questions

Alex Cunningham Excerpts

Thursday 17th March 2016 Commons Chamber

[Elizabeth Truss]

I pay tribute to my hon. Friend for the work he has put in to make the case for Calderdale to receive this funding. I saw for myself the devastation that had been caused by the extreme weather over the Christmas period. We are investing an additional £35 million. At the end of May, there will be a report on the Mytholmroyd defences. Then, in October, we will produce a full plan for Calder Valley outlining the timescales and exactly which schemes are part of this.

[Alex Cunningham (Stockton North) (Lab)]

The Government finally gave in to pressure from Labour Members and will apply to the EU solidarity fund. As the Secretary of State said, yesterday the Government announced additional funding that goes some way towards compensating for huge cuts in flood defence spending in previous years. However, will any of this money be used to replace the 50% cut in DEFRA’s funding of crucial research on flood forecasts, warnings and defences, demonstrating that the Secretary of State understands the importance of up-to-date evidence in developing our flood defence plans?

[Elizabeth Truss]

Let us be absolutely clear about flood defence spending. Between 2005 and 2010, £1.5 billion was invested. In the previous Parliament the figure was £1.7 billion. In this six-year programme it is £2.3 billion, and we are adding an extra £700 million because of the extreme weather we are seeing. Under the previous Labour Government, nothing like that amount was invested in our flood defences.

Welfare of Young Dogs Bred for Sale

Alex Cunningham Excerpts

Tuesday 8th March 2016 Westminster Hall

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) on securing this important debate. She and others have put a powerful argument about the need for change. Although we know that activities in this area are currently subject to consultation, I hope to hear at least some encouraging noises from the Minister in answering the debate to show that he recognises that need.

Animal welfare issues always attract a great deal of support among the people we are here to represent. We have heard about the problems of unregistered, unauthorised and unlicensed dog breeding. Colleagues from across the House have put forward many excellent points that are worth emphasising. The hon. Member for Southend West (Sir David Amess) referred to our many past debates, but was sure that this one would be groundbreaking. I leave him to judge that, but he demonstrated great confidence that the Minister would put an end to what he called the dodges used by the unscrupulous to get around the law. We will hear later what the Minister has to say.

My hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) reminded the House of the need for action across the UK, and rightly placed the challenge at the door of the hon. Member for East Kilbride, Strathaven and Lesmahagow and the Scottish Government to use their powers in that area. Others referred to other delegated responsibilities. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) took the opportunity to promote the benefits of EU membership and outlined how European legislation protects animals. Perhaps the Minister, who I believe is in favour of leaving, will tell us what work he is doing to ensure that animal welfare will retain those rigorous controls if we leave the EU.

The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) littered her speech with puns—I will just leave that there. My hon. Friend the Member for Hyndburn (Graham Jones) questioned whether we are still a nation of dog lovers, but also made the point that there is insufficient information for buyers out there in the marketplace. I hope the Minister will comment on that.

I was stunned by the size of the trade that we are discussing and horrified by the content of some of the briefings from animal welfare organisations. The hon. Member for East Kilbride, Strathaven and Lesmahagow rightly paid tribute to such organisations. The briefings outline how some dogs are effectively bred to death, resulting in the birth of weak dogs, themselves likely to face suffering and even abandonment.

The RSPCA tells us that as many as 1.9 million puppies are traded in the UK each year. That number is driven by factors including fashion, family and friends. I am sure that hon. Members across the House will have had substantial numbers of contacts from constituents angry about what is happening. I agree that it is appalling that the latest fashion can drive overbreeding and suffering for dogs, or any other animal for that matter. Steep demand creates a market for puppies that often focuses on small numbers of popular breeds, such as Shih Tzus, labradoodles or pugs. As demand increases, prices rise and the unscrupulous enter the market on a huge scale. The puppies to satisfy that demand come from a vast array of sources both within the UK and further afield. Breeding practices and welfare standards vary enormously during the rearing, transport and sale of such animals.

Sadly, one upshot of this situation is that thousands of animals end up being mistreated, with many developing health problems and being abandoned each year. Institutions such as Battersea Dogs & Cats Home, along with the rescue centres run by organisations such as Dogs Trust, see the sorry results of this growing problem on a daily basis. They are being left to care for the dogs, to rehome them or to take the decision to end their lives.

One issue of particular concern is the ease with which breeders, dealers and traders can advertise and sell puppies, not to mention an array of other animals, online. We do not have to look very hard to unearth some shocking examples of animals being purchased over the internet that have been cruelly mistreated after being acquired by abusive owners. The RSPCA tells me that it has received over 3,500 calls about puppy farms in the last year—a 122% increase on just five years ago. Many were from people complaining that their puppies had developed illnesses after they had been bought, and of those calls where the point of sale was noted, almost nine out of 10 of them involved an internet advert. That is backed up by data from the Kennel Club suggesting that as many as 20% of puppies bought from pet shops or directly over the internet, where many so-called farmed puppies are sold, will suffer from parvovirus and other potentially fatal diseases, which can cost up to £4,000 to treat. That represents an incidence rate roughly four times higher than among puppies from other breeders.

That leads me to an issue that has been touched upon briefly this morning already, but is worth mentioning again—the suspected illegal puppy trade from Ireland and continental Europe that supplements the legal movement of puppies. Estimates of the number of puppies born to licensed British breeders stand at just 70,000, with the Kennel Club registering around 250,000 puppies each year and rescue organisations rehoming roughly the same number, so there remains a significant shortfall to meet the demand. Inevitably, the remainder are imported or come from unlicensed breeders. Dogs Trust has noted a huge increase in the number of puppies being brought into the UK for sale, particularly from eastern Europe. Other hon. Members have already mentioned this in some detail, but Dogs Trust also says that it has identified a 61% increase in the number of dogs entering Britain in the 12 months after the introduction of the pet travel scheme in 2012, with the number arriving from Lithuania and Hungary between 2011 and 2013 rising by 780% and 633% respectively, and those figures only account for the dogs that were actually declared.

Although some unlicensed British breeders, including many of those registered by the Kennel Club, will sell only one litter a year, other litters will doubtless come from large-scale commercial breeders for whom animal welfare is often only of secondary consideration, if it is considered at all. As we have already heard, this backstreet breeding has much in common with puppy farming. As the RSPCA has highlighted, these practices, although frequently hidden behind closed doors, are alarmingly commonplace across the UK. The mothers often live miserable lives in sometimes squalid conditions and are forced to produce litter after litter so that their puppies can be sold for easy money. Exhausted and under-socialised, these dogs are abandoned once they have served their purpose.

Although it is not our primary concern here today, it is none the less important to recognise that such trade, based on cash transactions, could be costing the UK millions of pounds each year in undeclared income. A recent European study found that the trade in cats and dogs was worth €1.3 billion annually in the EU, with 10% of the trade coming from breeders who each breed more than 200 dogs annually. A ring of puppy dealers in Manchester who were uncovered by RSPCA investigations were found to be earning £35,000 a week—more than £1.8 million of undeclared income annually. A separate investigation estimated that a different dealer was earning £200,000 a year importing puppies from Ireland into Scotland.

It is to be welcomed that the Government are working with the Pet Advertising Advisory Group, which, in co-operation with several internet sites, has agreed a set of minimum standards for animals sold online. Indeed, I understand that as many as 130,000 inappropriate adverts have been removed as a result of this code, which is undoubtedly good news for animal welfare. However, the practices of puppy farming and backstreet breeding still exist, along with the various welfare problems with which they are inherently associated. I would therefore be interested to hear what actions the Minister is considering taking to widen the uptake of the PAAG’s code of conduct and what measures are being examined to further strengthen these minimum welfare standards. At the same time, I would also like to hear what steps are being considered to better enforce higher welfare standards and to better target enforcement actions across the board.

As many Members present this morning will be aware, the Government are currently reviewing animal licensing schemes, including for the sale of pet animals, with a consultation running until the end of this week. A couple of months ago, we had a debate in Westminster Hall about the trade in exotic pets—pets sold to people who were ill-equipped to care for them. The Minister was clear in his resolve on that occasion to take action on that particular issue. I recognise that today the Minister may not able to pre-empt the responses to the consultation exercise and that it would be unwise for him to commit to decisions without a thorough consultation and an evidence base in place. Nevertheless, I would like to hear his current thinking on the steps that could be taken to drive up standards and drive out unregulated breeders and dealers, in order to improve and safeguard animal welfare. I challenge him to tighten licensing requirements to achieve those goals.