Restriction of Hazardous Substances in Electrical and Electronic Equipment (Exemptions) (Fees) Regulations 2022

Baroness Hayman of Ullock Excerpts

Tuesday 6th December 2022 Grand Committee

Lastly, I note that, although the fee will be applied now, the guidance is not ready; it is being developed to be in place by April 2023—it is promised to be ready at the same time the fee is implemented. Can the Minister say how the preparation of this guidance is progressing and whether it will be ready to be published early in the new year so that those affected can familiarise themselves with it? It is concerning that 53 of the 54 businesses involved were opposed to the change in regulations. I understand the need to recover the cost of issuing exemptions but I find the consultant’s fee for assessing applications, at £36,625, very high—as are Defra’s admin costs of more than £3,000. This is an extremely retrograde step as a result of Brexit and one that could have been avoided.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Minister for his detailed introduction to this statutory instrument. We have heard that previously, when we were part of the EU, applications around hazardous substances were dealt with in Brussels so did not attract an application fee, which is why this measure will be very new for businesses to deal with.

Much of what I want to say has been covered by other speakers but there are a few things to look at. First, there is the application fee of £39,721. The Secondary Legislation Scrutiny Committee’s report commented that it is a “surprisingly precise” figure. Can the Minister give some information on where this surprisingly precise figure came from? That would be helpful. He stressed that it has been calculated on a cost-recovery basis, with applications made between Brexit and now being covered by the taxpayer. It was good to have that clarification.

The Minister also said that the cost per business is high because of the low number of applications likely in the coming years. I understand that the information given to the JCSI said that only one application for a new exemption has been submitted since Brexit and that there are only 23 live exemptions, which may be renewed in future. The SLSC’s report states:

“Defra expects that most applications in GB will be made by international trade associations and industry organisations on behalf of a specific industry, rather than by individual businesses.”


It would be helpful if the Minister could explain where that expectation has come from and how that structure is likely to work in order to give individual businesses some kind of reassurance as to what the expectation on them is likely to be. We know that businesses have been facing supply chain issues and increased costs, so it would be extremely helpful to understand that.

On the refund of fees under Regulation 5, there is mention of partial refunds in the SI and the SLSC’s report. Again, it would be useful to understand how that works and what “reasonable costs” means in this instrument. What are considered to be reasonable costs that the Secretary of State could take into account?

The noble Baronesses both mentioned the shortness of the consultation at six weeks; that would be useful to understand. I am sure the Minister knows that I am quite interested in consultation. Best practice is 12 weeks, so I wonder why it was concertinaed to just the six weeks. The noble Baronesses talked about other areas around the consultation so I will not go into those details.

On the exemptions, it would be useful to have an example of what an exemption is and whether it is possible for a business to move away from the use of hazardous materials. Is that something that certain businesses could do? If that is the case, is Defra able to support or give advice to businesses that want to do that? I think that would be quite helpful.

Finally, on Northern Ireland, I completely agree with the points made about the potential loophole. I ask for reassurance on exactly how that will work with Northern Ireland. It is a bit concerning if that does not work as smoothly as expected.

[Lord Benyon (Con)]

I thank noble Lords for their valuable contributions to this debate. I will address the points that have been made.

The noble Baroness, Lady Bakewell, asked why the fee is being introduced when so many respondents to the consultation did not support it—a point made by both other speakers as well. If I am in business and not facing a cost that is being picked up by somebody else, and I am asked whether I would like to pick it up, I am likely to say no. I am not surprised that they did not want to do this, but there are two reasons for doing it. One is to relieve the poor, overburdened taxpayer from picking up the cost of this. The second is to drive behaviour change and to drive companies to look at the alternatives where possible; I will come on to talk about that. I assure the noble Baroness that introducing the fee is entirely consistent with the Government’s Managing Public Money principles and is based strictly on a cost-recovery basis. It is also worth noting that charging is common practice in circumstances in which industry is required to apply for registrations, authorisations and licensing to comply with regulatory requirements.

Existing guidance on how to submit an application for an exemption is available on GOV.UK and will be updated to reflect the requirement to pay an application fee well in advance of the April 2023 date when the fee will be introduced. I assure the Committee that in granting exemption applications, the Government are not acting to constrain the development of alternative, less harmful substances. A fundamental requirement in considering an exemption is to do a detailed technical appraisal of substitute substances. In circumstances where an application is granted, it will be done for a time-limited period only.

I will address some of the other points. A short consultation was required to ensure that this statutory instrument could be laid using powers that expire at the end of this year, using the EU withdrawal Act. While it was short, key stakeholders were contacted and encouraged to respond. I suspect the noble Baroness and I were on the same side in the referendum, but I can assure her that this gives more accountability for the decisions that are taken. When I was last at Defra, this would just have been rubber-stamped. It would come have from the Commission and we would have had no say over it. At least we can now drive standards and do things in the right way. I hope that responds to the first and second points made by my noble friend Lady McIntosh.

The points raised by the Secondary Legislation Scrutiny Committee are important, but I reiterate that there is no loophole. Products placed on the Northern Ireland market must comply with the EU ROHS and EU exemptions. Unfettered access means that such products can then move freely into Great Britain. They are not required to submit a GB exemption application, so there can be no loophole in avoiding paying the necessary application fee. I hope that satisfies the Committee’s concerns.

Points were made about the REUL Bill. Ministerial colleagues and I are in the process of analysing Defra’s REUL stock and determining what should be preserved as part of domestic law, as well as REUL that should be repealed or amended. This work will determine how we use the powers in the Bill and, therefore, inform assessments of the Bill’s impact.

It is important that we consider whether recognition of exemptions in other jurisdictions with similar ROHS regulations to ours could work. There is no guarantee that we will proceed even after that assessment, but any proposal to proceed will be subject to consultation. It is therefore sensible to proceed now on the basis that no alternative to the current arrangements will be in place.

A number of people asked questions about the fees. The fee will be £39,721, as I said. This is made up of the technical consultant’s fee of £36,625 plus £3,096, which covers the cost of other administrative tasks such as publishing the consultation. The fee will be payable from April 2023. Exemptions last up to five years, or seven years for medical devices such as those mentioned by the noble Baroness. Exemptions are granted to products rather than to the applicant. This reduces the impact on business because, very often, the applications are made by trade bodies and huge multinational companies for which this figure is loose change down the back of the sofa. For an SME it would be a substantial cost, but that cost is very likely to be picked up by a whole range of different SMEs operating together through a trade body.

Since January 2021 we have received two applications for exemptions for Great Britain.