Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018

Baroness Hayter of Kentish Town Excerpts

Tuesday 15th January 2019 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I think everyone else on our Benches has gone away to celebrate, and we will join them soon. While thanking the Minister for setting out the reasoning behind these regulations and their purpose, I find it deeply regrettable that we have come to this: having to legislate to take away the protection of consumer rights simply because the Government have so miserably failed to negotiate a withdrawal agreement acceptable either to this House or—as we have now learned—to the other place.

Ministers are therefore threatening to crash out of our near half-century relationship, with all the rights and benefits that have accrued to consumers over that period—threatening no deal in an attempt to persuade MPs to vote for their inadequate deal. As we have seen, it did not work.

Meanwhile, the Government pursue these no-deal regulations, each and every one of which does two things. First, they show how much we have gained from and depend on our close working relationship across the EU, not only in trade but in all those associated areas, be it the recognition of legal judgments or—as in this case—the cross-border protection of consumer rights. It is an issue which, sadly, has been lacking throughout the Government’s approach to Brexit. We will have a longer debate on that tomorrow, when the Minister will also be replying, so perhaps I will just give him notice of one of the things I shall say then, which is to note the shocking failure of Ministers over two years to engage with consumer bodies and their representatives during their process of considering Brexit.

Secondly, the SIs do not only show how closely we have been intertwined with the EU; they are also testament to the disaster any no-deal exit would bring, because, literally overnight, long-standing protections would disappear. Consumers would feel this more than anyone else because it will happen immediately. The suggestion has been made, not by the Government but by some of their supporters, that somehow it would be a good idea to just wave through imports at our borders, particularly at our ports, to save congestion in Kent. That may be fine for the roads of Kent, but waving throughout unchecked lorries will mean we very quickly see shoddy, fake or unsafe goods in our shops, because we will lose all the protections that prevent that happening, and it will be consumers who pay the price.

So the regulations before us are a pitiful example of what will face us should we crash out on 30 March. As we have heard, what they show is that, with no deal, key consumer protection enforcement bodies—particularly trading standards and the CMA—will no longer be part of that absolutely essential cross-border network whereby rogue traders, rip-off companies, cartels and the makers of shoddy goods and services can be brought to book, as they can at the moment, by sharing intelligence and by pan-EU enforcement.

No matter what the Government say, consumer protection will be weaker. All these mechanisms have allowed trading standards bodies to alert their professional equivalents across the other 27 countries in the EU about unsafe products or traders, and to ensure that evidence found in one place can be used in another jurisdiction. That means that courts in one country can tackle a business located elsewhere, which is often the case when a consumer is buying something made in a different country. But under no deal—the outcome this House found unacceptable last night—our domestic enforcement authorities will no longer benefit, on behalf of consumers, from all those reciprocal arrangements and rights now granted under EU law. That is a big loss for our consumers.

But strangely and inexplicably, because of this self-injury to our consumers, the Government have decided, via these regulations, to similarly harm EU consumers by ending the requirement on our enforcement bodies to help other EU states in the interest of their consumers. They have made it voluntary rather than a requirement. That was never necessary. No rationale was given for this. Just because we have chosen to harm our consumers by leaving, I do not see why we are also willing to harm consumers in the other countries.

Furthermore, that was a policy decision. It was not automatic because of our exit. It was a policy decision to end our assistance to consumer bodies elsewhere, and therefore it was absolutely correct that our scrutiny committee insisted on this being an affirmative measure, because it is a policy and not an automatic decision. I hope there will be no further attempts to disguise policy decisions being taken by seeking to slip them through as negative orders.

Perhaps the Minister could explain the rationale for this mean-spirited decision. It is our Government—or even our people—who voted to come out, so why on earth should we make EU consumers pay the penalty? Could the Minister also explain why there has been no impact assessment for this measure? It is a vital measure for consumers and they will feel the impact, as will SMEs. They will have to do more of the checking which thus far they have not had to do because they have relied on any product coming from across the EU being safe to be sold here. Also, the cost will be paid even more by trading standards, not only because they will be hampered in their enforcement, but because they will have to do those checks on products arriving which currently they do not have to do. That should have been in the impact assessment.

Inexplicably, the Explanatory Memorandum says that the regulations will have an impact of less than £5 million. First, I do not believe it. Secondly, how on earth do the Government know without doing an impact assessment? Did they even contact trading standards to find out the impact on them of extra checks? Did they look at the costs where consumers are harmed and therefore compensation has to be paid? Did they look at the impact of enforcement taking longer when the intelligence is missing? Or is it simply that the Minister’s department does not really care too much about consumers?

In the same context, what assessment was made of the cost of the extra checks at borders once we can no longer rely on intelligence from trading standards abroad? We heard it said in the debate yesterday, “Don’t worry about the extra checks, because the checks at our border are done on a risk basis”. That means that they are done on the basis of intelligence. The moment that we take out intelligence, we lose our basis for a risk assessment, so the idea that there will no extra checks at the border is absurd. A little clarity from the Minister would be appreciated. The loss of access to these consumer protection networks is bound to be bad for consumers. It would have been more honest had the Government acknowledged this.

I have one further question for the Minister. This statutory instrument is supposedly “contingency planning” for no deal, but can he detail the Government’s intentions for the whole of the UK’s consumer regime should we leave in a slightly more ordered way with a deal? We would like to know something about the timing of the SIs that will be needed also for those circumstances.

[Lord Henley]

My Lords, I thank both noble Baronesses for their comments, particularly the noble Baroness, Lady Hayter, for reminding me that we would deal again with these matters tomorrow and that I might want to respond more fully at that stage. After considering things overnight, it might be that I deal with just a few more of the noble Baroness’s points in that debate on the report from the Select Committee—a debate which, dare I say it, will happen somewhat later than tonight’s.

The noble Baroness, Lady Burt, raised a number of questions. She started by asking how many statutory instruments were coming from the department, how many were drafted and when she would see the figure. I regret that I do not have the figure in front of me, but I think virtually all of them are now drafted and on their way through the process. I think we will be able to get them ready in time for 29 March. I look forward to discussing those and others with her, the noble Baroness, Lady Hayter, and other noble Lords as they come before us. I will continue to write to the noble Baroness or her noble friend, depending on whether I can work out who is dealing with each SI—but I am sure that they manage to exchange letters perfectly well—just as I wrote on this occasion to the noble Lord, Lord Stevenson, who no doubt passed on that letter to the noble Baroness, Lady Hayter.

The noble Baroness asked also about the EU consumer centre and what our plans were. I am grateful to her for repeating what a good job it did and saying that it will continue to operate until March 2020. At this stage, all I can say is that we have made no final decisions, but we will review that over the coming year. Again, I will make sure that the noble Baroness is kept informed in the appropriate manner.

On engagement, I can give the assurance that discussions were held with the Competition and Markets Authority, members of the Consumer Protection Partnership, Which?, MoneySavingExpert, the devolved Administrations, the Government of Gibraltar, the Crown dependencies and other government departments with direct responsibility for the laws in the annexe to the CPC regulation. The related competent authorities were also consulted. That engagement was as wide as is appropriate.

The noble Baroness, Lady Hayter, will be aware that it is not necessary to publish a full impact assessment for this SI because it qualifies for the de minimis exemption. The de minimis exemption from a full impact assessment applies where the expected net direct impact on businesses is no more than £5 million per year. It is also important to note that, in assessing impact, we are considering the effect of the SI in question rather than the wider impacts of EU exit. These regulations are designed to correct the deficiencies in legislation after exit to maintain the status quo as much as possible. Therefore, the expected impacts are small. To form the assessment of likely impacts, the department has engaged in informal partnership with the Consumer Protection Partnership.

[Baroness Hayter of Kentish Town]

I still do not understand how the figure of £5 million has been reached.

[Lord Henley]

I am not sure that I can give from the Dispatch Box a precise breakdown as to how we reach those figures. This is general guidance on all impacts in that we look at the effect on business; we make an estimate, and if it is below £5 million—this has been in existence for some time—we do not publish an impact assessment. That is a standard procedure. I will write in greater detail to the noble Baroness setting out how we do that.

I hope that I can say a little more tomorrow, because it goes wider than this SI, in response to the question asked by the noble Baroness about extra checks at borders. I think that would possibly be more relevant to that debate.

Finally, I will deal with the question from the noble Baroness, Lady Burt, relating to Schedule 13 infringements and how they differ from Community infringements. A Community infringement is a breach of the EU regulations and directives—specified in the current Schedule 13 to the Enterprise Act—as implemented by the EU member states. A Schedule 13 infringement is contravention of retained EU law that will form part of UK law post exit and thus will deal with breaches of national law. I hope that explains the issue. If not, I will no doubt receive a prod from the noble Baroness and be asked to write in further detail.

I believe I have dealt with the questions that relate to the instrument; others, as I have said, possibly went wider and might be addressed in our debate tomorrow, which I look forward to with enormous pleasure. Again, I remind the noble Baroness and possibly the noble Baroness, Lady Burt, who will also be speaking, I think, that we might be at a somewhat later hour, as there are two debates beforehand, both of which seem to have attracted a reasonable number of speakers. I commend these regulations to the House and I beg to move.