Brexit: Consumer Protection (European Union Committee Report)

Baroness Hayter of Kentish Town Excerpts

Wednesday 16th January 2019 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I too thank and pay tribute to my noble friend Lady Kennedy for her committee’s report and for opening today’s debate. It has been a little unnerving, as it has exposed both the scale of the problems likely to be faced by consumers—even with a deal, let alone after a crash-out—and the paucity of the Government’s response; “platitudes” was the word used by the noble Lord, Lord Bilimoria.

I start with my regret about how the Government have disregarded consumers over the past two years, failing to engage properly with consumer bodies and representatives. I am sure that the Minister has been briefed that, as early as 13 February 2017, I had cause to write to his predecessor at the department, the noble Lord, Lord Prior, about the lack of meetings on Brexit with consumer representatives. Given that lack of engagement, on 22 March 2017, the chief executives of Citizens Advice and Which?, together with Martin Lewis of MoneySavingExpert.com, wrote to the Prime Minister stressing the importance of consumers to the economy and calling for a,

“cross-Government high-level working group focused solely on securing the best possible deal for UK consumers”.

Sadly, that never happened—and, despite my umpteen Written Questions, there has been no improvement.

Indeed, the last letter I had from the noble Lord, Lord Callanan, on 13 November, supposedly set out Ministers’ meetings with consumer groups. But when I looked, I saw that the list of 27 included discussions with the FCA, Ofcom, the BSI and some finance companies, as well as meetings with the CAB unrelated to Brexit. That is a poor record. In fact, there has been precious little involvement throughout the process, which is probably partly why the problems outlined today have been allowed to fester.

It is hard to know where to start, so great is the impact of leaving the EU on consumers, where, as we have heard this evening, the raising of standards and their effective enforcement have helped protect British consumers. Just as we can buy goods made in the EU, confident in the knowledge that they meet recognised standards, so too can our enforcement bodies—the CMA, trading standards and the police—share intelligence with equivalent bodies across the EU, while court judgments here can be enforced there and vice versa.

As we heard from the noble Baroness, Lady Burt, we touched on consumer rights enforcement last night. However, we did not mention that the local enforcement bodies—trading standards—have been halved since 2010, as the noble Baroness, Lady Burt, and my noble friend Lady Kennedy noted. CTSI warns us that it will be exactly those front-line trading standards which will have to unpick the uncertainties after exit and of course will have to carry out far more checks once we can no longer rely on safe products arriving from the EU. So will the Government now provide trading standards with the resources they need, as pressed by my noble friend Lord Anderson? Will they take steps to ensure that our enforcement agencies can continue participating in those EU consumer networks?

Half of the dodgy non-food products reported to RAPEX—the EU rapid alert system—concern motor vehicles. This is clearly serious, as enforcing standards is essential for road safety. However, the Government have not been clear on how they will ensure that cars do meet standards, given that eight out of 10 imported cars are from the EU. REACH, RAPEX and ANEC all facilitate data sharing, policy formation and enforcement. Loss of UK membership—and indeed, leadership, as my noble friend Lord Judd said—of these bodies will be drastic. It would be particularly sad in the case of ANEC, which represents consumers to the standard-setting bodies CEN and CENELEC—a point raised by the noble Earl, Lord Kinnoull. The chair of ANEC is a British consumer champion, Arnold Pindar, and it will be sad for ANEC as well as ourselves if the UK no longer participates. I have of course written and asked questions of Ministers about any ongoing role for the UK on ANEC—but they have gone unanswered.

Products will obviously pose a risk but so, too, will food safety. There is an immediate threat to food prices in the case of no deal, because tariffs will be imposed and a third of our food comes from the EU. There is also a threat to food safety, because outside of the European Food Standards Agency there will be reduced intelligence sharing and joint safety assessments. As I warned last night, the inane proposal that we just wave through lorries at entry ports in order to avoid road congestion is simply an open invitation for out-of-time or improperly labelled food products. So perhaps there will be more horsemeat in our lasagne and, if Mr Fox gets his beloved US trade deal, we can look forward to chlorinated chicken.

However, it is not only food that will be more expensive, as Which? has warned. In a no-deal exit, tariffs will be imposed on a range of goods, adding pressure to families already struggling with the cost of living.

While the focus of what we looked at was obviously consumers in the UK, the challenge of a no-deal exit for foreign travel will be enormous, let alone for the 1 million Brits already living in the EU who might suddenly find that they will need to take a driving test to get a Spanish or French driving licence once ours is no longer recognised beyond a holiday stay. Holidaymakers may need to revert to the old green card proof of insurance—which I think all of us in the House are old enough to remember—if driving abroad. We might also lose compensation for cancellations and delays.

I first wrote to the noble Baroness, Lady Sugg, on 5 February last year about whether UK citizens on an EU airline from a third country, or a UK citizen on a UK airline from a third country to an EU state, would still be covered by EU consumer rights legislation. Sadly, I have received no satisfactory reply and, since then, the threat of no deal has made compensation for any delays to or from the EU even less likely. Therefore, will the Minister set out the current position on this in the case of no deal?

As serious for travellers is that with no deal we will lose the EHIC, the European Health Insurance Card. Not only will that mean that our easy access to medical treatment will be at risk; older consumers—again, looking around the House—or those with pre-existing medical conditions will face real challenges in getting health insurance for travel in the EU. Can the Minister set out the Government’s plans to ensure that holidaymakers will still be fully covered across the EU in the case of no deal?

The UKECC, which everyone in this House will know stands for the UK European Consumer Centre, handles 16,000 cases a year and is partly funded by the European Union’s consumer programme. Perhaps the Minister can confirm the arrangements that his department is making to continue its role after March.

The Government’s own no-deal consumer rights paper fails to outline how consumer rights will be affected when buying from EU businesses. Indeed, there is a woeful lack of detail on how rights will be impacted, especially as the redress schemes will disappear. In fact, I maintain that UK consumers will simply have far less protection. It would perhaps have been a little more honest if the Government had made that explicit in the paper they published and had made some suggestions about how to mitigate the risk to consumers. Astonishingly, although the Government’s report warns businesses selling into the EU that they should keep apprised of future changes in EU regulations, it fails to offer any advice or support on how to achieve this. Both businesses and consumers must be updated by the Government, so some help on that would be of assistance. It is clear that the Government are not doing enough with either consumers or businesses, and that is clearly causing anxiety. Having listened to the Government’s radio ads, they are really content-empty, probably causing less rather than more clarity.

The recent Which? survey found that nearly two-thirds of the over-65s are worried about Brexit. Even among the 35 to 64 age group, there has been a dramatic rise of 25 percentage points since September 2016, with its “Brexit worry figure” now at 61%. Is it any wonder that consumer spending in December was down 1%—the biggest decline for over a year?

This House will recall that we passed an amendment to the withdrawal Bill to retain the Charter of Fundamental Rights, referred to by my noble friend Lord Cashman. A part of our thinking when we passed that was prompted by Article 38, ensuring,

“a high level of consumer protection”.

In sweeping away this objective in the way the Government have sought to do, I fear that they are sacrificing consumers on the altar of Brexit. It is a sad day after nearly half a century of improving consumer rights.

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

My Lords, I join other speakers in offering my congratulations to the noble Baroness, Lady Kennedy of The Shaws, on chairing the EU Justice Sub-Committee and on producing this report. I also congratulate her on chairing what the noble Lord, Lord Anderson, described as a happy committee. I congratulate, too, on all their work the noble Lords, Lord Anderson, Lord Judd and Lord Cashman, and the noble Earl, Lord Kinnoull, as I do the members of the committee who are not able to be here. When she goes away, the noble Baroness will, if nothing else, have the praise of her noble friend Lord Judd, who described her as someone who had views, and I am sure that all of us would echo that. All of us who have known the noble Baroness for some time know that she is certainly somebody who has views.

It is my pleasure, indeed my joy, to respond on behalf of the Government—it is late but we will, I hope, be finished by 10 o’clock. I welcome the focus of the committee, which has been on consumer protection. I am grateful to the noble Baroness, Lady Burt, for emphasising the very high standard of consumer protection that we have in UK law. It is useful to point that out. Maintaining and enforcing this protection effectively remains a government priority as the UK withdraws from the EU.

The report was published in December 2017, which, I accept, is now quite a long time ago. The Government responded in a timely fashion in February 2018, almost a year ago. I will not go through the response produced by my colleague Andrew Griffiths at that time. It is now on the record and has been referred to in the debate. I can only apologise for the fact that it does take time for some of these reports to get debated. It might have been the noble Lord, Lord Bilimoria, who said during this debate or the previous one that we have had time and should perhaps have used other evenings for debating some of these reports. These are matters beyond my pay grade, and for the usual channels. I apologise, but we are having the debate on this occasion.

What has been happening this week will not have escaped noble Lords. My noble friend Lady Williams referred to the old adage that a week is a long time in politics—this week somewhat longer than others, even though it is only Wednesday. In the context of this debate and the timing of the EU exit process, obviously things change; there are many questions to be answered on what will happen next. I am unlikely to be able to address them all in detail during my 20 minutes or so of winding up. What I can say is that the withdrawal agreement still offers a time-limited implementation period during which UK consumer protections based on EU law will be retained; this meets our main aim of an orderly Brexit delivering the stability and continuity that consumers and business both need and demand.

The terms of the future relationship will continue to be a matter—dare I say it, as colleagues have done on earlier occasions—for negotiation. We are aiming for high levels of cross-border co-operation on consumer issues as part of our new relationship with the EU. As a responsible Government, we continue to prepare proportionately for all scenarios. In order to minimise disruption, our preparations for a no-deal scenario are focused on maintaining continuity in the short term for businesses and citizens; for example, the Government have committed to funding the European Consumer Centre for at least one year in the event of a no-deal exit. Consumers will be able to contact this service for help and advice until at least March 2020. We have also progressed legislation under the withdrawal Act to ensure that consumer law will continue to function effectively after exit day.

As the Government made clear in our written response, we recognise the importance of effective cross-border enforcement co-operation and information-sharing systems in protecting consumers. I can reassure the House again that the Government are fully committed to negotiating the best possible deal with our partners to deliver this. We want UK consumers to be able to buy with confidence from traders in the EU, and vice versa. The way that consumer protections apply when buying cross-border in future, and how reciprocal arrangements would work, are a matter for the negotiations. The political declaration on the framework for the future relationship sets out that the UK and EU will work together to safeguard high standards of consumer rights.

I shall say a little about national regulatory and trading standards bodies. On the role of national regulators, the Government are working closely with stakeholders across the consumer protection landscape to ensure that enforcement remains effective after EU withdrawal. We work hard to make sure that national, regional and local enforcement is joined up. National Trading Standards supports its local colleagues in sharing intelligence and handling complex or wider-ranging issues that span local authority boundaries. The Government have also set up the Consumer Protection Partnership, which helps enforcers and consumer advice groups to work together to pool information, identify new issues and make the best use of their resources.

On funding, about which the noble Baronesses, Lady Burt and Lady Hayter, and the noble Lord, Lord Anderson, all expressed some concern, it is important to be clear about the different funding streams. Local authorities are responsible for their own finances and recruitment, and are accountable to their local electorate. That means that spending and resourcing decisions for individual trading standards are a matter for each local authority, and they will determine their own priorities. In addition, two national bodies, National Trading Standards and Trading Standards Scotland, have responsibility for prioritising and co-ordinating cross-local authority boundary enforcement. Combined funding from my department for those two organisations is just over £14 million per year in 2018-19, enabling serious regional and national level breaches of consumer law to be tackled effectively.

[Baroness Hayter of Kentish Town]

We were discussing not the national issues but rather local trading standards having to check local products. I think the Minister is saying that although there will be more checks, they are not going to make any more money available.

[Lord Henley]

My Lords, I have given the amount of money that will be available from central government for National Trading Standards and for Trading Standards Scotland. Obviously, as I made clear, other matters are a matter for local authorities.

I turn to engagement with stakeholders. We have continued to engage regularly with consumer groups, despite what the noble Baroness had to say, and we will continue to do so; we have recently had two ministerial round tables. The noble Baroness said that I would come with a briefing setting out a long list. She has received a letter containing our meetings with the appropriate authorities and she seemed to imply that most of those meetings were not adequate. She is right: I have come with a long list. I am not going to read through it all, partly because—I have to admit that this is my own incompetence—I see that the list that I have come with starts at the beginning of 2018 but only goes up to June 2018. There will be many more going beyond that.

The point that I wanted to make is that this is not just a list of Ministers from my own department, although they appear as well; there are Ministers from other departments such as DExEU, the DWP, Defra, the DfE and DCMS. Even the Treasury has been gracious enough to see people. I am sure that that will continue. I feel that we have engaged and will continue to engage in order to ensure that there is the appropriate protection in the right way and that we listen to everyone’s concerns.

I shall deal with some of the specific concerns raised in the course of the debate, starting with those raised by the noble Earl, Lord Kinnoull. I am grateful to him for alerting me to them, as they are very important. He wanted an update on CEN and CENELEC and what we intend. As I think he will be aware, the British Standards Institution, the UK’s national standards body, is independent of the Government, but we are working together to ensure that our future relationship with European standards bodies continues to support a productive and open competitive business environment in the UK. The members of CEN and CENELEC have agreed a transition period until the end of 2020, to resolve their membership criteria and find a form of wording that continues to include the BSI as a full member.

The noble Earl wanted an update on the efforts to achieve good civil justice co-operation and participation in the Lugano Convention. The political declaration on the framework for the future relationship between the EU and the UK provides a positive basis for discussions on this, and we remain committed to future co-operation with the EU on civil and commercial matters, recognising that it is in our interests to co-operate with international parties. The UK will continue to prioritise joining Hague 2005 in our own right and seek to accede to the Lugano Convention. The UK will engage with EU partners to ensure that these important issues, which provide essential protections for systems, are a focus of the detailed negotiations to come.

I also want to address some of the concerns raised by the noble Baroness, Lady Hayter, including those she alluded to last night when we were dealing with EU exit regulations, particularly the consumer protection regulations. She asked about information sharing and noted how vital it was for product safety and alerting other authorities. She asked whether that will continue and wanted assurances that we would retain access to RAPEX, the EU rapid alert system for dangerous non-food products. Information sharing with other countries is one of the most important ways that we can help to protect consumers from unsafe products and it is in all our interests that EU and UK market surveillance authorities continue to share information. Work is under way to explore options for maintaining information sharing across borders as part of our ongoing partnership. We will also ensure that the UK’s market surveillance system continues to be robust following our exit from the EU.

The noble Baroness also asked whether we would be just waving goods through to avoid congestion at the border. Again, I assure her that we continue to take the issue of consumer product safety seriously and are committed to ensuring that only safe products are placed on the UK market now and in the future. Our robust programme of risk-based market surveillance will continue to include the ability to intercept products as they enter the UK, check products already on the market and gather information through a variety of intelligence sources. If there is a no-deal exit, EU and UK product-safety legislation will be aligned on day one, and therefore we do not anticipate significant changes in risk initially. She also asked about EHICs—I think I have one of those cards in my wallet at the moment—and I will write to her about that, if I may, as I will have to take advice from the Department of Health and Social Care in due course.

The noble Baroness, Lady Kennedy, was worried that we would see a watering down of consumer rights after Brexit. I make it clear that we want to continue to maintain close co-operation with the EU on consumer enforcement, as I think I have made clear throughout my speech. We will seek to do that as part of the future economic partnership.

I accept that cross-border enforcement co-operation might become more difficult in the event of a no-deal exit, but we have retained all the necessary powers for our enforcement bodies to continue protecting consumers in the UK courts in cases of infringement of retained EU consumer law. The exact impact on consumers will be difficult to predict because the scale, nature and severity of infringements will vary. It will also depend on the degree to which UK and EU enforcers are willing and able to co-operate with each other. As I made clear, we will obviously continue to work with consumer groups and enforcers to monitor the impacts and to respond as necessary.

Lastly, I will touch on the Competition and Markets Authority, which the noble Baroness referred to, and whether it is prepared for a no-deal exit. We remain confident in the CMA’s ability to be ready for exit day. It continues to plan for such an outcome. BEIS continues to work closely with the CMA to ensure that that is the case. As the noble Baroness will remember, in the Budget back in autumn 2017, I think, my right honourable friend the Chancellor committed £3 billion over the next two financial years to help departments, which includes the CMA and the devolved Administrations, prepare for the UK’s exit from the EU. The CMA is recruiting additional consumer protection staff, which amounts to a 25% increase in its capacity in anticipation of more complex cross-border consumer protection work. The vast majority of those roles have now been filled.

I hope that I have dealt with most of the questions. As I said to the noble Baroness, Lady Hayter, I will write to her on her question about the EHIC. If I find that there are other matters that I need to write on, I will do so. I again thank and congratulate the noble Baroness on—as the noble Lord, Lord Anderson, put it—her happy sub-committee. I thank and congratulate all those who participated in the debate and give the assurance that continued effective consumer protection and enforcement after EU withdrawal remains a priority for Her Majesty’s Government.