Merchant Shipping (Marine Equipment) (Amendment etc.) (EU Exit) Regulations 2019

Baroness Sugg Excerpts

Wednesday 20th February 2019 Lords Chamber

Moved by

[Baroness Sugg]

That the draft Regulations laid before the House on 16 January be approved.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, these regulations will be made under powers in the European Union (Withdrawal) Act, and are needed if we leave the EU without a deal. Marine equipment, as we are discussing today, is the collective term used to describe a ship’s safety and pollution prevention equipment. Examples include lifejackets, fire extinguishers and navigation lights.

Marine equipment is regulated globally by the International Maritime Organization, the IMO, under three international conventions: the International Convention for the Safety of Life at Sea, the International Convention for the Prevention of Pollution from Ships and the International Regulations for Preventing Collisions at Sea. Collectively, these international conventions require flag state administrations, such as the UK, to ensure that marine equipment complies with certain safety requirements regarding design, construction and performance standards; and to issue the relevant certification before equipment is installed on board a ship flying its flag. The flag state in the UK for these purposes is the Maritime and Coastguard Agency, the MCA.

Historically, each EU maritime administration had its own systems and requirements for the approval or conformity assessment of marine equipment. To help the free movement of goods, the EU adopted legislation to harmonise the way in which EU member states implement the IMO conventions. This legislation allows member states to designate conformity assessment bodies on behalf of the EU to issue an EU-wide approval for marine equipment.

Marine equipment approved in accordance with the EU legislation may be installed on any EU-registered ship, and the international obligation of each EU member can be discharged accordingly. The MCA, on behalf of the Secretary of State, has designated 10 conformity bodies for the EU which approve marine equipment in the UK. In the event of no deal, the MCA intends to convert these 10 bodies from EU-notified bodies to UK-approved bodies, to allow for continuity in the method of approval for marine equipment in the UK, and to ensure that the UK continues to meet its international obligation.

The MCA regularly meets with these 10 bodies and has kept them informed of the proposals. The 10 bodies have been supportive to ensure that the UK continues to have a functioning statute book. Similarly, the MCA regularly meets with manufacturers of marine equipment, and has received only positive feedback on the proposed instrument.

The EU directive 2014/90, known as the marine equipment directive, and related legislation established the harmonised EU system, criteria for designating conformity assessment bodies, mechanisms for ensuring the compliance of equipment, and remedial measures for removing risks to the safety of life. The regulations in this case, which this SI is changing, includes the Merchant Shipping (Marine Equipment) Regulations 2016, which implement the 2014 marine equipment directive in UK law. The Act also makes provision in Section 8 for regulations to correct deficiencies in retained EU law arising from the UK’s withdrawal from the EU.

These regulations make the changes needed to the marine equipment regulatory framework to adapt the EU approval system to one that can function effectively as a UK approval system, if we leave without a deal. The regulations retain the status quo as far as possible to avoid market confusion and allow continuity of operations for manufacturers. Specifically, the regulations do not change the design, construction and performance standards applicable to marine equipment; the methods for conformity assessment of marine equipment; the requirements to become a designated conformity assessment body; and the mechanisms for protecting the UK market against fraudulent or unsafe equipment. The regulations will allow UK ships to continue to use marine equipment that has been approved under the EU system. However, the regulations also establish a new approval system. The regulations make changes needed to ensure the UK approval system works, for example by changing references to “member state” and “the Commission” to “the United Kingdom” and “Secretary of State”.

Noble Lords may be aware that, once again, the SLSC recommended that these regulations be upgraded to the affirmative procedure. Again, I am grateful to the committee for its careful consideration of the regulations. The committee noted that in a no-deal situation it is the Government’s long-term aim that UK ships will use the UK approval system only. The committee was concerned about the additional costs for manufacturers that might need to seek an EU approval as well as a UK approval. As we set out in the new Explanatory Memorandum, the regulations before the committee do not place any limit on how long the UK ships can use EU-approved equipment. Therefore, there will be no additional costs for manufacturers as a result of this SI. If anything were to change in the future, the Government would introduce regulations to remove the time limit only after widespread consultation and careful consideration of the costs and benefits.

[Lord Adonis (Lab)]

The Minister said that there would be no additional costs to manufacturers. But will there be additional costs to ship owners—that is, to the consumers?

[Baroness Sugg]

No. There is no time limit in these regulations on how long UK ships can use EU-approved equipment. The regulations allow UK ships to use EU-approved equipment or UK-approved equipment, but there is no time limit on that, so there should be no additional costs. There will be small familiarisation costs, but no significant costs.

The regulations also establish a UK conformity mark for the new UK system. UK ships will carry equipment that bears either the EU wheelmark or the new UK mark. The only significant difference between the UK and EU approval systems is that the EU system requires a manufacturer outside the EU to appoint an authorised representative in the EU; the UK system does not require this. We decided to make this authorised representative requirement voluntary to avoid creating a barrier to the new UK system.

The regulations include transitional provisions to smooth the transition from the EU to the UK approval systems. First, UK conformity assessment bodies that, immediately before exit day, are designated EU-notified bodies will automatically be converted to UK-approved bodies, which will be authorised to carry out conformity assessment activities for the UK. That gives certainty to the 10 UK-based conformity assessment bodies of their status after exit day.

Secondly, any application for conformity assessment lodged with a UK body before exit day for EU approval will be treated as an application for UK approval after exit day. In that way, a manufacturer will not need to make another application for conformity approval if it has not been determined.

Finally, the regulations will revoke Commission Implementing Regulation (EU) 2018/733 because these implementing regulations communicate the IMO technical standards applicable to marine equipment, which are updated annually. The MCA currently replicates these in Merchant Shipping Notice 1874 and will continue to communicate the standards in this way. Accordingly, the implementing regulations will become outdated in a year.

Merchant Shipping Notice 1874, Amendment 3, also provides information pertaining to the UK bodies that carry out conformity assessment activities on the UK’s behalf, and information on the UK’s market surveillance procedures and other technical information that bears no substantive changes. In addition to the merchant shipping notice, the regulations are supported by two marine guidance notes, which replace MGNs 554 and 557; one is addressed to applicant conformity assessment bodies and the other relates to the UK’s approach to market surveillance. The marine guidance notes do not change the substance of the notes that they replace.

Finally, the MCA will be publishing a plain English marine information note, which I am sure will be very welcome. It will explain the UK system for marine equipment approvals and substantive changes from the EU system and it will address each major stakeholder—namely, UK ships, UK conformity assessment bodies and manufacturers.

The changes made in these regulations are needed in the event of no deal. They will ensure that the law on conformity assessment of marine equipment continues to function effectively after the UK’s withdrawal from the European Union in the event of no deal. They will enable the UK to continue to comply with its international obligations to ensure that equipment installed on board its ships is approved to the relevant, applicable international standards. I beg to move.

Amendment to the Motion

Moved by

--- Later in debate ---

[Lord Rosser]

I knew I would get approval for at least something I said. I take this opportunity, after a fairly long evening, to express my thanks to the Minister for dealing with these SIs in her usual good-natured and patient manner.

[Baroness Sugg]

I thank noble Lords for their consideration of the final regulations of this evening. International conventions require each flag state administration to approve marine equipment, and once we have left the EU it would not be appropriate for the UK to fulfil its international obligations through an EU system that we can no longer influence. That is why we are setting up the UK system. It will allow the 10 UK-based conformity assessment bodies to continue offering services to the UK market. If we allowed only EU-approved equipment, those bodies would be in the strange position of having to relocate to the EU to provide to the UK market.

We understand that we need to ensure that the UK bodies can continue to offer EU-approved equipment. The new regulations apply both to existing ships and new ships, which will all be able to use either EU-approved equipment or UK-approved equipment. That does not have a time limit currently. The Government will consider whether we should move towards the UK system, but that would be done only after very careful consideration and consultation with the industry.

There will be no reduction in standards under the regulations. As I said in my opening statement, they retain the existing international standards set at IMO level, and that is what we will stick to. They apply the same familiar process and procedures to marine equipment approvals, to minimise disruption to industry. As the noble Baroness, Lady Randerson, noted, some of the 10 UK-based EU-notified bodies have a global client base—and long may that continue. They are global operations and have offices internationally. We anticipate that some of the UK-based notified bodies with offices in the EU will make contingency plans to enable them to maintain their EU-notified body status, but we have no information about any of the UK-based notified bodies moving there. These are global companies that provide to a global market, and we expect them to be able to continue to do so.

Both the EU system and the new UK system are established on IMO standards, so manufacturers do not need to produce to two standards. A UK manufacturer may maintain its existing EU approval and keep EU market access, while also maintaining UK market access.

No formal consultation has been done on this instrument, but the MCA and the department regularly meet the assessment bodies and the manufacturers. Both groups recognise that the regulations are needed to maintain the status quo, and I am pleased to be able to say to the noble Lord, Lord Rosser, on our final SI this evening, that both the UK Chamber of Shipping and Nautilus, the seafarers union, are participants in the MCA industry committees, and have been consulted. These meetings occur very frequently, every three to six months.

This statutory instrument is necessary: if the House does not approve it, there will be no legal basis for UK notified bodies to continue operating in the country. The companies and those who work for them would therefore face uncertainty. If this SI were not approved, we would not be able to accept equipment from the EU or investigate non-compliance. So it is essential. We have not carried out a full impact assessment of the regulations because their purpose, intent and real-world effect is to do everything possible to minimise cost and disruption. Noble Lords should be aware that the impacts and costs to business of not making these regulations would be significantly higher—as I said, it would lead to uncertainty.

I hope that I have managed to address the points that have been raised. I thank all noble Lords who contributed to the transport SI debates. I am genuinely grateful for their scrutiny; these are important pieces of secondary legislation, and the House is certainly doing its job in scrutinising them. Marine equipment approvals are, of course, vital to ensuring the safety of those on board ships and the protection of the marine environment. I hope that noble Lords will agree that this SI is essential to ensure that the legislation on marine equipment approvals will continue to work effectively in the UK in the event of no deal.

[Lord Adonis]

My Lords, I join in the appreciation of the Minister for the meticulous way in which she has handled our debates this evening. However, I want to clarify one point: that when the Explanatory Memorandum uses the word “choice”, it means that there will indeed be a choice on an ongoing basis, and that ships and their owners will be able to choose whether they have EU-approved and certified or UK-certified equipment—they will not have to shift from one to the other by virtue of the fact that they are purchasing the equipment after exit day.

[Baroness Sugg]

That is indeed the case. They have a choice: UK or EU. That is for new and existing ships and there is no time limit on that choice through the regulations.

[Lord Adonis]

My Lords, I thank the Minister for clarifying that point. My one final remark is that a felicitous moment in the debate was the revelation that the noble and learned Lord, Lord Mackay, is an Elder Brother of Trinity House. He shares that great distinction with Sir Winston Churchill, who used to appear frequently in the uniform of an Elder Brother of Trinity House. I hope that the noble and learned Lord might do so in future in the House, so that his great and esteemed rank is fully on display. On that note, I beg leave to withdraw the amendment.