CE Marking (Structural Steelwork)

Gregg McClymont Excerpts

Wednesday 26th February 2014 Westminster Hall

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Williams. Most people will be familiar with CE marking. Some goods have had it for years, from kids’ toys to kitchen appliances, from bike helmets to our hot water boilers, among other things. CE marking was introduced as a means to create a level playing field in the internal European market, starting way back in 1988. It is, of course, a consumer protection device to ensure that manufactured goods are made to standards that are harmonised across the European Union.

Recognising the challenges involved in providing a standard certification mark on manufactured goods, it was decided to phase in the introduction over a long period. That has led to different dates set for various goods since 1988 and it is still continuing to this day. The most recent incarnation of the mark was in 1995 and it continues in most product areas without a major problem. However, there is a problem for the Government and steel fabrication industry with the requirement for CE marking on all fabricated steelwork and construction in civil engineering to be in place by 1 July 2014. I want today to draw the Government’s attention to the implications of that requirement.

Let me give some background. The Government have championed the idea that they are a friend of small business, and that is indeed a sensible approach. Just last month, for example, speaking to the Federation of Small Businesses, the Prime Minister announced a plan to scrap 3,000 rules affecting small businesses, saying that he wanted to

“get out of the way of small business success.”

We can all agree with that laudable aim, but the reality on the ground can be different.

It was in that context that I was first contacted by a firm local to my constituency, T&D Cruickshanks, based in Kirkintilloch. Cruickshanks, a third-generation family-run business established in 1948 with four employees, is exactly the kind of small manufacturing business that the Government hold up as an example of an enterprise that they are setting out to support and that we all need to succeed. It is in the spirit of cross-party support for small businesses of that kind and others that I bring this issue to Parliament. Mr Cruickshank is absolutely clear about the impact on his business. Businesses that do not comply with the new CE marking certification by 1 July 2014 will be trading illegally, and Mr Cruickshank is very clear that certifying products involves significant costs for a small business such as the one his family have run for generations.

That focus on the lack of awareness in the fabrication industry of the necessity of meeting the new certification standard has been echoed by another business in my constituency, Highland Galvanizers, based in Cumbernauld. Geoff Crowley, the managing director, is very clear that upwards of 700 companies just in Scotland are unlikely to be compliant by 1 July. Geoff has been at the forefront of efforts to warn of the impending introduction of CE marking on fabricated steelwork in construction and civil engineering, and to make firms and the Government aware of it—it is coming up very fast.

It appears that the steel fabricators, suppliers and manufacturing industry, especially at the small business end of the chain, are largely unaware of what comes into force on 1 July, and are therefore unprepared. The preparation to comply with the CE certification marking, according to my industry discussions, takes perhaps six months. Many have not started. There are notable exceptions, especially the members of the British Constructional Steelwork Association, which has made CE marking compliance a condition of membership and is training its members in becoming compliant with the EU regulation.

In advance of the debate, I asked the Minister a number of parliamentary questions. In his response, he directed me to a 2009 impact assessment. With help from those on the front line in the fabrication industry, I have identified a number of issues about the impact assessment, on which I am sure the Minister will be pleased to respond.

First, the 2009 report relates to the whole construction products directive, whereas today we are seeking to address specifically the subsection that relates to the steel fabrication industry. [Interruption.] Members of the press are looking increasingly fascinated as I proceed. Secondly, the consultation was with larger bodies—trade associations, large companies and the like—which were within easy reach of civil servants. That makes the results unreliable because it ignores the challenges faced by small companies, which are often not members of trade bodies.

The impact assessment estimates the number of businesses affected to be about 18,000 and a total cost to them of £66 million, with an annual cost for maintenance of £12 million. I wonder how those estimates stand now. Will the Minister provide more clarity on the cost of meeting those marking certification standards? Anecdotal evidence from Scottish steel fabricators who have already implemented CE marking is that implementation costs of £20,000 are not unusual for larger businesses, and that quotes from consultants to help smaller fabricators to meet the new standard range from £5,000 to £10,000.

Further to that, the impact assessment, at paragraph 29, removes half of those who might be affected by the new certification standard, because—this is the impact assessment’s own description—half of those who would be affected will have voluntarily become CE mark certified on the basis that they might want to do business abroad. We have to be aware of the impact assessment in that context. Does the fact that business might be certified for another reason mean that that cost should be removed from the impact assessment? Are those calculations accurate enough for hon. Members to make a judgment about the potential implications of the certification and ensuring that the industry across the board is compliant?

The impact assessment recognised that small businesses would be affected disproportionately. We are talking about small businesses that only sell locally and that are not exporters. There is little benefit for them in CE marking in itself. Of course, they are already at a disadvantage compared with larger suppliers in the industry, which can easily afford to absorb the costs of meeting the new standard. That creates obvious financial and compliance challenges for small steel fabricators such as Cruickshanks in Kirkintilloch.

There was clearly some recognition of the potential problems with the new CE standard—an impact assessment was undertaken in 2009—but, five years later, it appears that not much has happened to ensure that small steel fabricators are aware of the requirement, which has to be met by 1 July, and aware of any support that can be given to meet it.

In paragraph 61, the impact assessment asks those consulted how they think the certification standard will impact on competition. Larger companies thought that the impact would be positive, whereas small businesses saw it as negative and thought that the measure would reduce choice and drive smaller businesses out of the marketplace. Paragraph 65 recognised that smaller businesses, particularly those that are not members of trade bodies, would suffer from poorer communications—it is much more difficult to get the message out to small businesses. From the discussions I have had with the Scottish part of the steel fabrication industry in particular, but not exclusively, I think the problem is that many of the small fabricators are simply unaware that the requirement is coming. Some just do not believe it. Some have heard and are hoping they will be unaffected.

I say again that the British Constructional Steelwork Association is doing sterling work in trying to shed light on the requirement and has made compliance with CE standard marking a condition of membership. The Federation of Small Businesses is also alerting its members to the deadline. However, those few bodies in the UK that are authorised to assess and certify companies seeking CE accreditation, such as the Steel Construction Certification Scheme and the Welding Institute, are under-resourced and already booked up beyond the 1 July deadline. That is what I am told.

Since I secured the debate, I have been contacted by a number of small businesses—steel fabricators, welders and the like—across the UK. Organisations that procure large quantities of steel, such as those behind large-scale construction projects, are already beginning to demand that smaller suppliers be CE accredited. There is a real issue in that the vast majority of Scottish fabrication businesses will not be eligible to tender for that kind of work after 1 July, because they will not have met the certification deadline. Local authorities are starting to wake up to that, and I hope the Minister will tell us what action his Department is taking to ensure that local authorities are acting, and what Government guidance and help has been given.

Businesses that recognise that they need to act—that requires having some training and subsequent qualification, putting some administrative procedures in place and having an audit by a notified body—find that there seems to be a lack of available resource. There are few trainers and fewer assessors, and they are booked up beyond 1 July. My understanding is that trading standards has to be responsible for the enforcement of the CE marking standard. What action has trading standards taken to inform those in the industry that the standard must be met? Has trading standards taken it upon itself to offer advice?

I look forward to the Government grasping the matter. There is a significant problem for small businesses—smaller fabricators lack awareness of the requirement to meet the standard by 1 July. The Government have a role to play, and if they believe that small businesses are the engine room of the economy, I hope they engage in a positive and constructive spirit. I am sure the Minister will agree that it is a serious matter. Businesses may not be compliant by 1 July, and all hon. Members should be aware of the potential implications for those businesses and their staff. I look forward to the Minister informing me and those at the sharp end of the industry how the situation will be resolved before 1 July.