REACH etc. (Amendment etc.) (EU Exit) Regulations 2019

Lord Gardiner of Kimble Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Lord Gardiner of Kimble]

That the draft Regulations laid before the House on 5 February be approved.

Relevant documents: 15th and 17th Reports from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)]

My Lords, these regulations concern the registration, evaluation, authorisation and restriction of chemicals, otherwise known as REACH. These regulations apply to the whole of the UK, with the exception of paragraph 1 of Schedule 11, which makes technical amendments to the England and Wales regulations that transposed the EU directive on the disposal of polychlorinated biphenyls, or PCBs. We have worked with the devolved Administrations on this instrument and, where it relates to devolved matters, they have given their consent.

Our chemicals sector is world leading and one of the UK’s largest manufacturing exporters by value. We fully realise the sector’s economic importance and its importance to the way we all live our lives. At the same time, we also recognise the risks to human health and the environment if chemicals are not used properly. The UK is strongly committed to the effective and safe management of chemicals to protect both the public and the environment. That will not change when we leave. This is why we clearly set out our negotiating position in the White Paper published in July last year.

We want frictionless trade which maintains strong chemicals regulation through a common rulebook for sectors such as chemicals that would be supported by arrangements that cover all relevant compliance activity such as REACH, and continued active participation in the European Chemicals Agency, ECHA, so that UK businesses can continue to register chemical substances directly, rather than working through an EU-based representative.

However, we must also be ready should we leave without a withdrawal deal. The building blocks of REACH will all remain, and we are keeping the fundamental approach of REACH, with its aims of ensuring a high level of protection of human health and the environment, as well as enhancing innovation and competitiveness. This is why we seek a smooth transition and an outcome which minimises friction, disruption and delay at our borders and supports the continued chemical supply chains with the EU.

Delivering day one functionality has been a key priority since 2016. To achieve this, we have been working with both industry and the UK regulators. Since 2016, Defra, in partnership with BEIS and HSE, has run an extensive programme of stakeholder engagement with the chemicals industry with the aim of reaching as wide an audience as possible, particularly targeting SMEs and downstream users of chemicals. This programme included regular ministerial meetings with Ministers from Defra, BEIS and DExEU.

Last summer, we held a series of informal briefings for the chemicals sectors, NGOs and other stakeholders on the proposals contained in the instrument. We followed this up with detailed guidance. Since October, this effort has been even more intense. We have engaged directly with more than 1,700 stakeholders. Building on this, we launched the ongoing business readiness campaign in January to spread coverage to as many businesses as possible. We have used online adverts to promote stakeholder events and both social and traditional media outlets for increased stakeholder engagement. In the last week, my officials have also been in Frankfurt and Brussels to spread the message to EU business.

Concurrently, we have been building the UK REACH IT systems. We have tested this system with more than 100 industry users from UK and international chemicals manufacturers and distributors, the energy sector, aerospace, biotechnology and the automotive sector, agriculture and the cosmetics industry. The system stood up well and we received positive feedback, with industry generally finding it straightforward to use. The positive assessment and feedback from attendees during this exercise means that UK REACH IT will be ready to go live for exit day. It will have the critical functionality to enable industry to register new chemicals and for holders of existing REACH registrations to provide the UK agency with details to verify those registrations.

UK REACH provides for the functions of ECHA to be carried out by the Health and Safety Executive. The HSE will receive industry’s registrations of chemicals and make technical decisions, for example in dossier and substance evaluations, as well as scrutinising authorisation applications and making scientific recommendations on whether to introduce new restrictions. This builds on the HSE’s activities as the competent authority for REACH. The Environment Agency and the devolved environmental regulators will have the role of providing the advice that the HSE will need on environmental matters.

The HSE is ready to act. We are increasing the resources available to it with extra money and extra people. We have done the same for the Environment Agency and for Defra. We have also provided extra resources to both the HSE and the EA to prepare, and we will continue to scale up their resources to £13 million a year at full operation. Appeals against the HSE’s decisions will be heard by the First-tier Tribunal, which is fully independent of the HSE. The tribunal can bring in expert advice so that it can assess the merits of the case.

The SI contains a range of transitional provisions to provide legal certainty to business and to protect supply chains. There will be automatic transfer of existing UK registrations into the UK REACH system. This means that industry needs to do nothing on exit day to be reassured that its registrations will be valid in UK law and there will be no break in its access to the UK market.

Companies will need to provide HSE with the information supporting their registrations in two phases: initial information within 120 days and the full information within two years. No fee will be attached to these requirements. As I have said, industry has tested the IT systems and given them its support.

--- Later in debate ---

[Lord Selkirk of Douglas (Con)]

My Lords, I will be extremely brief. This has been a remarkably good debate, and I strongly congratulate the sub-committee Chairman, the noble Lord, Lord Teverson, the noble Lords, Professor Lord Krebs and Professor Lord Trees, and the noble Viscount, Professor Lord Hanworth, each of whom made extremely relevant and important points. While we were considering this, I was struck by how many are employed in the chemical industry; I understand the figure is far above 50,000. I hope it will be strongly borne in mind that their expertise is absolutely essential for our country, especially when there is the possibility of wide-scale duplication.

The other point I make is that a restriction on the availability of medicines would cause grave concern. I hope that the Minister will exercise a watching brief and that an independent statutory committee will be created, as called for by the noble Lord, Lord Krebs. This will take no more than a lot of hard work, understanding and, if I may say so, openness and transparency.

[Lord Gardiner of Kimble]

My Lords, in this debate noble Lords with considerable experience have made extremely valuable contributions, certainly for me. I also found it immensely valuable having meetings earlier to get abreast of some of the key, essential points that noble Lords have made today.

I reiterate what the noble Lord, Lord Teverson, and my noble friend Lady McIntosh said, as well as the noble Baroness, Lady Bakewell, when talking about Aston Chemicals. I feel confident mentioning the name, as the noble Baroness mentioned it. So many of these businesses are in the small business sector, and how essential it is. I acknowledge the importance of the chemical industry and its contribution. I think we all agree how essential it is to have a regime—we can discuss what would be the optimum regime—where we can all have confidence in the use of chemicals. There have been strong expressions on matters that I entirely respect and understand, but I have a responsibility to your Lordships to say—and these are not just my riding instructions from the other place—that we need this statutory instrument if we are to have an operable system, which the chemical industry acknowledges.

I have counted and I think I may have had 45 to 50 questions. It would be impossible to indulge your Lordships and answer every one in great detail, but I will endeavour to answer as many as I can. The noble Lord, Lord Fox, opened by asking if Her Majesty’s Government—Defra and other departments—are concerned about these matters. I say emphatically yes, for the two reasons I opened with that noble Lords raised. This is a major commercial interest of this country. We also have the great responsibility of ensuring that our country is safe, and indeed that products from our country are safe for others to use.

On IT, the first thing to say is that I could never have invented any of it—so I can safely say that I would not have been in any positon to say whether this will work—but I am assured that for day-one functionality we are ensuring that industry will be able to register new and imported chemicals and to provide authorities with information required for maintaining the validity of existing registrations. Post day one, we will enable joint registrations for industry and build back-end functions for the HSE. I acknowledge what the noble Lord, Lord Fox, the noble Baroness, Lady Bakewell, and my noble friend Lady McIntosh said about IT, but this has been tested with industry and I can only report what I have heard on the success of that testing.

--- Later in debate ---

[Lord Fox]

I was not implying that there was something wrong with the trade association. My point was that it is wrong to hide behind that statement and not acknowledge that there are serious copyright and confidentiality issues around this data which make the whole cut-and-paste exercise much more complex and expensive than the Minister seemed to present.

[Lord Gardiner of Kimble]

I understand the point from the noble Lord. However, as I said in my opening remarks, it is the case that Cefic and other bodies are working extremely constructively, as there is a mutual benefit.

As a prelude to today, I read last Thursday’s Hansard—my noble friend Lady Buscombe was very helpful in taking me through that interesting debate. To be pedantic, let me be clear that the 488 approvals mentioned are part of a programme under the biocidal products regulation and not REACH. All of government is looking in great detail at what needs to be done and what resources are necessary to make sure it happens.

The noble Lord, Lord Krebs, and my noble friend Lady McIntosh asked about the benefits of a UK system. I have said already—and will say again, because the noble Lord, Lord Whitty, raised it—that our preference is obviously to maintain participation in the European Chemicals Agency. That is the Government’s aim, and I will go into further detail on it. However, we are here because we have to consider all eventualities. In his report, the noble Lord, Lord Teverson, made it very clear that although sometimes we do not wish to be in a certain place, we have to do the responsible thing. Indeed, his committee considered how we deal with all scenarios.

The noble Lord, Lord Teverson, also asked how many UK companies have taken advantage of the Brexit window. I do not have any details from the ECHA on that, but if I receive any further information, I will make sure it is passed to the noble Lord.

The noble Lord, Lord Fox, mentioned the duplication of costs. It is the case that, unfortunately, if there is no deal and we have to set up a UK REACH system, or if at the end of the negotiations participation is not possible, we would, as other countries do, have to have a regulatory system. However, I emphasise that, through our transitional measures, we are seeking to minimise the costs; for companies registering new chemicals, the requirements will be the same.

I understand the concerns of business and civil society. That is why we have had such a considerable number of discussions, as I referred to in my opening remarks, with business, all representatives who have an interest and Ministers in BEIS.

I was struck by last Thursday’s intervention from the noble Lord, Lord McKenzie of Luton. He described the Health and Safety Executive as,

“one of the jewels in the crown of our regulatory firmament”,—[Official Report, 21/3/19; col. 1602.]

and said he had no doubt about its intellectual capability. I agree with the noble Lord and with the points made by the noble Lord, Lord Whitty: no other organisation is better placed than the HSE to act as the UK agency.

As I said, we intend to scale-up resources to £13 million at full operation. I say to my noble friend Lady McIntosh that this funding is primarily for human resourcing in Defra, the HSE and the Environment Agency, to make sure that: we have the necessary levels of technical specialist input into risk and socioeconomic assessments of chemicals for the UK; first-rate policy advice can be provided; we can increase engagement with UK businesses and appropriate international fora; and we can take forward legislation as we seek to become a global leader in promoting the sound management of chemicals. As the noble Lord, Lord Teverson, rightly identified, the HSE will at this stage take on about 35 to 40 people. We will have a strong and effective regulator by building on the expertise of the HSE and the Environment Agency to operate REACH in the UK. As for the estimated number of staff, we think we will need 135 full-time equivalents across the three organisations of Defra, the EA and the HSE for the work I have outlined.

The noble Lord, Lord Whitty, raised the matter of independence. As the UK agency, the HSE must also draw on independent expert scientific advice when developing its opinions on restrictions and authorisations. This will add to the robust evidence and analysis underpinning its opinions. If there are reasons the HSE does not commission independent advice—for example, where ECHA has already published a robust opinion on a chemical—it must publish its justification.

The noble Lords, Lord Fox, Lord Teverson and Lord Whitty, raised the potential costs to industry. The instrument puts in place transitional arrangements to provide business continuity. We are bringing all UK registrations automatically into UK REACH, so there is no break in market access. We are making sure that companies can continue to buy chemicals from the EU from day one. Grandfathering means that there will be no break in industry’s duty to identify and apply the appropriate risk management measures in businesses. We will not weaken the “no data, no market” principle because that is fundamental to REACH. But we have engaged closely with industry stakeholders about costs and how to mitigate them. As I said, the UK Chemical Industries Association and Cefic have published their joint recommendation that data used to register under REACH should be available for UK REACH at no extra charge.

On grandfathering, we acknowledge the existing ECHA registrations. That is why we have the grandfathering system and will accept reduced information for the first two years. But that is not a tenable position in the long term if we want to have an effective regulatory system that protects human health and the environment.

A number of noble Lords, particularly the noble Lord, Lord Trees, mentioned animal testing. This instrument preserves the built-in mechanisms to reduce the amount of animal testing. This is the last-resort principle that means that companies and the regulator can turn to animal tests only if they have exhausted all other ways of getting the information they need to complete the understanding of the chemical. There is also the testing proposal mechanism, which means that in many cases industry cannot proceed with animal testing unless it gets the regulator’s agreement first. The UK’s regulations preserve these provisions. Without this instrument, we would not have those powers to stop animal testing.

The UK’s record on these matters is acknowledged internationally, which was mentioned by the noble Lord, Lord Whitty. The UK has been the forefront in ECHA in opposing animal tests where alternative approaches are available. I should say to the noble Lord, Lord Trees, that we will aim to harmonise as much as possible. We will accept existing animal tests produced for EU REACH. We will not ask for new ones. Looking forward, we will work on the basis of mutual acceptance of data and the EU follows the same principle.

The noble Lord, Lord Fox, raised the important issue of environmental protections. The Government have repeatedly made clear their commitment to environmental standards. The policy paper that we published alongside the environment Bill in December last year reinforces the regulatory provisions throughout REACH that are fully preserved in the instrument today.

I also say to the noble Lord, Lord Krebs, that we will continue to need robust scientific evidence to make sure that we are properly protecting human health and the environment. That is why we have put in place strong arrangements for scientific advice. The HSE must seek external knowledge and advice when forming its opinions or otherwise justify why it has decided not to. It must act in a way that ensures a high level of transparency and it must publish its opinions. The HSE will have access to the best advice and will not be limited to the UK or even the EU. Indeed, we think by contrast that a UK statutory committee runs the risk of rather narrower membership and limiting our access to expertise. We are also committed to transparent processes. We will have arrangements in place in UK REACH to allow stakeholders to observe discussions and considerations where independent scientific advice is provided and to read publicly available minutes of these meetings.

The noble Lords, Lord Krebs and Lord Fox, raised divergence. It is the case that industry and NGOs have expressed views on that matter. First, the UK will not diverge from EU regulatory standards, at least not if that means reducing our standards. In other words, that we will retain the highest possible standards is the whole basis of this regulation. We will look very closely at what the EU does, but it is right that our regulators should apply their own judgment based on independent, expert advice on individual chemicals.