Michael Fallon
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
It is a pleasure to serve under your chairmanship, Mr Caton.
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) on securing the debate and on raising important issues, and I recognise that she has a particular constituency interest in this issue. I also welcome the hon. Member for Wrexham (Ian Lucas) to the debate and welcome the interest that he has shown in it.
I will begin by describing some of the regulatory regimes that electric cables fall under, so that we are clear about them. As far as safety is concerned, there are robust safety regulations that apply to manufacturers, importers, distributors and retailers, which require products to be safe. How do we interpret “safe”? We do so on a case-by-case basis, taking account of good engineering practice, the extent of scientific knowledge, the ability of engineering to provide solutions, and the reasonable expectations of the user of the product, among other factors.
A “safe” product means that a product does not present any risk, or only the minimum risks compatible with its use, consistent with providing a high level of protection for the safety and health of persons. It is important that we distinguish between the requirements of legislation and the requirements of standards. There is no requirement in the legislation for compliance with a standard, and there is a good reason for that. While compliance with a relevant standard provides a presumption that a product is safe, there has to be a route for innovative products and advances in technology. Standards generally cannot prejudge advances in technology, and therefore are amended and updated in the wake of innovation and scientific advances.
I now turn to a specific issue that the hon. Lady raised, which is misusing trade marks to mislead consumers deliberately. Counterfeiting is an issue that the Government take very seriously, because—as she set out very clearly—it threatens legitimate businesses and the economy, and of course it also poses a risk to consumer health and safety, as well as undermining consumer confidence in these products.
The infringement of an intellectual property right is a civil matter. However, the infringement of trade marks can also be a criminal offence. Trading standards officers are primarily responsible for enforcing the criminal IP laws, with support from the police and investigative assistance from the owners of the IP rights. Government and the associated public enforcement organisations continue to engage actively with British businesses to raise the profile of the threat of counterfeit products entering relevant supply chains, including supply chains in the electrical cabling sector. For example, the IP crime toolkit, which was launched by the Intellectual Property Office in November 2011, aims to make businesses more aware of the growing risk from counterfeit goods entering supply chains, and it also gives guidance on how to strengthen and protect IP assets.
There is also legislation for addressing issues relating to falsely described goods, and it is applicable when such goods are supplied to a business or a consumer. The supply of cables that are falsely described by any means to a consumer is likely to be a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008. Businesses enjoy similar protection against misleading advertising and marketing, including false statements, under the Business Protection from Misleading Marketing Regulations 2008. Both of those sets of regulations are enforced by local authority trading standards officers.
I now turn to some of the concerns that the cabling industry has expressed. It initially raised safety concerns about cabling with my Department back in 2009. Those concerns were referred to the Health and Safety Executive, which is the relevant enforcement authority. The HSE then approached my Department for funding for a special project. A special market surveillance exercise undertaken by HSE was agreed, to determine the state of the UK market given the serious concerns that had been raised. That exercise commenced early in 2010.
The market surveillance project had the overall objectives of determining how the cable supply sector was functioning and whether there were any market failures that needed to be addressed. Once the HSE had performed an initial study of how the sector functioned, it was able to proceed to taking samples from across the sector. It had to take a sufficiently large number of samples to determine whether the cables available on the market were safe or not. Those samples were not taken at random; they were a biased selection taken from cables that were considered by HSE inspectors to be the most likely to be non-compliant.
That project has now concluded, but the final report is still to be produced; it is expected very early next year. I understand that the findings of the report will show that, with the exception of one large batch of cable that had copper content that was 50% underweight and of two samples with questionable origin, there was no justification from the other samples that were found for the HSE to remove any product from the market. The samples that were found to be non-compliant were voluntarily removed from the market without any formal action being taken by the HSE.
Part of the administrative requirement of the legislation is for those in the supply chain to be able to provide a copy of the declarations of conformity that the cable complies with the legislation. These declarations were found not to be generally available, but they were provided within the 10 days requested by the HSE. If the HSE had formally requested them, it would have had to allow 21 days for them to be produced, rather than the initial 10 days. The HSE found that some manufacturers outside the EU were reluctant to supply declarations of conformity and that there was evidence of hostility from those manufacturers towards importers who requested the declarations of conformity, however they were supplied. The HSE is not an enforcement authority for counterfeit goods, but it should be reported that it did not identify any counterfeit product during its market surveillance assessment.
While it was assessing the sector, the HSE found that the market is dominated by a small number of importers, most of whom had a low level of awareness of the administrative requirements, although some were fully aware of their obligations. The industry is standards-led, and considers that the standards provide all the protection that it needs. However, it was generally unaware of the general failure to meet the requirements of the standards. The industry also suffers from a poorly developed system of product recall. The HSE has therefore advised that on the basis of its assessment most products on the market are safe. Although they may not always be compliant with the standards with which they are claimed to be compliant, they meet the requirements of the safety legislation.
While carrying out the assessment of the market, the HSE identified a considerable lack of awareness of the administrative requirements of the legislation. It has now put in place measures to increase awareness of them. The measures led to distributors and importers demonstrating a greater understanding of their obligations and of the risks—financial liability and reputational risks—that they expose themselves to. I understand that that has led to a significant improvement of best practice by some of those in the supply chain. The HSE’s recent follow-up visits to a leading UK distributor-importer have verified that it has adopted processes to identify substandard, non-compliant cable before it enters the UK wholesale-domestic market. The HSE will facilitate awareness of that best practice at an event that it is planning, to engage other distributors.
The current HSE assessment of the market demonstrates that most cables on the market are generally safe and that there are robust regulations in place dealing with safety, counterfeiting and false declarations. Traceability is an issue and all cable needs to be marked, but market surveillance hands are tied until the industry puts its house in order on marking. The thorough HSE market surveillance assessment provides a reassuring and clear statement of the market: that it is functioning satisfactorily. There are cases where non-compliant products are identified. Those should be referred on a case-by-case basis to the relevant enforcement authority. In matters of product safety that is the HSE for workplace products and trading standards officers for products supplied to consumers; in relation to false marketing declarations it is trading standards officers for both business-to-business and business-to-consumer transactions; in relation to counterfeit goods, or in cases of suspicion of counterfeiting, evidence should be supplied to trading standards, Her Majesty’s Revenue and Customs and the police.
Mrs Hodgson
I have been listening intently to the Minister’s response, as has my hon. Friend the Member for Wrexham (Ian Lucas). So, I am sure, have the industry experts in the business world, who are far more cognisant than I am of the finer points of what he says. I am not an expert in the field, although I am trying to represent my constituents as well as I can on the issue. Will I therefore be able to enter into correspondence with the Minister, for follow-up, if we want to drill down on some of the points in his response?
Michael Fallon
I am certainly happy to engage with the hon. Lady in correspondence on any of the technical points I have raised. If anything is not clear I shall get back to her about it. I, too, am not an expert on cabling regulations. The hon. Member for Wrexham may be the only expert in the Chamber—apart from you, Mr Caton. I know that you have some knowledge of the area.
Michael Fallon
It is kind of the hon. Gentleman to say so. Perhaps it is a process of lifelong learning for all of us.
I do not want to introduce too much levity into the discussion. There are concerns about conformity of the distribution chain with the administrative requirements of the product safety legislation, but the products on the market, which I have accepted may often be non-compliant with the current standards, are generally considered to be adequate for the purpose intended and are safe. However, I assure the hon. Member for Washington and Sunderland West that we take the concerns seriously. We believe that the legislative framework is robust; but I urge her and the hon. Member for Wrexham to report directly to me at the Department any evidence that they have in connection with the points they have made, so that we may look at it. If they have any specific evidence of counterfeiting or false marketing, that should be reported directly to trading standards officers in the specific local authority areas.