I begin by expressing my condolences and those of all Members to our friend and colleague Mr Deputy Speaker. He has suffered such a grievous loss, and we hold him in our hearts and prayers this Christmas season.
It is a pleasure to follow such interesting, well-informed speeches. I will discuss new clause 61 and amendment 291, which are in my name. We have heard much from the Minister today and from the Prime Minister, but my concern is that the blandishments and reassurances that we have been given actually contain more fudge than I hope to find in my Christmas stocking on Monday. As we look forward to the phase 2 negotiations, I am clear
about one thing: there is no free trade agreement that we can negotiate that will be as comprehensive as the one we have with the EU now. New clause 61 recognises both that and the importance of the UK chemicals industry.
The Bill attempts to cut and paste EU law into UK law, but it cannot do that for the chemicals industry, which is vital to this country. We export almost £15 billion-worth of chemicals to the EU each year. Some 60% of all our chemicals go to the EU, and 75% of all our chemical imports come from the EU. We no longer make some basic chemicals due to that close relationship, which is really important for the pharmaceutical industry. Chemicals are our second largest export to the EU after cars, and the industry provides half a million jobs, both directly and indirectly. However, the regulatory uncertainties around Brexit—this hokey-cokey on whether we are going to be the single market or the customs union or have a free trade deal—are sending shockwaves through the chemicals industry.
The industry is concerned that the UK will no longer participate in the EU’s regulation on the registration, evaluation, authorisation and restriction of chemicals or REACH, and new clause 61 would require us to remain in that arrangement. REACH covers over 30,000 substances and pharmaceuticals that are bought and sold in the single market. It also covers products—everything from the coating on a non-stick frying pan to flame retardants in sofas, carpets and curtains, to gases, fertilisers, plastics, speciality adhesives, rubbers, paints and dyes—and hazardous substances. It seeks to protect human health and the environment, particularly following the disastrous chemical leak in the Italian town of Seveso.
If a UK business wants to sell a chemical product into the EU or to Switzerland, South Korea or Norway, it must be registered with and authorised by the European Chemicals Agency in Helsinki. Membership of REACH is essentially a passport to the global chemicals marketplace. The Environmental Audit Committee has conducted all sorts of inquiries into the arrangement, but it cannot simply be transposed into UK law because it involves data sharing and co-operation. We do not have a domestic UK agency to carry out the same function, so the Bill will put our trade in chemicals at risk. Without an agreement to the contrary, the European Chemicals Agency has said that all UK companies’ registrations will be non-existent after exit day, which I cannot stress strongly enough. That would mean no access to the database and no legal obligation in this country to have a national helpdesk to give advice to companies. The arbitrary red lines on membership of the single market and customs union are the source of those risks, and the situation could be disastrous. The Secretary of State for Environment, Food and Rural Affairs tweeted about maximum divergence from the EU, but he is effectively putting a stake through the heart of the UK chemicals industry.
The Chemical Business Association told my Committee that 20% of its members are investigating moves out of the UK as a result of Brexit uncertainties. The Chemical Industries Association wrote to the Secretary of State for Environment, Food and Rural Affairs this month, urging the Government
“to do all it can to remain within or as close as possible”
to the EU’s rules. Its chief executive, Steve Elliott, said in his letter that leaving REACH
“would seriously bring into question 10 years of investment, as registrations and authorisations that permit access to the EU single market would suddenly become non-existent on exit day”.
That could have upstream effects on dialysis machines and solar panels, and all sorts of other industries would be affected.
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The Chemical Business Association explained to my Committee that
“Compliance with chemicals regulation represents the key to market access…Compliance is non-negotiable. Failure to comply is a barrier to market access. Without market access there is no trade.”
People in the industry have told me privately that this is a business-killing issue, as is tariffs.
EU tariffs on general chemicals are 4.5%; on paints and dyes, they are 6.5%. It is estimated that that would cost the UK chemicals industry £600 million a year. That is before we get to the non-tariff barriers that I have just discussed. By March 2019 when we leave, UK companies will have spent £250 million registering their chemicals—6,000 of them—with the European Chemicals Agency. They have a deadline to meet of next May. Why should they pay money in May 2018 to get chemicals authorised that they will not be able to sell in May 2019? They are concerned about the risk of market freeze as well.
Of those 6,000 substances, 5,400 have animal study data associated with them. If we leave, we may end up needing to test more products on more animals, which I am sure nobody in this House wants. We will be duplicating EU legislation on this. That has an effect on jobs. The Prime Minister’s constituency of Maidenhead has over 400 workers in the chemicals industry. The hon. Member for Cleethorpes (Martin Vickers) has 900 jobs in his constituency that are dependent on the industry. In South West Wiltshire and South Thanet, more than 15% of employment depends on the chemicals industry.
When I first asked the Environment Secretary about this issue, he said that when we leave, the area will be regulated better. He told the Committee in November that he is
“looking at how we can use the European Chemicals Agency and the REACH Directive in order to ensure we can trade freely”.
I am telling him now: he simply cannot. Leaving now and diverging will harm jobs, growth, manufacturing and investment in this country.
In view of the time, I will not share my comments on amendment 291. Suffice it to say that the powers in the Bill for tertiary legislation should be curtailed and contained, and we should time-limit new public bodies’ powers to legislate for parts of the economy.