My Lords, I declare my interests as in the register, but everybody in this Chamber has an interest because chemicals touch every part of everybody’s lives in this country. That is why the Minister is completely correct that it is vital for this country to have a safe and effective management regime for chemicals. Safety should be the primary concern, alongside environmental sustainability.
Along with other Peers, I worked on the Nuclear Safeguards Bill, which the Government rightfully decided deserved primary legislation, not least because it involved an international treaty but also because it is a complex and important safety regime. During the proceedings
on that legislation, which the Government brought to this House and the other place, it was improved and full debate was had. The chemicals and chemical regulation regime is just as complex and important, if not more so, than nuclear safeguarding, and this should have been brought to your Lordships’ House and the other place as primary legislation. It is regrettable that this was not the case.
It is also extremely unfortunate, to say the least, that the Government have left it so late to bring this statutory instrument in front of your Lordships. When this was tabled it was anticipated that this could be three days before the measures in this statutory instrument would be required. Given its importance and complexity, that is beyond remiss and looks like brinkmanship. Despite the fulsome description of consultation, roadshows and so on, the response I have had from industry and civic society—a broad range of stakeholders—has been that this is not a satisfactory statutory instrument, which is why I have tabled this fatal amendment.
I will try to highlight some of the flaws. I am afraid to say it will not be a short speech, because there are quite a lot of flaws. I apologise—but not much, because this issue has to be laid before your Lordships and these issues need to put on the public record. I will ask a number of questions. As the Minister has set out, this regime is effectively ready to roll, so I am sure he will not have trouble answering these questions.
In the months and years to come, it is important people understand what the Government think they have laid before your Lordships in the regrettable event that we have to use this statutory instrument. However, there is another reason why this debate is important. The instrument clearly indicates the direction of travel. In his preamble, the Minister talked about the objective of having a common rule book, frictionless trade and co-operation—I am not sure that is the word the Minister used—with the ECHA. In the event that we leave the European Union, these are all ambitions I would share. However, none of them is a done deal, and this statutory instrument sets a direction of travel for what regime might follow in any case.
The Government have succeeded in unifying one part of the country: those involved in the manufacturing and use of chemicals in the industry are pretty united in their concerns about this statutory instrument. As the Minister set out, much time and effort has been invested in creating and delivering REACH—over more than a decade. Many in the industry and civil society feel that, just when this regime is beginning to deliver, we are walking away from it and potentially creating another parallel exercise. And those who have been involved in this will know what a big exercise it is. As we have said, the political agreement points to co-operation, but we cannot be certain we will get that.
Can the Minister confirm to your Lordships’ House that, as well as the process of discussion with the chemicals industry and green organisations, the concerns put forward by these bodies have been represented to Her Majesty’s Government? Can he confirm that those consultations have happened?
The economic impact on the UK of the development of an equivalent national chemicals regulation is considerable, and the Minister set out some of the complexities that will be taken on board by the United Kingdom. Furthermore, REACH substance evaluations and authorisations are not small affairs. The Minister mentioned substances of very high concern, or SVHCs. My understanding is that around 488 of those are being re-evaluated by REACH. At the moment, that process is shared across member states, and it is a long and complex process. If the United Kingdom is going to take on board that process individually and separately from the EU, it will take a great deal of time and money, and, frankly, it will require more tests, whether the Minister is seeking to avoid that or not. It is quite clear that, in taking this course, the United Kingdom will face a significant burden, taking on the duplication of a previously shared workload.
The Minister talked about preparation. I understand there is an IT framework, which cost around £5.8 million to create. In July 2018, in a parliamentary committee, a civil servant confirmed that it would not be fully functional on exit day, and I noticed that the language from the Minister was slightly hedged on that issue. The official said that some of the fuller functionalities would not necessarily be required on day one and are on a slower timescale. Perhaps the Minister can clarify what functionality will be available on exit day and what will not.
As the Minister said, Defra has confirmed that the HSE will run this database and lead the overall process. He set out, as Minister Coffey did when presenting this SI in the other place, that the Government anticipate a future budget increased by £13 million—I believe that was the figure. That equates to around 40 to 50 additional staff. Given that the number of chemicals used in the UK will not be drastically lower than the number used at EU level, the HSE will deal with a similar number of chemicals—the Minister talked about grandfathering, and we will come to that—to those under the jurisdiction of the ECHA. I should point out that its annual budget is €100 million and it has nearly 600 members of staff. Consulting with people in the industry, I am told that around 300 to 400 people would be a reasonable assumption of what the HSE would need in order to deliver the very complex tasks that the Minister has set before your Lordships. So I challenge the idea that £13 million would be sufficient resources to deliver this programme. Can the Minister comment on that particular supposition but also, within the framework of his own constraints, tell us how many people have been recruited already by the HSE in order to deliver this, because we could have been delivering this within a few days? I imagine that a recruitment process is already under way. Will the Minister update us on that?
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On data, I completely agree with the no-data no-product rule set out by the Minister. It is essential that we have data and nobody on these Benches is proposing otherwise. As the Minister set out, data for REACH is jointly submitted by a consortia of companies. The problem of grandfathering becomes complex in this area. The Government state that the UK can
download this data. That has clearly been confounded by copyright and ownership issues around data. Companies will need permission to reuse that data for the system. In some cases, the data neither belongs to them, nor to one other company, but to a chain of different companies. The copyright to the data belongs with those companies. The notion that somehow this data is transportable and all you need is for a trade association to agree to that is a naive view. A recent survey carried out by the Chemical Business Association revealed that three-quarters of major UK companies do not currently own the data that they need in order to get the registrations they would require under UK REACH, so I hope that the Minister understands that issue. It is all very well saying that the data can be ported and there is no need to duplicate it, but the data is owned.
Animal testing is an issue of great importance to everyone in your Lordships’ House and REACH has successfully minimised animal tests through data sharing and other measures. That point was heavily promoted by the British delegation when REACH was created. The organisation, Cruelty Free International, estimates the number of tests across REACH’s 11 years to be around 4 million. All of us would agree that that is far too many, but considerably fewer than would have been necessary without REACH. There is genuine potential for duplication. It is all very well the Minister saying that that will not happen but it will because there will be regulatory divergence when there are two systems. As soon as you have regulatory divergence, it is inevitable that the HSE in this country and the ECHA in the rest of Europe will demand different or parallel data. That will come to pass and that is the point at which more testing will be required, and some of that testing will be on animals. When pressed by a parliamentary committee, Minister Coffey admitted that there could be an increase in animal testing if the UK is no longer a member of REACH, and that is unacceptable.
On operational costs, the chemical industry, as the Minister set out, is important, but this affects more than the chemical industry. It affects the cosmetics industry, the consumer industry, agriculture and, of course, all sorts of manufacturing. Clearly, as the Minister acknowledged, duplication of costs is more severe for SMEs than for larger companies. Right across all sectors we are seeing the creation of a parallel system. This does not chime with the mantra that Brexit would be about burning red tape. We are knowingly duplicating red tape.
Last week, the noble Baroness, Lady Buscombe, spoke to an SI which dealt with pesticides and GMOs and was in some ways a foretaste of this one. She made it clear that the HSE’s approach to them would be self-financing. In other words, it will charge industry for the cost of registration. I assume that we are looking at a similar model here. Will the Minister identify what costs have been factored into the HSE’s budget for this year and next year and what revenue generation has been put in the budget for that organisation over the next two years? This is not a self-financing system; it is a system that will be financed by industry and therefore ultimately by consumers in this country who will have to pay the price.
Grandfathering is very complex, and I will spare noble Lords too much detail, but there are clear holes in the approach. Companies based outside the EEA can appoint Europe-based only representatives to take over the tasks and responsibilities of importers when complying with REACH. This simplifies access to markets and to the chemicals needed for important activities in this country. My understanding is that UK companies acting as only representatives for REACH will be obliged to relocate from the United Kingdom to mainland Europe to continue to have that relationship with EU REACH. What is Defra’s position on that? Are there any ways around it?
The Minister referred to the transitional relationship, which is a two-year process. Two years is an interesting choice. It could have been one year or five years, so what was the modelling? What was at the heart of Defra’s decision to make it a two-year process?
While this is being presented as a like-for-like process, we are going to end up with some chemicals not being grandfathered across this system. My understanding is that with chemicals in the current EU REACH listing that are held by a non-UK organisation, there may be problems grandfathering, particularly where the process of approving those chemicals has not been completed. My friend in the other place Norman Lamb raised this. An application for EU authorisation submitted by a non-UK EEA entity on which a decision has yet to be made and on which a UK downstream user is dependent will not be grandfathered. Despite the fact that some chemicals have cleared that hurdle, it remains an issue. The point has been raised with Defra on many occasions. It continues to be ignored or not catered for. What is it about this issue that stops Defra allowing something else to happen?
What overall extra costs will industry face as a result of having to maintain two parallel chemicals processes? While all this consultation has gone on, it is not clear what the impact on industry will be. What effect does the Minister expect this to have on British business?
Scientists, too, are worried about this. Why would they not be? I am a chemistry graduate, although you would not know it to look at me. The Royal Society of Chemistry has expressed concern not just about the duplication issue, which I have gone on about ad nauseam, but about whether the HSE will have adequate scientific capability to take on the increased decision-making and responsibilities of acting as the national regulator. If this concerns the country’s leading chemists, does it not concern the Minister as well?
Finally, the Minister, rightly, talked about devolution. The Government have worked hard with the devolved Administrations, but there is one area where we could benefit from more information. What capability do the Government expect the devolved Administrations to have in order to be able to respond meaningfully to the HSE when regulatory issues are put to them?
I see the wrinkled faces of those opposite me and they will be glad to know that I have reached the end of this point. There are clearly many flaws in this statutory instrument. Some of them have been highlighted also by the Secondary Legislation Scrutiny Committee and I am sure that we will hear about others from my
noble friend Lord Teverson. That is why I have tabled this amendment and I await the Minister’s response with interest. I beg to move.