My Lords, I thank the noble Lord, Lord Fox, for setting out in such detail the issues around the statutory
instrument. I also thank the Minister for his time and that of his officials for the briefing that we had at the beginning of the month.
I have read the Explanatory Memorandum three times and each time I have become more concerned. I have dealt with a number of SIs during this exit process, but the EM on REACH is the longest I have dealt with. It is an extremely complex subject. The stated purpose of the SI is to correct deficiencies in retained EU law. I remain unconvinced that this will happen.
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As we have heard, REACH and the European Chemicals Agency operate on a no data, no market basis. The industry is also responsible for managing the risks from its use of chemicals. This seems sensible, but there are significant pitfalls and costs for some of our smaller companies and businesses operating in this area. Paragraph 2.4 of the EM assures us that the UK regulatory system for chemicals will be “similar” to the current EU system. Similar is not “identical”, nor “the same as”. This is open to interpretation and confusion. Although it is important to achieve value for money for the UK taxpayer, ensuring public safety should have an equal status with value for money.
The European Chemicals Agency is responsible for the effective registration system for chemicals. As we have heard, once exit day has passed, this responsibility will pass to the Health and Safety Executive as the UK competent authority. The HSE will run a database for applicants for new chemical registrations. Like the noble Baroness, Lady McIntosh of Pickering, my heart sank when I read in paragraph 7.18 of the Explanatory Memorandum:
“A UK IT system will facilitate the operation of the UK REACH system”.
Government does not have a good track record on setting up new IT systems, as the noble Baroness so eloquently said. Those applying for registration and being refused will have recourse to the First-tier Tribunal, instead of the ECHA board of appeal. Like my noble friend Lord Fox, I am extremely concerned about the lack of capacity in personnel within the HSE and the tribunal to deal with this extremely complex subject.
As the Minister also said, the SI includes an amendment to the definition of used PCBs. This rolls easily off the tongue and means very little. It actually refers to the various environmental protection regulations for the disposal of polychlorinated biphenyls and other dangerous substances. PCBs are one of the most toxic pollutants affecting rivers, schools and fish and are a persistent organic pollutant. Will the amendment to the definition of PCBs be more stringent or more lax? Perhaps the Minister can reassure us.
The long list of what is being done and why is extremely concerning. Can the Minister explain what the,
“alternative methods for assessing the hazards of substances”,
are likely to be? As for the Environment Agency providing expertise in relation to environmental science, I am again concerned about the organisation’s capacity. Both the Environment Agency and the Health and Safety Executive have been asked to take on many additional functions as a result of the myriad statutory
instruments which this House has debated in recent months. Each one glibly says that the powers will be dealt with by those organisations, but there is no mention of capacity building or additional resources to help. Each SI cannot be seen in isolation but must be seen in the context of all the other duties passing over. There is a cumulative effect, and the system must be robust.
I live in an area with a big manufacturing company which used to be British-owned but is now Italian-owned. As we have heard, the system of registering to trade in chemicals is often that the larger company applies and the smaller contractors operate under that registration—that is, it is grandfathered over. This has not been a problem while the main holder was an EU-based company. It will not be a problem when the registration is held by a UK company, but it will be a significant problem for those small engineering companies operating under the registration of an EU-based or worldwide company that does not hold a UK registration.
Years ago, I worked for a small engineering company that did subcontract work for other local companies. Often, parts had to be electroplated, which was done in Bath by another small company. These small operators, which often use extremely toxic chemicals, are likely to be hit the hardest by this legislation. Sadly, despite my noble friend Lord Fox’s many meetings with them, Defra officials have failed to grasp the implications and make any amendments to the SI to mitigate the consequences.
Paragraphs 7.14 to 7.23 of the Explanatory Memorandum give details of the interim arrangement for UK registrations into the UK REACH system. It is cumbersome, with cost and safety implications. I am concerned at the fate of many of our small companies, which are the lifeblood of our economy.
Moving on to the consultation undertaken, the EM states that 23 stakeholders from a range of organisations were consulted in a series of eight meetings. That represents less than three consultees per meeting. The Minister indicated that wider consultation subsequently took place. Can he say how many small companies were consulted during this process and how many industries they covered? I am concerned that insufficient weight has been given to their views.
Dani Loughran, the managing director of Aston Chemicals, has given me permission to use her example of how this SI will affect smaller companies. Aston Chemicals employs 36 people and imports chemical ingredients from around the world used in personal care products, such as shampoo, toothpaste, skincare and cosmetics. It brings its products into the UK by boat or air and supplies them to manufacturers in the UK and the rest of Europe. The UK has been a gateway to Europe with cost-efficient freight routes landing at UK ports.
REACH is causing another huge problem for the chemical industry because it will mean that we are no longer a member of the European Chemicals Agency, or ECHA. We all know that it manages all chemical regulations, including the EU’s landmark REACH regulation. Chemical manufacturers all over the world have spent millions testing their chemicals and providing extra
safety data to meet the REACH requirements, with access to the massive EU single market as a reward. After Brexit, the UK wants to replicate this regulation with UK REACH. It would mean manufacturers having to do the whole thing again—with more testing and more enormous costs—but, this time, just for access to our market in the UK. For most chemical companies, this will not be worth while as the size of the UK market simply will not justify the huge costs involved, resulting in products being withdrawn from sale in the UK. UK manufacturers will not be able to manufacture without these ingredients, and as chemicals are at the top of the supply chain for many industries, they will all be affected. EU manufacturers, however, will be fine, so the logical outcome is for these industries to move out of the UK and into the EU, losing more UK jobs and tax revenue. Aston Chemicals is not alone; thousands of UK companies are having to do the same.
I understand that we do not live in a perfect world. We often have to make compromises, but some compromises need to be weighed up very carefully. If this fatal Motion is passed, the UK will be left without any framework within which to operate on this sensitive issue, and businesses and the public will suffer. If we support this SI, which has some significant flaws, the UK will operate under an imperfect regime, the consequences of which have been highlighted this afternoon. There are several phrases to describe this situation: “between a rock and a hard place” or “between the devil and the deep blue sea”. I know that the Minister is listening to the arguments put forward, but I suspect that his hands are tied by those in the other place. However, I look forward to what he has to say and hope that we can find a way forward.