Draft Product Safety and Metrology etc. (Amendment) Regulations 2024 Debate

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Department: Department for Business and Trade
Rushanara Ali Portrait Rushanara Ali (Bethnal Green and Bow) (Lab)
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It is a pleasure to serve under your chairmanship, Ms Rees. The statutory instrument will extend the validity of EU product standards, known as CE or European conformity, in the UK indefinitely. When the UK left the European Union, the Government intended to replace, as the Minister pointed out, the CE standard with the UK’s own UKCA. Like so many of the Government’s Brexit promises, it has fallen by the wayside when meeting the cold reality of what it actually means.

Under current law, all firms would have to begin using the new UKCA mark by 1 January 2025, because recognition of the EU’s CE regime is due to expire by the end of this year. The Government have already postponed the deadline twice, but, as we have heard, the statutory instrument will remove the expiry date altogether, meaning that the CE scheme will now be valid indefinitely. The move has been welcomed by industry, with many businesses and trade associations speaking in favour of the Government’s change in direction due to the need to avoid a dual testing and standards regime for businesses that operate and trade in Europe.

It is good that the Minister is taking pragmatic action. It is a shame his predecessors had not done it sooner because that would have saved businesses a great deal of work in setting up a parallel system and wasting much-needed resources that they could have invested elsewhere. The British Chambers of Commerce described the Government’s move as a “welcome change in direction”, and techUK stated that the move was a

“positive step that will make it easier and cheaper to place products on the GB market.”

The Labour party welcomes the changes as they will make it easier for firms to trade with our European neighbours, reduce operating costs for business by mitigating the need to comply with two regulatory regimes, and help protect prices for consumers. The instrument’s impact assessment lays out a fairly compelling, as the Minister pointed out, justification for the intervention. The Government predict that the benefit to business of maintaining the validity of the CE regime will be £558 million, but that gives rise to the question why, before the announcement of this U-turn, the Government had pursued the removal of the CE’s validity with such persistence, despite the obvious problems it would present for businesses, trade and consumers. I hope the Minister can address that. I appreciate he was not in place at the time, but perhaps he can address the points because they are relevant to his Government.

The ongoing uncertainty has been disruptive to businesses as they have had to prepare for this ever-moving cliff edge —in some cases re-designing and re-manufacturing products to replace the CE mark with a UKCA one. Many firms will understandably feel as though they have wasted money, while other firms will likely have held off investments because of the policy uncertainty and the fact that they have had to spend money complying with this parallel system. What has changed? Why did the Government continue to insist for so long that businesses work to this superficial cliff edge, which created needless hassle, only now to pull the plug on the whole plan? What assessment have the Minister and his Department made of the overall cost to business of preparing for the parallel UKCA process, as opposed to sticking to the CE process that we are now reverting back to?

As welcome as this move is for businesses, it is far from ending the uncertainty for firms. Two critical questions remain. First, will the Minister confirm that this statutory instrument’s removal of any expiry date for the CE regime’s validity means that there will be no subsequent attempts to reinstate an expiry date? Secondly, do the Government intend to modify or water down the existing UKCA regulation, thus effectively creating a two-tiered regulatory system for firms and consumers to operate in?

I speak regularly to businesses, their representatives and intermediary organisations, and many have deep concerns about the state of the business environment, particularly in recent years, the lack of consistency and clarity in policy, and the constant chopping and changing. That is set out very clearly in proposals and changes resulting from Brexit uncertainties, and this is yet another example of that. Although this particular decision is welcome, the fact is that this should never have happened. It would have been far better if the Government had stuck to the CE regime that they are now reverting back to, rather than letting businesses waste so much time, energy, money and effort in addition to the burden they already faced.

The Government’s dogmatic, ideological approach has been really damaging for businesses, and they are fed up with it. It is good that the Minister has responded and we will support this SI, but I very much hope that he will look at other provisions containing needless disruptions. We need a pragmatic approach to support businesses rather than an ideological one that damages them and their ability to generate growth and power our economy.

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Kevin Hollinrake Portrait Kevin Hollinrake
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I thank hon. Members for their contributions, I will deal with the key points raised. The shadow Minister, the hon. Member for Bethnal Green and Bow, talked about a dogmatic, ideological approach and about the Government persisting in travelling in the same direction, but admitted in the same breath that we have twice changed the deadline on the CE marking, and we have now changed it again to make it indefinite. As will always be the case with the Conservative party, we are for business because we are from business; we listen to businesses and we are pragmatic. As I said earlier, we have had 46 roundtables and engaged with 200 domestic and 50 international businesses. As the facts change, we change our mind, and it is important that we reflect the needs of businesses.

The hon. Lady talked about wasted money, but this money has not been wasted, in that the UKCA regime still applies and is still available to businesses that want to place goods just in the GB market. We have not legislated permanently never to reintroduce the UKCA marking; we are very much taking a case-by-case approach to sectors and products that we feel will benefit from a UKCA marking rather than a CE marking.

The point I would put back to the hon. Lady is that, as is often the case with the Opposition, we hear lots of criticism from people standing on the sidelines, but they do not have any definite plans themselves. Is she saying that she would not have a UKCA marking? Is she saying that she would permanently adopt a CE marking, which would mean she would have to settle for dynamic alignment? I am interested to know what her approach would be, so perhaps she could set it out when she addresses these points in future. [Interruption.] Does she want to intervene?

Rushanara Ali Portrait Rushanara Ali
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Yes, I would be happy to. If the hon. Gentleman wants to get the Prime Minister to call a general election, I would be very happy to set out what the Labour party would do if we were in government, but he is the Minister. I have acknowledged the positive role he personally has played, but his predecessors were moved around—week after week, in some cases—and businesses unfortunately had to deal with industrial-scale uncertainty. As he will have heard, that was extremely damaging for confidence and made it hard for businesses to operate. I have separated out his role from those of his predecessors and previous Prime Ministers, and I hope he can acknowledge that I have been fair in the way I have reflected on it versus what happened before, but I call on him to call a general election so that the Labour party can get going and deliver for business.

Kevin Hollinrake Portrait Kevin Hollinrake
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That is slightly above my pay grade, but I acknowledge what the hon. Lady said about my role. I have been here 18 months, and I am pleased to have been in the job, but I also have great respect for my predecessors.

The hon. Member for Walthamstow described what has happened as an unmitigated disaster for businesses. I would point out that the UK is now fifth in the global league table for trade; it was sixth, but we have just gone past France. We are the fourth largest exporter in the world; we were seventh, and we have again gone past France. We are third in terms of GDP growth, whether we look at the period since 2010, since the pandemic or indeed since Brexit. We are the second largest exporter in the world of financial services. We have the largest number of unicorns in Europe—businesses that have gone from start-up to a $1 billion valuation—and twice as many as France and Germany combined. So there are many, many positive things that the hon. Lady might reflect on rather than looking at the difficulties she describes for businesses.

I think the hon. Lady said that we should dynamically align with everything the European Union does and that that would be helpful for business. Let me point out some of the things that she would forgo if she took that approach: the move to digital labelling on a voluntary basis, which businesses greatly welcome; the changes we have made to things such as the working time directive, holiday pay and GDPR, and to the product safety regulations, which will make it easier for businesses to comply with those regulations; the Digital Markets, Competition and Consumers Bill, which will hold big tech companies to account to help small and medium-sized enterprises, in a completely different and we think much better way than the EU; free trade agreements with 73 countries, including Australia and New Zealand; and accession to the comprehensive and progressive agreement for trans-Pacific partnership and thus one of the largest growing markets in the world. None of those things would have been possible had we stuck in the European Union, as the hon. Lady wanted, or continued with dynamic alignment with European Union rules. She asked whether we will continue to dynamically align. We will take that on a case-by-case basis. The UKCA mark is still there where we decide to diverge from the European Union.

I did not get the hon. Lady’s point about the net benefit. The net benefit is set out quite clearly in the impact assessment: £64.8 million in the first year and £558 million over a 10-year period. I am happy to write to her if she wants to write to me—