The Environmental Audit Committee urges the Government to provide clarity on the future of chemicals regulation after the EU Referendum.
Government must provide certainty
The Environmental Audit Committee has said the Government must urgently provide certainty to the UK chemicals industry over the future of chemicals regulation. The UK chemicals industry is the second largest exporter to the EU after cars, selling almost £15bn of chemical products into the European single market a year.
UK companies will have spent an estimated £250 million in order to comply with an EU registration deadline in May 2018, yet have received no guarantees over whether these registrations will remain valid after the UK leaves the EU. This uncertainty means that one in five UK chemicals companies represented by the Chemical Business Association are already investigating registering elsewhere in the EU, in a move that could cost jobs and investment.
Mary Creagh MP, Chair of the Environmental Audit Committee, said:
"It is disappointing the Government have not provided the certainty that UK businesses urgently need on their plans for the future chemical regulation in the UK. The timing of Brexit means that companies face significant costs to comply with EU regulations before we leave, with no guarantee that that investment will be useful to them in the future. The lack of Government clarity is causing uncertainty and driving billions of pounds worth of businesses to consider leaving our country for the EU. The Government needs to provide certainty to ensure that it encourages continued chemical business investment in the UK.
"This lack of clarity extends to plans for a future chemicals framework for the UK: the Government has admitted that it will be difficult to transpose regulations such as REACH into UK law, yet it has not yet offered a vision for the replacement. The Government needs to ensure it understands the complexity and importance of current regulations in enabling the UK chemicals industry to provide not only value to the economy but their expertise and high standards in protecting public health and the environment."
Value to the economy
The Environmental Audit Committee’s report highlights the crucial importance of regulation in enabling the UK chemicals industry to provide value to the economy whilst also protecting public health and the environment. The Committee urges any future Government to ensure this industry is not forgotten during EU negotiations and the development of any future domestic legislative framework for chemicals.
The committee’s key findings are:
- The chemicals regulation framework established by the EU through REACH is difficult to transpose directly into UK law. Writing EU regulations into UK law could not be done simply by having a line in the "Great Repeal Bill" deeming REACH to apply in the UK. REACH was written from the perspective of participants being within the EU, with much of it also relating to Member State co-operation and mutual obligations, oversight and controls, and freedom of movement of products.
- Companies face significant uncertainty over the validity of current REACH registrations after the UK leaves the EU: the Government must clarify their position on the future regulatory framework as a matter of urgency. Companies face significant costs relating to the upcoming REACH registration deadline in May 2018, yet it is unclear whether these registrations will remain valid once the UK leaves the EU in 2019. This uncertainty may already be having an impact on long-term investment decisions by companies.
- In deciding the future of the UK's relationship with the EU's single market for chemicals, the Government should take a pragmatic approach. The most important element of REACH, which the Government should seek to remain involved in as a minimum, is the registration process for chemicals. Most of our respondents, from both environmental and industry perspectives, wanted to stay as closely aligned to REACH as possible. Involvement in registration would allow UK companies to share testing data with EU companies, sharing costs and allowing them to enter the market without double registration, even if the UK adopts higher standards of chemicals protection.
- Establishing a stand-alone UK system of chemicals regulation is likely to be expensive for both the taxpayer and for industry. The Government did not provide us with detail of their scenario planning, although they did admit that the cost of taking on the roles currently provided by the European Chemicals Agency could be in the “tens of millions” of pounds.
- The experiences of the US as it introduces an improved system of chemicals regulation could be useful for the Government when planning the UK's approach. The US is in the process of updating its federal chemicals regulations following the introduction of new legislation in June 2016. Federal agencies are currently developing their new approach to the assessment and regulation of chemicals, and the experiences of the US in developing its own system may prove useful to the UK.