My Lords, I thank the Minister for his introductory remarks on this statutory instrument.
Previously, applying for an exemption for the use of certain hazardous substances was handled and organised, and the cost was picked up, by the EU. After Brexit, the cost was picked up by the UK taxpayer. The Government are now moving the cost from the taxpayer to the businesses which are required to apply for exemptions. Not surprisingly, those businesses are balking at this additional cost where previously there was none for the same service.
As the Minister said, the fee that Defra is implementing to be payable is £39,721. At the same time, the Secretary of State will publish a charging scheme of fees and how they will be reached. The fee set out in the instrument will operate from April 2023, when the new scheme of charges will also become operable. There is no indication at this time whether those charges will be higher or lower, only that they will be on a full cost-recovery basis.
As the noble Baroness, Lady McIntosh of Pickering, said, Defra held a six-week consultation on the fee being introduced in this SI, which ended on 26 August. Of the 54 responses received, 53 disagreed with the consultation proposals. This is the first time that the businesses concerned have been expected to pay for exemptions.
The Secondary Legislation Scrutiny Committee, of which I am a member, asked a number of questions of Defra on the SI. The exemptions cover such items as the use of lead in portable emergency defibrillators and the use of mercury in intravascular ultrasound imaging systems. This is vital to the health service and a number of us at all levels, because of the effects on the health service, on which we are completely reliant.
The fee is to cover the cost of a consultant’s fee in assessing the application and whether the product is safe and fit for use. Regardless of whether the application is a renewal or a new exemption, the fee to be applied is the same. There are 23 existing exemptions that would require an application fee to be paid when they are next renewed.
Four businesses consulted were concerned that specialised items provided in low volumes but subject to the application of a fee might not continue to be supplied in GB due to the cost. This would have a significant impact on some medical technologies. Given that some of those businesses supplying this equipment and needing an exemption certificate are small and medium-sized businesses, the cost is likely to have a negative effect. Can the Minister comment on this?
The Northern Ireland market, as both speakers have said, is not subject to these regulations as it still operates under EU rules. No fee is therefore charged there. This SI applies to England, Scotland and Wales only. Can the Minister say whether it is likely that some devices might appear illegally on the Northern Ireland market, not subject to a fee, and then be sold on to England, Scotland or Wales? I understand the Minister says that this is not likely, but this is a loophole in the system whereby no fee would have to be paid for a separate GB exemption; the noble Baroness, Lady McIntosh, also referred to this. Would it not be better if the same system applied to the whole of Great Britain, including Northern Ireland? Would the Minister care to comment on that?
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Lastly, I note that, although the fee will be applied now, the guidance is not ready; it is being developed to be in place by April 2023—it is promised to be ready at the same time the fee is implemented. Can the Minister say how the preparation of this guidance is progressing and whether it will be ready to be published early in the new year so that those affected can familiarise themselves with it? It is concerning that 53 of the 54 businesses involved were opposed to the change in regulations. I understand the need to recover the cost of issuing exemptions but I find the consultant’s fee for assessing applications, at £36,625, very high—as are Defra’s admin costs of more than £3,000. This is an extremely retrograde step as a result of Brexit and one that could have been avoided.