Official Report: Minutes of Evidence

The Chairperson (Mr McGuigan): This item will be reported by Hansard.

I welcome Mark McGregor, head of legislation, goods regulation and chemicals branch in the Department for the Economy; Gareth Lyons, from the same branch; Jennifer Stewart, head of firearms and explosives branch in the Department of Justice; and Canice Ward, head of the medicines regulatory group in the Department of Health. I hand over to you to brief us.

Mr Mark McGregor (Department for the Economy): Thank you. Good morning. I will take you through our evidence this morning and give you an overview of the classification, labelling and packaging (CLP) regime. My colleague, Gareth, will give you some more detail on the proposed revisions, and then our colleagues from Justice and Health will add their comments.

EU Regulation 1272/2008 on hazard classification, labelling and packaging of chemical substances and mixtures is more commonly referred to as CLP, and we will refer to it as CLP throughout. It is contained in annex 2 to the Windsor framework. There is, at present, a proposal for a revision of the CLP regulation. On 14 October 2024, the Council agreed to adopt the revision and agreed with the European Parliament's decision. At present, we are just waiting for the revision to be formally signed, probably on the margins of the European Parliament plenary session this week. After that signature and publication in the Official Journal of the European Union, the formal notification to this Committee will take place via the UK-EU joint consultative working group (JCWG) structures. The implementation of the amendments will begin in mid-2026 across the EU and Northern Ireland, if it is adopted and applies here.

The CLP revision includes the introduction of new hazard classes, which have already been added to CLP by way of a previous Delegated Regulation 2023/707. That came into force in April 2023 and already applies to substances and mixtures that are placed on the Northern Ireland market. That element came in before the Windsor Framework Democratic Scrutiny Committee was established and its scrutiny role was in place. A similar regulatory regime applies in Great Britain as assimilated law. It is essentially a snapshot of the EU CLP regime and is known as UK or GB CLP.

There is a varied spread of departmental responsibilities and roles. The main competent authority and policy lead for CLP is the Department for the Economy. However, other Departments provide technical and scientific support in specific areas. Our colleagues in the Department of Justice hold competence in enforcement responsibilities for civil explosives only. The Health and Safety Executive for Northern Ireland (HSENI) and local authorities or councils carry out enforcement responsibilities. The Department of Health has enforcement responsibilities in relation to CLP in registered premises in Northern Ireland. The Environment Agency provides support for CLP cases that involve environmental hazards.

It is important to note that under the agency agreement between the Health and Safety Executive of Great Britain (HSEGB), DFE and the Department of Justice, HSEGB provides expert scientific advice on CLP. As the subject matter experts on CLP, we tend to refer the more technical and scientific queries to HSEGB for its input. That is governed under an agency agreement, which is published on the HSEGB website.

I will give you a brief overview of the CLP regulation as it stands. Its overall purpose is to ensure a high level of protection of health and the environment, while maintaining the free movement of substances and mixtures within the EU market. It sets uniform requirements for suppliers to classify, label and package hazardous chemicals appropriately before placing them on the market. Suppliers must assess whether the substances and mixtures that they place on the market have harmful properties and classify them by type and level of hazard. The most harmful substances, which are those that can cause cancers, cell mutations or adverse reactions in fertility or respiratory systems, are legally required to have an EU-harmonised classification applied. The harmonised classification sets labelling requirements for that substance, which must apply throughout the EU market in order to ensure adequate risk management. Suppliers must then clearly communicate the identified hazard to consumers, the supply chain and the poison centres for the emergency health response. That is the National Poisons Information Service in Birmingham, which was administratively appointed by the Departments to receive that emergency health response information. Labelling requirements can include the quantity of the hazardous substance, hazard pictograms, signal words and safety advice. Finally, packaging of substances must be durable, resealable, prevent the escape of substances and, where required, include child-resistant fastenings and tactile warnings.

I will give a brief overview on the need for the CLP revision before Gareth covers some of the detail. It supports the aims of the European green deal and sets out the EU's ambition for sustainability, carbon-neutrality and zero pollution. The European Commission adopted its chemical strategy for sustainability in October 2020. The strategy aims to better protect human health and the environment from harmful chemicals and to boost innovation by promoting the use of safer and more sustainable chemicals. As part of that strategy, an evaluation of EU chemicals regimes identified three main areas of weakness in CLP.

First, certain harmful hazards posed by chemicals are not being classified strongly enough under existing criteria. In particular, the Commission expressed concerns about chemicals with endocrine disrupting properties, which is about dealing with your hormone system. Those chemicals can impact on the environment or human health by causing an overproduction or underproduction of hormones. The Commission also expressed concern about toxic chemicals that accumulate and persist in the environment and living organisms and about mobile and persistent chemicals that can cause long-lasting contamination of water resources.

Secondly, hazard communication to consumers and businesses is suboptimal and is leading to the potential exposure of consumers, workers and the environment to unnecessary risk. Consumers do not fully understand the pictograms and warnings, and label readability is limited due to technical language and small font sizes.

Thirdly, there are legal gaps and high levels of non-compliance with CLP. Analysis indicated that imports of substances sold on online marketplaces, in particular, were often classified or labelled incorrectly leading to their incorrect use, storage and disposal, and that accurate hazard information

submitted to poison centres for the emergency health response requirement.

Mr Gareth Lyons (Department for the Economy): I will look at what the key amendments to CLP will be. First, to address the concerns around classification, six new hazard classes were brought forward. They were added in 2023, and they deal with hazards such as endocrine disruptors and persistent, accumulative, mobile and toxic properties. Those classes, along with substances that pose any kind of carcinogenic, mutagenic or fertility risk, will also be prioritised going forward for harmonised classification by the EU. The Commission has been given further powers in the amendments. It can now mandate that the European Chemicals Agency develop new harmonised classifications going forward, and it has also simplified the assessment process to improve transparency and to allow access to SMEs for making assessments of chemicals.

To communicate the hazards better, there will be new formatting rules for labels. That will include minimum font sizes, directions on line spacing and requirements for all warning text to be printed in black on a white background. Labelling rules also extend to selling chemicals in refillable containers, new exemptions from labelling for chemicals that are sold either in very small packaging or in bulk, such as fuel, and options to use digital labels and fold-out labels on packages.

To address the concerns about legal gaps and non-compliance with the rules, new rules will be brought in that will apply to the sale of substances via distance sales or online marketplaces. All advertisements or product listings on online marketplaces must now clearly display the hazard text and pictograms that you would typically find on a physical label. All suppliers who place substances on the Northern Irish or EU market must also now be established in the EU or Northern Ireland or must appoint a responsible person in the EU or Northern Ireland to be responsible for ensuring that the substances meet CLP requirements. The requirement to submit information relevant to poison centres for emergency health response has been broadened, and that will apply to importers and distributors who relabel and rebrand substances.

The changes will be implemented in 18 months following the adoption of the legislation in force. There is a further six-month period for the changes to the label formats, and there is a 24-month transition period, which will apply to any products currently on sale or in store.

Mr McGregor: I will come back in to cover some initial assessment of impact. Although CLP is a devolved matter, as noted previously, the Health and Safety Executive of Great Britain provides expert scientific and technical advice to the Department. Our assessment of impact is therefore informed by the explanatory memorandum provided by HSE in February 2023. That explanatory memorandum is slightly out of date. We have also provided extracts from an updated but not yet published explanatory memorandum that HSEGB is working on. On receipt of that, we will forward it to the Committee in writing for you to examine.

DFE has conducted light-touch engagement with business. In September, we wrote to 53 businesses that were identified as key players in the market based in Northern Ireland and eight trade bodies to request feedback on the changes proposed by the EU to CLP. Unfortunately, at this time, no feedback has been received. We continue to try to engage on that, but it will be interesting to see the responses that the Committee receives, be it from the Citizen Space survey or a consultation in that area.

HSE has highlighted a number of areas where the amendments to CLP may lead to additional costs for Northern Ireland business and, potentially, temporarily disrupt supply chains. That includes the need to redesign non-compliant labels and relabel products; updating advertisements and product listings in online marketplaces; training to accurately classify substances in the new hazard classes; training on and implementation of risk management measures to comply with new rules for the sale of chemicals at refill stations; and the requirement for certain distributors that import chemical products to submit emergency health response information to poison centres.

HSE's initial estimate is that the total administrative cost for Northern Ireland-based suppliers would be in the region of £88,000 per annum. We have not seen the HSE's methodology for making that estimate. It is something that we will follow up in writing with it to try to understand that more fully. HSE, however, identifies potential cost mitigations. The cost of updating labels and online marketplaces may be mitigated when changes overlap with scheduled rebranding or marketing activities, which typically occur every 18 months. Other amendments such as digital and fold-out labels are voluntary but offer labelling flexibilities and could be used to reduce administrative burdens and lead to savings for Northern Ireland suppliers through avoidance of relabelling costs. Additional derogations for chemicals sold to consumers in bulk, such as fuel, and in very small packaging will also exempt some suppliers from incurring CLP compliance costs. The overall costs of the legislative package to Northern Ireland-based suppliers will be offset by a projected saving of £1·12 million per annum to public health systems and de-pollution schemes. The benefits stem mainly from the protection of health and the environment.

Trade between Great Britain and Northern Ireland may be impacted on due to the requirement for businesses in the rest of the UK to comply with the amended CLP regulations to supply the Northern Ireland market. The scale and impact of that will depend on whether those businesses also supply the EU market and the position adopted by HSEGB when implementing equivalent changes to the GB CLP regime.

HSE is assessing the amendments made by the EU to CLP. That included a public consultation in September on potential changes to GB CLP, including relabelling, labelling formats, warning statements and pictograms. Northern Ireland-based businesses can continue to move qualifying chemical products to Great Britain.

That concludes my remarks on the impacts. I will pass to departmental colleagues for some brief comment before concluding. Jennifer, would you like to come in?

Ms Jennifer Stewart (Department of Justice): As Mark said, the Department of Justice is the designated competent authority and enforcing authority in respect of CLP for explosives for civil uses. We do not anticipate that that would be impacted on by the current amendment to CLP.

As Mark also said, we are signatories to the agency agreement with HSE, which provides technical support as required.

DOJ has a memorandum of understanding (MOU) with the HSE explosives inspectorate for it to provide the technical health and safety support to DOJ.

Mr Canice Ward (Department of Health): As Mark said, the Department of Health has monitoring, enforcement and surveillance responsibilities for CLP in registered premises or pharmacies in Northern Ireland. Those responsibilities continue under the legislation, and there is no change.

Generally, pharmacies in Northern Ireland and across the UK are entitled to sell certain poisons or chemicals that may be affected by the legislative change. Typically, a pharmacy may sell household chemicals, such as caustic soda, hydrogen peroxide and citric acid, in various forms. When those products are now to be sold in Northern Ireland, they will have to be compliant with the updated legislation. On rare occasions, a pharmacist may order a particular chemical to extemporaneously prepare a medicine for a patient at the request of a prescriber. That is very rare, but any chemicals that they order in that manner would now have to be compliant with the updated legislation.

Medicines are specifically exempted from the CLP regulation. The classification label on packaging of medicines is covered, in its entirety, by medicines legislation, and there is no impact on that as a result of the CLP legislation. The change will not have any impact on the supply of medicines to Northern Ireland. The Department has enforcement and surveillance responsibilities, and that also is unchanged by the legislation.

Mr McGregor: That concludes the introductory evidence from the Departments. I hope that you have found it useful, and we are very happy to take any questions that you may have.

The Chairperson (Mr McGuigan): Thank you very much to you all. First, I apologise to Canice for using the French pronunciation of your name.

The Committee's role is to look at the significant impact on communities of things that are likely to persist. You said that the HSE had a light-touch consultation with businesses, and it had no response from 53 businesses.

Mr McGregor: That was engagement by ourselves.

The Chairperson (Mr McGuigan): Yourselves. Sorry.

Mr McGregor: It was under Gareth's control. We engaged with Invest NI to identify some key players in the market and the relevant trade bodies, and we reached out to them. Previously, there has been difficulty in engaging with the sector. Last year, in conjunction with DAERA, we tried to reach out and engage with the sector. Some 200 businesses were contacted at that time, and only seven responded. Our light-touch engagement asked for general views on the amendment to get an idea of their feelings. It was not a full consultation by any stretch, and the response time was quite limited, but we received no substantive responses. That reflects the difficulties that we experience when engaging with the chemicals sector.

The Chairperson (Mr McGuigan): During the light-touch exercise, were businesses made aware of the potential additional costs that you mentioned?

Mr Lyons: No. We asked for general feedback and comment from businesses on the CLP amendments.

The Chairperson (Mr McGuigan): OK. Fair enough.

What is your opinion of the impact? You have spoken across the board. Will there be any significant impacts on communities in the North that are liable to persist as a result of the new EU legislation?

Mr McGregor: It would seem unlikely, because any supply chain disruption could potentially be short-term. GB is looking at its chemicals regime, going out to consultation and considering areas of alignment with the EU. The Product Regulation and Metrology Bill is going through Parliament, and it will potentially allow alignment in areas such as chemicals regulation. Therefore, there is the potential that GB will come into alignment eventually, but we do not know how long that will take. GB is reviewing the area and its chemical strategy in the round, not just the CLP aspect.

The Chairperson (Mr McGuigan): Thank you.

Mr Brooks: Thank you very much for your presentation. Is there any sense of what the businesses that are covered by this regulation account for of the total trade between GB and NI?

Mr Lyons: I have some figures on that. It is hard to give an exact figure, because this will impact on companies that manufacture chemicals, companies that blend chemicals and companies that may use chemicals to offer a service, for example; so, quite a lot of businesses are touched by it. Going by the strict HMRC definition of a company dealing with chemicals, approximately 2% of industry in Northern Ireland works in that kind of area. So, it is not insignificant.

Mr Brooks: Absolutely.

Going back to the point that you made in your answer to the Chair about the engagement that you have had with some of those businesses, where you said that there has not been much feedback, do you think that it would be beneficial to flag some of your concerns or your own view of the impacts, positive or negative, with businesses to see whether they feed back to that? That may not be the usual way of doing things.

Mr Lyons: We did do that. The letter that I sent out to businesses did go through a summary of what we presented today. It showed what it is going to bring in and the potential issues that it may bring. We did not put figures on it as such because we are not sure how reliable those figures exactly are, but we gave an overview of what it was going to mean for business in Northern Ireland and then asked for feedback on that.

Mr McGregor: We are still waiting for guidance from the EU for businesses on how to implement CLP. Obviously, it is not in place quite yet, and there is then a lead-in time of 18 months to two years for a lot of the provisions, so it gives time for that guidance to be produced. We do not have that kind of technical compliance guidance because the EU has not drilled down into that level of detail yet.

Mr Lyons: Another point to note is that HSEGB did a consultation in September. As part of that, it has had a look at it. It got responses from Northern Irish businesses on that consultation. Although it is about GB changes going forward, not EU changes, it was asking questions around how much it costs to change a label, timescales and those kinds of things. It is going to try to extract information for us at a local level, and that might be helpful to have.

Mr Brooks: Are there any indications or fears at the moment that there is any risk of GB-based businesses that currently trade into Northern Ireland withdrawing from Northern Ireland if things change?

Mr McGregor: We have had no direct indication of it. We are aware that it is a risk. The assessment is that the chemicals market is, generally, global. An awful lot of the GB chemicals will be supplied via an EU supply chain, and most companies will also be supplying into the EU. So, meeting their compliance there will meet their Northern Ireland compliance. There may be some smaller companies that supply only the UK and the GB market that could, potentially, decide not to comply and continue to distribute to Northern Ireland, but they are seen to be smaller businesses in smaller areas. We do not have any defined risk in that area, and it is not a case where there would not be alternatives available. There may be another GB supplier that will supply or an EU-based manufacturer that can supply.

Mr Brooks: So, there is not a strong risk that, if any of those businesses pulled out, that would add significant disruption in supply chains or anything of that nature.

Mr McGregor: Obviously, we cannot guarantee for every single case, but, in most instances, we are not anticipating a risk in that area.

Mr Brooks: Are there any public services that would be disproportionately affected by any disruptions?

Mr McGregor: Yes, there are certain bodies that are heavy users of chemicals. The energy industry and energy generators will use certain chemicals in cooling processes and the like. All the bigger organisations that are buying in bulk are expected to have a supplier that is already in the EU supply chain and compliant. We have not had anybody flagging any risk or concern about a supplier not continuing supply.

Mr Lyons: We were given a list of companies used by NI Water and Northern Ireland Electricity, the generators of electricity. Those main suppliers are multinational companies, so I would imagine that they will obviously have European operations and will continue to meet the requirements going forward.

Mr Brooks: Thank you.

Ms Nicholl: Like the others, I think that any politician has fears when there has been no feedback. You have answered quite a bit of this already, but I want to ask whether there are any further plans to increase that engagement. It is interesting to me that, as the Department for the Economy, you would have quite a lot of engagement with business ordinarily. Did you say that the process for this was through Invest NI? Will you be exploring any other ways of engaging?

Mr McGregor: Yes. Because we have faced the challenges in getting the industry to engage, we are in the process of scoping the idea of a chemical stakeholder forum. That is what we are provisionally titling it as. We are looking at the kinds of areas in which we might want to engage people. We are having to discuss it with other Departments, because DFE is responsible for only three chemicals regimes. An awful lot more sit on DAERA, and, if we were doing something, we would probably do it jointly. It was demonstrated here, where we wanted to understand the views of business and were unable to attain them. We are exploring that. Obviously, it will require approvals from within the Department and ministerial approval, but we are working towards establishing a chemical stakeholder forum to look at these things on a semi-regular basis.

Ms Nicholl: If it has been an issue in the past, as you said, that makes sense.

Mr Lyons: The list that we put together of local businesses that deal with chemicals was sent to HSEGB. That is why it was compiled. It asked for that, because it wanted to contact businesses personally. So, HSE is going to —.

Ms Nicholl: It had actually contacted before you had —.

Mr Lyons: No, it has not contacted them yet. It asked for a list of companies, which I got for it. I then decided to use that to contact directly for DFE, but HSE has plans for engagement also, with that list of companies.

Ms Nicholl: People responded to its consultation, so it should get something.

Mr Lyons: Hopefully.

Ms Nicholl: OK. Thank you.

Mr Buckley: Thank you very much for the presentation, lady and gentlemen. In conjunction with Kate's comment, it concerns me that there has been such a historical lack of engagement from the chemicals industry with Departments in this nature, particularly given some of the changes.

I will pivot back to David's question, which is not unrelated to that engagement piece. Did you say that 2% of all trade is chemical-related in Northern Ireland? Did I pick that up right?

Mr Lyons: Yes.

Mr McGregor: Let me see. We have a note here that the Northern Ireland chemicals industry generates £222 million gross value added (GVA). That is 2% of the UK chemicals industry GVA, and it comprises 0·5% of the total of Northern Ireland GVA. The figure there is £222 million.

Mr Lyons: The —.

Mr Buckley: Sorry. Go ahead.

Mr Lyons: The 2% is the number of employees as part of the Northern Ireland workforce.

Mr Buckley: That is quite significant in itself. The fact that nobody is replying or engaging via the traditional forms of engagement would lead to a lot of concern from me. I just want to flag that. I know that you have suggested means by which you try to address that, but, certainly, not only in this space but going forward, if there are to be persistent changes or updates, it is something that we need to bear in mind.

It is 2%. How many businesses, roughly, is that?

Mr Lyons: At that point, 85 businesses were identified.

Mr Buckley: OK. Again, I seek clarification on David's point. In that trade, what percentage of the trade is suppliers from GB into Northern Ireland of that total 2%?

Mr Lyons: We do not know that. The trade statistics that we were given exclude GB-Northern Ireland trade.

Mr Buckley: OK. Is there any way of us establishing that figure?

Mr Lyons: We have tried, unsuccessfully so far, in a number of areas, to find that figure. We do not believe that HMRC is providing that data at this time.

Mr Buckley: That makes it even more difficult to assess the impact of this. If GB does not follow these regulations, there is the risk of divergence. Ultimately, we do not know the potential impacts. I have no more proof than you do, but, given some of the people with whom I engage in this industry, I imagine that quite a bit is supplied source through GB. If GB does not follow the same regulations, there is the potential for significant divergence, if that action of trade is in any way fettered. Would that be a fair assessment?

Mr McGregor: There is the potential for a GB-based supplier to decide not to comply with the EU regulations and then not be able to access the Northern Ireland market. Other than recognising that that potential exists, we have no evidence. Nobody has flagged to us that they are in that situation or are concerned about their supplier. We have had comment about how the chemicals market works generally: it is so interconnected at a global and European level that, in most cases, it is anticipated not to have that impact. However, you are correct: there is a risk of some smaller GB-based suppliers in particular wishing to withdraw from the Northern Ireland market.

Mr Buckley: We hear a lot of commentary in a number of different sectors and industries about how differentials in labelling could cause significant disruption to the Northern Ireland supply chain.

You said that HSE mentioned what that would cost in addition. Do we have any specifics on the increase in costs in reference to trying to meet those EU requirements for a GB supplier, for example?

Mr Lyons: We do not, but once the consultation that was done in September by HSE about its plans for the GB version of this is given to us, that will give us a good indication.

Mr Buckley: So, we have no real ability to identify or delve into the cost per business for NI or GB businesses to comply with the regs. There is no way in which to dissect that at this stage.

Mr Lyons: No. The HSE memorandum gave a figure of £88,000 per year for Northern Ireland as a whole, but —.

Mr Buckley: How did that figure come about?

Mr Lyons: That is what we are looking to find out.

Mr McGregor: We have not seen the methodology for that. We are interested in working out how HSEGB came up with that. We are awaiting a response on that, and we will share it with the Committee once it is received.

Mr Buckley: OK. Again, I accept from what you have said that you guys do not have the answers to this, but I want to know about the scale of trade from GB to NI, and how it would impact if there were divergence and GB did not follow. I am not entirely convinced that GB is following in that instance, and I certainly do not see any indication that it will any time soon. I want to know the cost per business and how that might impact on the sector here.

The Chairperson (Mr McGuigan): I will follow on from some of the points that Jonathan made. You seemed to suggest earlier that it looks as though legislation in GB may well follow the EU example, although you do not have a time frame for that. Given the points that you made about the global nature of the chemical market, it follows that it is likely, regardless of legislation across the water, that businesses that are in a global market and want to trade, whether it is here or anywhere else, will follow EU regulations.

Mr McGregor: Yes. For CLP, there is a global harmonisation system, and, in this instance, the EU is a step ahead; it is pushing ahead with improving chemicals regulations and increasing the risks that it is trying to protect. GB follows that global system as well. It has not yet adopted the hazard classes, which means that, in general, the rest of the world has not adopted them, but the EU is already pushing for them to be added to the agenda and adopted on a global basis. You quite often see a situation globally where, because of the size of the EU market, companies want to comply with it and maintain access. The EU is trying to get the additional hazard classes added via the global system, which would make them applicable to GB and the UK via that route, rather than an alignment with the EU approach. There are a couple of routes by which GB could get closer to the position in the EU and Northern Ireland. We are not guaranteed that that will happen; that will fall to the Whitehall Departments and the UK Government.

The Chairperson (Mr McGuigan): Thank you very much for coming. There are no more questions. This has not been notified yet, so we will hear from you at a later date, no doubt.

Mr McGregor: Yes. We expect that to be within a couple of weeks. We expect signature on the margins of plenary this week, and then the publication and your notification after that.

The Chairperson (Mr McGuigan): Grand job.