Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome from the Department of Agriculture, Environment and Rural Affairs Colin Armstrong, the deputy director of the water and marine policy and legislation branch; Adele Willis, head of the water policy branch; and Donna Acheson, a water policy adviser. I invite you to brief the Committee.

Mr Colin Armstrong (Department of Agriculture, Environment and Rural Affairs): Good morning, Chair and members. Thank you for the opportunity to brief the Committee. Hopefully, we will be able to provide you with some information to help you with your inquiry into the new regulation.

I thank the Committee for its questions last week. I apologise that our follow-up answers arrived with you only this morning. You will see that some of your questions have been answered. They have been very helpful to us in our discussions with DEFRA to obtain a level of detail that will provide you with the understanding of the regulation that you desire.

I will speak first about some of the statistics and our understanding of the market and of manufacturers. You will note that, in its response, DEFRA has included some statistics on the scale of the market for detergents and surfactants. The position remains that the Northern Ireland market is very small and that the number of Northern Ireland-based producers that trade in those goods is very small. DEFRA has assessed that, for the period 2022 to 2025, Northern Ireland accounted for less than 1% of the UK detergent trade with EU and non-EU markets.

In addition to the analysis that DEFRA undertook, as a result of the questions that the Committee asked, we were able to engage with Northern Ireland Research and Statistics Agency (NISRA) statisticians. We received some further information about Northern Ireland import and export values for the two specific detergent-related categories. Some of that information is not able to be released at a fine scale, because it identifies individual companies and is therefore considered to be confidential. The data, however, confirmed the position that I outlined to you last week, which is that the market is predominantly exports from Northern Ireland to Ireland, with only a small proportion being for onward export to the wider EU and only a very small proportion being exported to other international markets. The predominant market is Ireland, with a small proportion going to the wider EU and a very small proportion going to other world markets.

As you are aware, Northern Ireland companies will be required to adhere to the new regulation if they are to supply goods to the EU market. It is therefore beneficial for Northern Ireland businesses to align with EU standards in order to maintain that trade. Non-application of the EU regulation in Northern Ireland would lead to the potential risks that we detailed in our written answers.

It was challenging for NISRA and the statisticians working for DEFRA to get data on the level of trade between GB and Northern Ireland, and vice versa. That data was not available to a level that would have allowed them to do any assessment or analysis, so we have only export figures. We have nothing on the internal market.

Since we received the questions from the Committee last week, we have continued to have discussions with DEFRA to highlight the Northern Ireland-specific considerations in its policy development. DEFRA very much welcomed those discussions. It shared the link to your inquiry — the consultation — with its stakeholders. That included, as is outlined in our letter, approximately 30 Northern Ireland-based businesses and stakeholders. Several of those manufacturers appear to produce sanitisers, disinfectants, odour-control agents and enzyme-based or biologically active cleaning chemicals that may fall within the expanded scope for microbial products. Evidence that the EU gathered through its interviews with subject matter experts indicates, however, that testing costs would not impact negatively on those manufacturers and that those costs are within what is considered an acceptable range.

Since last week, DEFRA has provided us with a detailed programme and timetable for its stakeholder engagement. That will include specific engagement with interested parties in Northern Ireland, including businesses and with the Northern Ireland Local Government Association. That is because of councils' responsibilities for undertaking enforcement action. DEFRA has also confirmed that it is willing to host a workshop for stakeholders in Northern Ireland. Its programme will include informal consultation, which will be invaluable to understanding the specific nature of any issues that a business in Northern Ireland may have in dealing with the regulation. DEFRA has also confirmed that it intends to use the evidence gathered through the stakeholder engagement programme to inform its next steps. We will continue to engage with DEFRA as the programme progresses.

It remains our assessment that the regulation is not expected to have a significant, direct or persistent impact on everyday life for communities in Northern Ireland. DEFRA has provided assurances that alignment is its preferred option. It will follow up in writing to confirm its position to the Committee. That is consistent with the commitments that it has made to protect the internal market. The extended 42-month transition period means that businesses will have time to adapt, and DEFRA's timetable will align with that. That 42-month period will hopefully allow time for the issues on which you have asked us questions to be discussed and for special consideration to be given to Northern Ireland.

That was an update on what we have done since last week. I hope that it has helped to answer some of the questions that the Committee raised.

The Chairperson (Ms Ferguson): Thank you, Colin. I will bring in members to ask questions.

Mr Martin: I will ask one, Chair. Thank you very much, Colin. If you attend next week, you will get a special 'Blue Peter' badge for three Committee appearances in a row, which is something that I am sure that you would treasure.

In your presentation, you referred to 1% of trade. To what does that 1% relate? It is very small. I will read out the reference from the answers you provided us with:

For my understanding, does that mean stuff that is made in Northern Ireland and sent outside Northern Ireland, or does it mean something else?

Everyone looks really confused. It is —.

Mr Brooks: It is question 1.

Mr Martin: It is in the response to question 1, which is:

It is in the second paragraph of the answer, about two lines down.

Mr Armstrong: Adele, do you want to answer that? You have a bit more knowledge of exactly what the data was?

Ms Adele Willis (Department of Agriculture, Environment and Rural Affairs): Yes. DEFRA provided that data. The 1% relates to manufacturing that goes on in Northern Ireland.

Mr Martin: That is what I thought.

Ms Willis: England, Scotland and Wales make up the vast majority of the manufacturing. In the big pool of things, we are a small drop in the ocean. The investigation that we have done on some of the figures that have been produced for us by statisticians might look like big figures to the layman, but, in reality, given the scope of the UK market, they represent quite a small proportion.

Mr Martin: I would have guessed that the figure for that kind of manufacturing in Northern Ireland is relatively low. My greater concern would be the impact on trade from GB to Northern Ireland. If we are not making very many products internally and selling them internally, we are clearly getting them from somewhere. I suspect that we are getting the majority of them from GB. We do not have data on GB to Northern Ireland trade, which, I assume, is fairly substantial. Colin, you said that it is hard to capture that data, but do you accept that, given the fact that we do not manufacture very much of our own product, we import most of it? Is that a fair comment?

Ms Willis: Proportionally, compared with the rest of the UK, we do not manufacture very much of it. It is substantial enough for our size, however, so I would not draw any conclusions from that. As Colin mentioned, we cannot break down the data on GB to NI trade to that level, unfortunately.

Mr Martin: I would expect it to be substantial. Everyone uses Duck cleaner, and we have to get it from somewhere. It is probably safe to say that we get most of it from GB. I am trying to tease out the impact on GB to NI trade as a result of the regulation. What is the quantum involved?

Ms Willis: We are hoping to get more intelligence on that through local engagement. We have done a bit of research with Companies House and sourced various organisations through that. This week, in the weekly bulletin for Invest NI, we have published the link to the Citizen Space survey. We have done that to try to get as much intelligence on the ground as we can. DEFRA has also provided us with a timetable for its stakeholder consultation. As Colin mentioned, DEFRA has indicated that it would be more than happy to do a workshop over here with local manufacturers. It is teeing up that. The stakeholder engagement is due to commence in mid-April and run until around the end of August. DEFRA will then go in and have a look, after which there will be more stakeholder engagement in and around policy finalisation. Colin mentioned the long lead-in time. Local manufacturers will be involved in that engagement with DEFRA as it progresses.

Mr Martin: I wonder whether this is within your remit or vires. Last week, we saw evidence that had come in from two companies: SC Johnson and the London Oil Refining Company Ltd. They are two of the major players. SC Johnson is massive. Has DAERA thought about reaching out to them? We have an email address for SC Johnson. It will have somebody dealing with its public affairs and so on. Has the Department proactively reached out and said, "Look, we are considering this. The Committee is having an inquiry. Can we meet, even virtually, and get your understanding of the regulation, as you are probably the largest player in that area? What do you expect the impact to be?"? It may even give you some data. Is that something that you guys could do?

Mr Armstrong: DEFRA will do that. We have fed that information back to DEFRA. Last week, I mentioned the response that it had got from the trade representation body. I think that at least one of those companies was a member of that trade body. In response, DEFRA has gone back to those companies and made sure that they are aware of your consultation. Hopefully, you will get another direct response from either the individual companies or the trade representation body at least to answer any particular questions that you have. DEFRA is certainly aware, however. As the policy lead, it will engage with those companies to try to get to the bottom of the issues that they identified.

Mr Martin: That would be really useful. The Committee tries to get as much data as it can and make decisions based on that data. Given the fact that we have a few sizeable players in that area of manufacturing, DEFRA reaching out and having a level of direct engagement in order to get an understanding of the companies that inhabit the sector would be very useful. Thank you.

Dr Aiken: Thank you very much for your evidence. From reading through the answers that we have received, it is clear to me that, on the one hand, they state that the impact will not be very significant, because large volumes or many products are not involved, but, on the other hand, they state that HMRC has no idea about the data or the product volume, and there is only an estimate that it is about 1% of the total UK product. The UK product is absolutely vast, so Northern Ireland's 1% could represent a considerable amount.

How can we pressure either DEFRA or HMRC into coming up with more detailed data? At the moment, we are being asked to make a decision on something that we are told is very small, yet, at the same time, there is no data on it. I appreciate the real problem that you have, because you are probably in the exact same place as we are. You are being told there is not a problem, but nobody knows whether there is, because there is no data. Northern Ireland has some very big players in the market, and some of them have talked to me about their concerns, because they do not know what the impact will be. The companies have the view that they are not being taken seriously, because everyone is saying that Northern Ireland trade represents a small amount. The companies are saying that it might be a small amount in percentage terms but that there is still a massive amount of product to distribute.

How can the Committee be given more assurance about the quantum with which we are dealing? The Committee has no figures to go on, and 1% of the UK detergent trade could mean an awful lot of product. Apologies, Chair, but that is the problem that I have with this.

The Chairperson (Ms Ferguson): No problem.

Dr Aiken: This happens with almost everything that you have to do. You do not have the data, and HMRC will not give you it. I therefore cannot make an assessment until I know what I am dealing with.

Ms Willis: Our statisticians have managed to get us some data through Eurostat. We originally tried Companies House and HMRC, but we cannot break down the data any further. We have some figures, but they require more analysis. We have a breakdown of the import and export figures with Ireland, the European Union and the rest of the world for a four-year period. We are gathering the information and adding it to the evidence base.

Dr Aiken: Can the Committee get sight of those figures? We do not want to make a huge issue out of it if it is not a big issue, but if there is a bigger issue, we need to form a view. Those figures will give us an idea, and we have some good researchers who can pull some of the data out of the figures. Are you content that we do that, Chair?

The Chairperson (Ms Ferguson): Yes.

Mr Armstrong: The benefit of asking questions is that we know that DEFRA used its economists, who had datasets, but when we asked NISRA, it took a slightly different view, having used different datasets. We will try to get the statistics for the Committee to provide you with a fuller picture, as that would be helpful. We have received some indicative information from NISRA, but we can follow up with DEFRA to get statistics to assure the Committee.

Dr Aiken: The House of Lords Windsor Framework Sub-Committee asked DEFRA the same question recently, and it said that it did not know the detail because HMRC would not tell it. That is the conundrum.

Mr Brooks: My colleagues have covered most of the questions that could be asked. Thank you for trying to come up with some answers for us. Colin had a bit of a rough time at the Committee last week, but your work is appreciated. We criticise Departments when the information is not available or they are not willing to answer questions, but we can see that you have tried to gather as much information for us as you can. It is very clear that some of that information will come far too late for us, given that we have to make a decision on the regulation next week. There are still significant gaps in the information. Nevertheless, it is right for me to recognise the effort that has been put into getting us information.

The Chairperson (Ms Ferguson): I had the same questions as members. You will be as frustrated as we are that that information is not available from HMRC, or even through NISRA. That may be something that the Committee can raise with HMRC. We can tell HMRC that we need to be aware of what information is currently available and ask why it cannot be provided for the North, be it information on trade through GB to the North, so that we can have a fuller understanding.

Mr Brooks: It is not intentional — I do not know how anybody else feels — but, at times, I feel that we are being patted on the head and asked to believe a desktop exercise, whether it lines up with the information that has been provided from the mainland or not.

The Chairperson (Ms Ferguson): It is difficult when we do not know the scale involved. Percentages mean nothing if we do not know what 100% represents. That is frustrating for us.

On behalf of the Committee, I thank you, Donna, Colin and Adele, for your work over the past week and for presenting to the Committee.

Dr Aiken: Thanks, team.

Mr Armstrong: Thank you very much. We appreciate that.

Mr Martin: We will get you back next week, Colin, and I will get you that badge.

Mr Armstrong: Thank you. I look forward to that.