Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome Aaron McKendry, senior principal pharmaceutical officer with the Department of Health. Good morning, Aaron. If you could brief the Committee when you are ready, that would be great.

Mr Aaron McKendry (Department of Health): Thank you, Chair. Good morning, members. Thank you for the opportunity to provide the Committee with some background information on the EU's proposal for a regulation of the European Parliament and Council on monitoring and controlling drug precursors and repealing regulations (EC) No 273/2004 and (EC) No 111/2005.

I am a senior principal pharmaceutical officer in the Department of Health and the interim head of the medicines regulatory group, leading on key aspects of medicines control and the enforcement of medicines legislation in Northern Ireland for the Department. My aim today is to provide the Committee with background information on the proposals from a health perspective, including on the control and licensing of drug precursor chemicals (DPCs) in NI and to address the questions that have been submitted by the Committee.

As members will be aware, the proposed regulation relates to monitoring and controlling drug precursors and will repeal regulations (EC) No 273/2004 and (EC) No 111/2005, which apply in Northern Ireland via section 23 of annex 2 to the Windsor framework: "Chemicals and related". It is worth noting that the Home Office remains the lead authority for DPC control in the UK and that, as a result, advice on and licensing of DPCs in Northern Ireland continue to be led by the Home Office. I liaised with Home Office officials in preparation for the evidence session, and I will endeavour to provide members with information that is focused on the practical effects of the regulations on Northern Ireland.

The objective of the proposed regulation is to modernise EU rules on drug precursor control, addressing the rise in designer precursors and improving trade oversight, while reducing the administrative burden for legitimate operators.

DPCs are chemicals that may be used for the illicit manufacture of narcotic drugs or psychotropic substances; however, they can also have legitimate uses. Designer precursors may be close chemical relatives of controlled DPCs, purpose-made to circumvent those controls and usually without a recognised legitimate use. International duties to control DPCs are designated by the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 — the 1988 convention — to which the UK and EU member states are signatories.

The 1988 convention sets out controls on DPCs, designed to prevent their diversion into the illicit manufacture of drugs while permitting legitimate trade. Such trade is usually subject to licensing requirements and, in some cases, to pre-export notifications to the importing country along with, in most cases, export checks. As a result, the DPC control regime operates through international cooperation between exporting and importing jurisdictions, ensuring that the receiving jurisdiction has agreed to the import of DPCs before export is authorised.

Regulation (EC) No 273/2004 of the European Parliament and of the Council lays down measures for monitoring trade in DPCs within the EU, while Council regulation (EC) No 111/2005 governs trade in DPCs between the EU and third countries. The two regulations jointly implement the measures envisaged by article 12 of the 1988 convention. The changes proposed in the regulation to EU rules and drug precursor control relate to three main areas: categorisation of substances; refinement and streamlining of external trade procedures; and procedural changes. The proposal reduces the number of categories of substances from four to three, with category 3 being a new category for designer precursors.

The new categories are as follows. Category 1 is substances with a high risk of diversion to illicit use but significant legitimate use. To supply, import, export, possess, use or carry out intermediary activities relating to those substances, a licence lasting up to three years would be required.

Category 2 covers widely used bulk chemicals. The controls would apply mainly to external trade, and companies would register their activities rather than apply for approval in advance. The registration can last for up to three years or may be unlimited in certain circumstances.

Category 3 contains the designer precursors, which have no legitimate use outside research and are manufactured to make illicit drugs. Those substances would be subject to a general ban on supply, import, export, possession, use and carrying out intermediary activities.

For larger quantities, or for legitimate uses other than research or innovation, operators would have to obtain a licence following the rules, like category 1, which may consider certain things, such as secure premises, responsible officers, documentation and labelling. The European Commission would be able to use generic scheduling to control whole chemical families and to set exemption lists for specific legitimate substances not already in categories 1 or 2, mirroring the approach often taken by the UK and other countries in controlling illicit drugs.

In respect of the refinement and streamlining of external trade procedures, rather than authorising each shipment, operators would submit quantity notifications, declaring the total amount of each substance that they intend to trade over a set period. HM Revenue and Customs would then verify licences, registrations and notifications and check that the shipment does not exceed the declared ceiling. That process will be fully electronic once systems are interconnected.

Finally, looking at the proposal's process changes, DPC controls would be digitised and simplified through a central EU electronic system, which is still to be developed. Enforcement powers would allow authorities to temporarily seize or detain goods based on risk, with an obligation on online marketplaces to report any suspicious activities. Additionally, a new EU drug precursor information repository would be established and managed by the EU Drugs Agency.

I will focus on what that means for Northern Ireland and the practical impacts of the proposed legislation. As noted in the recent UK Government explanatory memorandum (EM), there is already a degree of regulatory divergence between GB and NI in the regulation of DPCs, which the Government are taking steps to address. The last clause refers to the regulations that the UK Government laid before Parliament in February to ensure that the same DPCs are controlled in Great Britain and Northern Ireland. Subject to House of Commons approval, those will come into effect no later than 14 July.

The consolidation of the two EU regulations into one could make the process simpler for businesses and public authorities alike, but there will be a need to amend domestic legislation to facilitate implementation. The UK Government have advised that they will closely review the changes that the EU is proposing and consider them further, once the shape of the final regulation is clear. I remain closely engaged with Home Office colleagues in that regard.

Operationally, DPC licensing activities are undertaken by the Home Office. Whilst there may be changes to licensing criteria, I do not see the impact or implications of the proposal being significant to the everyday life of communities in Northern Ireland in a way that is liable to persist.

Members have asked the Department to address certain questions, and I will provide answers based on the Department's current understanding.

Questions 1 and 2 relate to the application and non-application of the proposed EU act and whether significant impacts specific to the everyday life of communities in Northern Ireland could be felt. It is the Department's view that neither scenario will have a significant impact specific to the everyday life of communities.

Question 3 seeks clarity on the impact of potential divergence as noted in the UK Government's EM for Northern Ireland. The divergence discussed in the explanatory memorandum should be seen as potential, in the event that the UK Government were to decide not to mirror those changes in Great Britain other than is expected. As it stands, there is already regulatory divergence between GB and NI in the regulation of DPCs, and the UK Government have taken steps to remove the existing divergence, having submitted draft regulations to Parliament. Those have been approved by the House of Lords and, if approved by the House of Commons, will come into force no later than 14 July 2026.

DOH officials remain closely engaged with Home Office colleagues to ensure that there is clarity in respect of licensing rules for Northern Ireland emanating from current and future potential regulatory regimes, irrespective of potential divergence between GB and NI.

Question 4 sought to determine the number of businesses that will be affected by the proposed EU act. It has been confirmed that some five businesses could be affected.

Question 5 seeks information on how those businesses could be affected, positively or negatively. One element of the proposal is that obligations under the existing regulations would be simplified or automated in line with the EU digital agenda. The potential benefits of the proposal include the new electronic system; the introduction of controls on imports and exports based on total quantities rather than individual transactions; and the removal of the 15-day pre-export notification waiting period. Those initiatives could remove administrative burdens on operators without compromising control. Equally, the consolidation of two regulations into one could make the process simpler for businesses and public authorities.

Question 6 sought information on engagement to date and details of any feedback received. As the proposal is still in its early stages, we have not engaged directly with stakeholders. The Home Office remains the UK lead authority for DPC control, providing related advice and licensing of DPCs in Northern Ireland. Future stakeholder engagement will be led by the Home Office if required. Only a small number of businesses in Northern Ireland will be affected, and the proposal does not introduce new obligations but instead removes or automates various existing requirements, which might be expected to be welcomed by businesses.

Questions 7 and 8 ask what the potential benefits of applying the proposed EU Act in Northern Ireland would be and for details of the corresponding implementation costs. The potential benefits could be a simplified process for businesses and public authorities, which may remove administrative burdens on operators without compromising control on DPCs. As the UK lead authority for this regulatory regime, it might be expected that the Home Office would incur transitional costs during the implementation process. That will be subject to the final text of the EU proposal being confirmed.

Question 9 looks at the responsibilities of the Home Office and the Department of Health in relation to the licensing of DPCs in Northern Ireland. The UK Government consider that licensing of DPCs is a devolved matter and that other matters relating to DPC control are reserved. The licensing of DPCs in Northern Ireland has always been administered by the Home Office, and in the context of the regulations currently before Parliament, Northern Ireland Ministers have recently confirmed to Home Office Ministers that, based on the UK Government's position, they are content for the UK Government to continue to do that. The UK Government-administered central system for the consideration of DPC licensing results in a consistent licensing approach across all nations, which is considered beneficial.

Question 10 asks about the specific impacts that the provisions in the proposed EU act would have on the licensing of DPCs in Northern Ireland. Until the final text of the EU proposal is confirmed, and the UK Government's position in respect of the overarching regulatory regime is clear, specific impacts on the licensing of DPCs in Northern Ireland cannot be detailed at this time.

I hope that members are content with the detailed information provided. I am happy to take questions that members may have.

The Chairperson (Ms Ferguson): Thank you, Aaron.

Mr Martin: Thank you, Aaron, for that very detailed testimony. In your answer to question 9, you said that the UK Government consider that licensing DPCs is a devolved matter and that other matters relating to DPC control are reserved. You mentioned that the Government have made it pretty clear who is responsible and that the Executive have a clear role. Can you give us some context for that? From your answer, I am not exactly sure who, from the Department of Health's perspective, is responsible for DPC licensing. Is it the Home Office?

Mr McKendry: Operationally, all DPC licensing activities are conducted by the Home Office. Businesses in Northern Ireland that want to operate with such chemicals or compounds will make applications to the Home Office.

Mr Martin: What is the Department of Health's role with DPCs?

Mr McKendry: The crossover occurs in that DPCs may be used to produce controlled drugs. The Department of Health has legislative competence and responsibility for the licensing of controlled drugs. I carry out that function. Companies are often licensed for both: on the one hand, they are licensed to possess and use DPCs; on the other hand, they are licensed by the Department to use controlled drugs. There is a significant overlap. Yes, companies apply to different people, but I am aware of those companies and have a dialogue with them and can provide advice on what they need to do.

Mr Martin: OK. From the evidence that we have received, there is a relatively small number in Northern Ireland, but there has been no engagement with them. Given that fact, might the Department of Health not have thought, "We will have a chat with those folk and see how the new laws, if they come in, will impact on them"?

Mr McKendry: This is such an early step in the process, and the Home Office is, ultimately, the lead authority, so, at this stage, we will defer to the Home Office for stakeholder engagement.

Mr Martin: You mentioned that you had had some engagement with the Home Office. We had a letter, I think, last month from Lord Carlile to Sarah Jones, the Minister for Policing and Crime, in which he writes:

When Lord Carlile notes the engagement with "Northern Ireland Executive officials", does he mean you?

Mr McKendry: Yes.

Mr Martin: What views did you express to Sarah Jones?

Mr McKendry: We remained engaged throughout the process. We worked collaboratively with Home Office colleagues to produce this brief and to understand what the proposal might mean for Northern Ireland. As part of that process, we fed back to Home Office colleagues.

Mr Martin: OK.

Mr Brooks: I heard and understood your answers to my colleague, but, for clarity, is there, between you and the Home Office, a settled understanding of and agreement about each other's role, or is that still being worked out between you?

Mr McKendry: It is a settled and agreed position.

Mr Brooks: OK. Thank you very much. I appreciate that.

The Chairperson (Ms Ferguson): Do any other members have questions? Peter, you wish to come back in.

Mr Martin: Aaron, you were reasonably clear on this, but I want to tease it out. You accept that there is already regulatory divergence between GB and NI, and you gave evidence about legislation that could proceed in, I think, July. Is it the Department of Health's understanding that, if that legislation were to proceed and be implemented, that would solve the divergence?

Mr McKendry: Yes.

Mr Martin: OK. Do you further accept that it is important that we do not have further divergence on DPCs, in light of what we have talked about here?

Mr McKendry: If divergence can be minimised, it is easier for businesses. At this stage, it is difficult, because the final text is not known. That is why we are closely monitoring it and will pay close attention to the final text to understand what, if any, potential divergence there may be in it. We will work closely with Home Office colleagues in that respect.

The Chairperson (Ms Ferguson): No other members have indicated that they have questions. Therefore, Aaron, on behalf of the Committee, I thank you for your presentation this morning.