Select Committee on Deregulation Ninth Report


ANNEX

Letter from the Senior Executive Officer, LACOTS to the Clerk of the Committee

You will be aware that LACOTS has previously provided comments on consultation in 1993 and 1996 that culminated in consideration by the Parliamentary Deregulation Committees in 1996 to which LACOTS gave evidence.

LACOTS has always supported the principle of self-verifiction by manufacturers provided there are appropriate safeguards and had considered this might be extended to petrol pump repairers and installers only if appropriate extra controls were included. Accordingly we had welcomed the inclusion in the revised proposals of a notification procedure to local authorities of work carried out by repairers and installers and have recommended the provisions are enhanced to ensure the system is demonstrably effective and efficient. We also suggested that if there were continued problems in applying the proposals to any particular business sectors there may be merit in delaying the application of the proposals to those sectors and introducing the proposals in a staged approach to enable other sectors to self-verify.

As you highlight in your letter of 12 June 1998, LACOTS has reservations on the revised proposals including those on which you requested additional comments to which we provide our particular comments below:

1.  Quality Systems: General

1.1  It is the significant elements of quality systems and metrological control that must be specified in the proposals rather than the name and reference of a standard. If sufficient detail is not included in the proposals, any change in philosophy, policy or even personnel involved in the issuing of approvals could affect the conditions to which approvals to self-verify are subject because of the scope for different interpretation. Additionally, any significant elements that are not included within the legislation itself may not be considered in the future to be part of the compulsory controls both by the organisation issuing approvals and should the question of status arise during any court proceedings. It is important that approval conditions are transparent and accountable no matter which organisation has assessed a company's quality system. For example LACOTS has noted that from the Explanatory Memorandum points 107 and 162 that sub-contracting of the self-verification and pre-test stamping functions may be envisaged. LACOTS is concerned that this is a new consideration to which appropriate consumer and business safeguards must be secured, particularly if this is considered in relation to the "user" of equipment being sub-contracted.

1.2  Reliance on ISO 9003 is one standard that has been specified and LACOTS is concerned that this would not cover the production process. The use of this standard would hinder the assessment of whether a quality system had been established that would ensure a product complies with legal and other metrological controls. However, we note and accept that the Minister intends to link its use to the simplest of equipment.

1.3  Any quality system registered by an accredited body is assessed to ensure the company is actually doing what it declares that it is doing and does not necessarily ensure the quality of the end product nor that it complies with any legal or other metrological controls. For this purpose it is essential that an inspector of weights and measures with the appropriate quality assurance experience is involved in the audit team as an expert adviser to the lead assessor as per the implementing arrangements for Directive 90/384/EEC. The role of the officer should include the assessment of the overall capability of the system to achieve the relevant metrological legal and approval conditions and requirements and should not be restricted to only metrology specific areas of the quality system such as calibration.

1.4  Under the proposals the accredited bodies will in effect be performing a new quasi-regulatory role. Clear help and guidance must be given to ensure that these bodies are comfortable with reporting metrological or approval condition non-compliances to Government. This would be a deviation from their more usual practice of respecting client confidentiality and working with the client to improve the system.

1.5  The accredited bodies are businesses working within a competitive market and should be given a mechanism to ensure a level playing field with their competitors. This could be achieved largely by specified minimum standards for the purposes of legal metrological and approval control, eg a minimum frequency of audits.

2.  Quality Standards: Overseas and Domestic

2.1  LACOTS fully appreciates and understands the reason why the proposals have had to be revised to enable overseas companies to take advantage of the proposals. However, it has been noted that this is in advance of an EU harmonised mechanism that will be provided by the Measuring Instruments Directive presently under development.

2.2  We understand that the standards applied to overseas and domestic companies will be the same. This presumes sufficient detail is included in the proposals to ensure practical application is the same regardless of the geographical location of the company. There will be resource implications for accredited bodies deploying personnel for audits involving extensive and/or long-haul travel which may add to a case for specified minimum service levels including audit frequencies to ensure a level playing field between accredited bodies.

2.3  The most critical difference in the treatment of overseas and domestic markets is the lack of jurisdiction for local authorities overseas and the lack of sanctions through offences that could apply to overseas companies. The domestic business is disadvantaged by this. Overseas companies will not be subject to random inspections by trading standards officers who could have established whether a product continues in practice to be produced lawfully and in line with approval conditions. The importance of inspection was recognised by the inclusion in the proposals of the specific power for local authorities to enter and inspect premises where equipment was being self-verified rather than restricting this power to only those premises where equipment was actually possessed or in use for trade. Overseas companies will not be subject to enforcement action and court proceedings where serious infringements take place. Punitive sanctions will be restricted to removal of the company's approval to self verify. Domestic companies can however, in serious cases, be taken to court when they have committed offences. Both inspection and appropriate sanctions are essential to underpin the proposals and secure public protection and fair trading.

2.4  We remain concerned that there will be significant difficulties in preventing particular products, such as failed batches of glassware intended for use in public houses, from being placed into use in the UK. At the present time such products are tested by batch and verified by a UK trading standards officer so control is exercised before a product is in use at retail level. At retail level it is extremely difficult, without details of the original batch, to assess whether a product is a legitimate failure of a batch (of which there may be a few) or is a failure from a failed batch (of which there may be many). A requirement that product is traceable to batch is essential. Overseas companies who are able to take advantage of the absence of jurisdiction for a local authority to inspect their premises will be able to 'dump' failed batches in the UK with much less chance of detection than domestic companies even if there is a requirement that a retail product must be traceable to batch.

2.5  On a related matter, LACOTS understands that the pre-test stamping provisions have been restricted to approved self-verifiers because of the reduced ability to retain control over inspectors marks at overseas locations. LACOTS also appreciates that there is logic, in some cases in permitting the verification mark to be incorporated into the product prior to the testing that would establish whether it would pass as fit for use for trade. However, the proposals permit a self-verifier to take advantage of the pre-test stamping provisions and do not allow the same route where local authority verification is used. The Minister has recognised that to remain competitive capacity measure manufacturers will probably seek to obtain approved verifier status. Although we note that there may be significant incentives for manufacturers to retain approved verifier status and we understand the reasons for restricting pre-test stamping to self-verifiers we remain concerned on two particular points. Firstly, local authorities who have to provide a verification service will be competitively disadvantaged as capacity measure manufacturers will stop using their verification service. Secondly, any manufacturers who wish to or cannot obtain approved self-verifier status will be significantly disadvantaged by being forced to use a local authority verification service involving the less commercially attractive "double handling".

2.6  On another related issue, LACOTS welcomes the provisions that would recognise test results from competent third parties within the EEA and prevent duplication of testing in the UK before passing as fit for trade by an inspector. LACOTS does not question the competence of overseas third parties but has recommended the inclusion of similar wording to that used in other legislation in order to avoid doubt that an inspector who suspects, for example, that equipment has been adjusted after it has been tested, could refuse to accept test results. This would be particularly important if an inspector's action were questioned in any legal proceedings. We acknowledge that the Minister has stated that this is not necessary and the proposals would not compel inspectors to accept test results.

3.  Implications for Local Goverment

3.1  LACOTS has set up a task force to further comprehensively consider the effect that the proposals will have on local authorities and to quantify the resultant funding provision that has been recognised by Government. LACOTS will be able to provide details of its conclusions to the Committee during July 1998 should that be required. Government funding provision to local government to lessen the difficulties created by the extra burdens and higher unit costs created by the proposals may enable Chief Officers and Heads of Services to present a case to their elected members for offset funding to be allocated to their service for this purpose.

3.2  The proposals must not undermine the ability of local authorities to maintain existing levels of public protection and fair trading. A critical part of the mechanism for providing these safeguards is the unannounced inspections that local authorities may carry out at self-verifiers premises and where self-verified equipment is in use. Local authorities are also required by statute to provide a verification service and will need to ensure that companies who wish to or need to can have access to a local authority verification service and the appropriate infrastructure would therefore have to be maintained.

3.3  The proposals will remove verification income from local authorities and the proportion of verification income that is removed may be substantial. Although local authorities will endeavour to make savings as a result of a reduced verification role, such as might be achieved through regional arrangements, there may also be significant transitional costs, not least in any necessary redundancies. This will particularly effect those local authorities with a large manufacturing base subject to verification in their area. The removal of significant local authority verification income will also increase the unit cost associated with maintaining the necessary staff, premises and equipment etc. for a verification service to local businesses who choose or need to use the local authority facility.

3.4  Local authorities have been subject to continual resource constraints and have obviously looked to maximise any savings and efficiencies. One efficiency has been for metrological inspection work to take place at the same time as a verification visit where possible. This approach minimises burdens on business as well as contributing to economic efficiencies. The removal of verification income which assists on a cost recovery basis the travel to the site, maintenance of equipment, etc, will have an impact on local authority resources and could effect inspection levels. The overall reduction in funding (in real terms) means that this small and vital service may be badly affected in the absence of appropriate funding.

3.5  It is essential that inspection levels are maintained to underpin present consumer and trade safeguards but also as a foundation for the vital inspection and market surveillance roles that will arise from the Measuring Instruments Directive. This Directive is under development to provide routes for all equipment to be placed on the market and put into use. It is also envisaged that at least until such a stage is reached where local authorities can risk assess self-verification, local authorities may wish to treat these companies as a higher risk subject to an increased inspection frequency. It is also likely that inspection levels will have to increase to take account of any extension of the proposals to sub-contractors. Local authorities will also need to assess and respond where necessary to information received as part of any notification procedures. This is essential to ensure consumer protection and fair trading but also creates extra burdens on local authorities introduced by these proposals.

17 June 1998


 
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