The Chairman: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement on the decision to refer the relevant document to this Committee? I call Adrian Bailey.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): Welcome to the Chair, Mr. Weir. Having sat with you in many Select Committee meetings, I have long experience of your fairness and even-handedness, so we are grateful to be serving under you today.

It may be helpful to the Committee if I take a couple of minutes to explain the background to the document and the reasons why the European Scrutiny Committee recommended it for debate in the European Committee. We must go back to the European Council directive adopted in 1988 that sought to harmonise safety levels of toys throughout all member states and to remove obstacles to trade within the internal market. In particular, the document specifies that toys may be placed on the market only if their design and use do not pose a risk when used as intended or in a foreseeable way.

However, the Commission believes that technological developments have raised new safety issues in that area and given rise to increased consumer concerns. Therefore, it is necessary to revise and enhance the existing measures. Accordingly, in January 2008, the Commission put forward Document No. 5938/08 with the aim of enhancing the safety of toys while maintaining the smooth functioning of the internal market. To achieve the overall aim, the Commission has sought to strengthen essential safety requirements, improve understanding and enforcement of the directive and clarify its scope, as well as various definitions within it. In doing so, it addresses such areas as the possibility of harmful chemicals being ingested, the risk from choking and suffocation, and the visibility of warnings.

Although the Government had said that the text reflected the discussions that have taken place since 2003 in informal Commission working groups and that the revision was sensible, the Scrutiny Committee decided on 12 March 2008 to defer a final view until it had seen the impact assessment that had been promised. The assessment was provided, but was not considered entirely satisfactory in that it proved difficult to arrive at clear estimates of either the costs involved or, more particularly, the benefits. Moreover, it was not clear how far any additional costs would be passed on to consumers or would have to be absorbed by an industry largely comprising small and medium-sized enterprises.

Consequently, the Scrutiny Committee remained unconvinced as to the proportionality of the measures proposed and therefore recommended that the proposal be referred for debate in this European Committee.

The Economic Secretary to the Treasury (Ian Pearson): It is a pleasure to serve under your chairmanship, Mr. Weir, and I thank my hon. Friend the Member for West Bromwich, West for cogently summarising the concerns being discussed in Committee today.

The Government are fully committed to toy safety. It is only right that we should take steps to protect children from any serious risks attached to toys and reduce other less serious risks to a minimum. The directive will enhance toy safety through banning allergenic fragrances from use in toys; requiring additional appropriate warnings at the point of sale, such as maximum and minimum age of users and the need for adult supervision; requiring any risk of choking to be more clearly identified; and requiring more information on chemicals contained in toys.

In particular, the directive will restrict the use in accessible parts of toys of chemicals that are harmful, or have the potential to harm, children. Such chemicals either are, or have the potential to be, carcinogenic, mutagenic or harmful to reproduction. They are commonly referred to as CMRs—carcinogens, mutagens and substances toxic to reproduction.

Even when dealing with an issue as emotive as toy safety, we need to take a proportionate approach. The directive that was originally published banned all those potentially harmful chemicals unless they were specifically approved by the Scientific Committee on Consumer Products, and I recognise the fact that the European Scrutiny Committee had concerns about whether that approach was proportionate. While it is undoubtedly sensible to restrict the use of chemicals that may be dangerous, the safety gains are negligible if that chemical is retained in the toy and does not migrate from it, or is simply not accessible to children because it is in an inaccessible part of the toy. I am thinking, as a common example, of batteries that are completely contained and inaccessible.

During the negotiations, the UK consistently reiterated the need for proportionate action based on risk assessment, rather than the precautionary approach favoured by some member states. As a result of those arguments, the new directive will allow the use of less risky but still potentially harmful chemical substances in available parts of toys, subject to extremely low content limits, without specific clearance from the Scientific Committee. That will allow the continued use of a range of materials—particularly plastics—that would otherwise have to go through the lengthy and expensive process of examination by that Committee. Stainless steel has also been exempted from the requirement and, similarly, the directive will now allow an immediate derogation for materials that are acceptable as food contact materials.

The Scrutiny Committee’s examination of the draft directive correctly identified the danger of an over-enthusiastic attempt to improve the safety of toys possibly resulting in over-regulation and heavy costs for the toy industry, with little increase in safety. We also recognise the fact that the cost estimates in the impact assessment are high and, as my hon. Friend said in his introductory remarks, that the range of figures is wide. This reflects the limited available data on the industry and the potential impact of the directive.

The UK’s industry, with which we were in close contact during the negotiations, welcomes the derogations that we have secured, because they offer savings on the original proposal. The directive will enter into force two years after publication, and it now recognises that the chemical requirements are complicated and that time is required for compliance. It therefore allows toys that comply in other respects, but not with the new chemical requirements, on to the market for four years after the directive enters into force.

The directive, subsequently approved by the European Parliament in December 2008, is, inevitably, a compromise. Members of the Committee will be aware of the compromises that are part and parcel of a qualified majority voting process, which also involved co-decision with the European Parliament.

We believe that the directive substantially improves toy safety and rejects some of the more extreme proposals, which would have added significant costs for debatable safety gains.

The Chairman: We have until half-past 5 for questions to the Minister, which, I remind Members, should be brief. It is open to Members, subject to my discretion, to ask related, supplementary questions.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is a pleasure to serve under your chairmanship, Mr. Weir. I noted carefully the words spoken by the hon. Member for West Bromwich, West, who sits on the European Scrutiny Committee. He said, “The Committee is unconvinced of the proportionality of the measures proposed,” which is why it recommended that this Committee discuss them. Therefore, it is appropriate to ask the Minister a number of questions, particularly in a time of recession.

Several times, the Minister rightly dwelt on the balance between risk and cost to the industry. I understand that almost 700 businesses, with a total turnover of about £500 million, can expect additional costs of between £55,000 and £98,000, as paragraph 1.8 on page 00004 indicates. Will he comment on the number of businesses involved and the cost to each, because that seems to be a key part of what this directive is about?

Will the Minister also comment on the nature of the review? I ask that question because the directive was implemented in 1988 and he has just told us that it will not be implemented again until two years after publication. Presuming that publication happens this year, a considerable gap will be involved—1988 to 2011—between the review of quite an important industry and, potentially, a number of deaths. I shall come to that later in my questioning.

However, I am sure, Mr. Weir, that you want me to ask only one question at a time. Perhaps, therefore, in dealing with the issue of costs versus risks, the Minister might tell us when the up-to-date and full impact assessment on the measure is likely to be received, because paragraph 1.6 on page 00004 of the bundle of documents says that there has been only a partial impact assessment so far.

Ian Pearson: The hon. Gentleman is right, as the European Scrutiny Committee is right, to want to focus on the costs to industry, particularly at this time. He is obviously aware of the timetable for implementation, because he referred to it. Certainly, we hope that the toy industry, along with the rest of the UK economy, will be in a very different situation when this revised directive is implemented.

Since the original estimates contained in the impact assessment were prepared, we have been doing some further work to revise the costs. Following a suggestion made by the European Scrutiny Committee, further evidence came to light that we were previously unaware of. Some of that evidence is updated market reports, which are normally produced annually. The revised estimates produce a slightly more accurate picture of the segment of the toy market that the directive applies to. However, it is still believed that there has been an overestimation. The best figures that we have are that, on a best-case scenario, the average annual costs to the industry would be £33 million, and on a worst-case scenario £59.3 million.

Our figures on net present benefit, which I think have been disclosed to the Committee previously, would be, on a best-case scenario, £1.5 billion and, on a worst-case scenario, a net present disbenefit to the tune of £507 million. The best estimate net benefit is that there will be a net benefit of £518 million. Inevitably with some of these impact assessments, there is room for argument about how the calculations are made. During implementation of the directive, we certainly want to consult closely with the industry to gain a better idea of the impact that it will have.

The hon. Gentleman mentioned the timetable involved; it is as I have indicated. Our general view has been that, although there is potential to make improvements in the directive and it has been in existence for 20 years, it has served the European economy well. There were some notable scares in 2007, which I think influenced some of the thinking behind the work that was already going on to revise the directive. However, there is no substitute for ensuring that there are adequate enforcement measures. Some of the things that happened in 2007, such as the presence of excessive lead in paints, are really an enforcement issue, rather than a failing of the original directive.

Mr. David Drew (Stroud) (Lab/Co-op): I am delighted to serve under your chairmanship, Mr. Weir, and pleased to discuss this issue, in which I declare an interest. I have had two Adjournment debates on it and have taken particular interest in this item, which I will show to everyone. It is a Surprise egg, known in the trade as hybrid.

The Chairman: Order. I remind the hon. Gentleman that he is not allowed to show exhibits. He must tell us what it is.

Mr. Drew: You know what I am talking about now, Mr. Weir, so I will put the egg back in my pocket, although I do not want it to melt. I am not asking the Minister to eat it, or even unwrap it. I am just going to refer to it.

It is important to put on the record the work done on toy safety by the MEP Arlene McCarthy, who chaired the Committee that looked into this matter.

The Chairman: Order. This is a question session. The hon. Gentleman will have the opportunity to make a speech later if he wishes to do so.

Mr. Drew: My first question is at the core of this issue: how can we be satisfied that products are properly and independently tested to meet the standards that allow them to be put on the market? I am talking about existing and new products. Issues of testing are at the kernel of the argument on toy safety. Who does the testing? How robust is it? How can parliamentarians and the public be satisfied that they are completely safe?

Ian Pearson: I pay tribute to the work that my hon. Friend has done on those issues, and he is right to point out the role that Arlene McCarthy has played. I reinforce the point that the Government take toy safety extremely seriously.

My hon. Friend showed us a particular product, which I shall not comment on, but I want to make it clear that the directive makes improvements in ensuring that there are appropriate warnings at points of sale about the risk of choking. It also requires more information on the chemicals contained in toys. That is one of the most significant differences in the directive.

My hon. Friend will be aware of the product standards regime and approvals process. When we looked into the issue and consulted with the industry and others, we did not, as I have said, take the view that in every instance there ought to be prior authorisation through the Scientific Committee. There are separate processes for new and novel products, but for many products on the market it would not be reasonable to put them through a new and completely different testing regime. That would be a big burden on business and disproportionate, because it would not bring a policy benefit.

My hon. Friend is right that when we update legislation, whether at UK or European level, we should take a proportionate approach while being clear about the standards and inspection regime that will be enforced to ensure that products on the market are safe. He will also be aware of the general product safety regulations that apply to toys and more widely.

Mr. Brian Binley (Northampton, South) (Con): What a pleasure it is to serve under your chairmanship for the first time, Mr. Weir. Let me apologise for my late arrival. I tried, unsuccessfully, to intervene on the Chancellor, but you have been much kinder to me, for which I am grateful.

I draw the Minister’s attention to page 000080 of the document, which says:

One assumes that enforcement falls to county and other councils’ trading standards bodies. What assessment has the Minister made of the additional cost? If we are to improve enforcement, those bodies will have to pay an additional cost, and many of those departments are sadly being cut back because of the current economic crisis.