Memorandum from Chemical Industries Association

1. Current developments

What are the implications of recent economic developments for the design and delivery of the regulatory reform agenda, including risk-based regulation?

The current economic situation makes the Better Regulation agenda even more important. The more Government can do to improve the regulatory burden on businesses within the next year the better chance you give industry to reverse the current down turn.

The economic circumstances also highlight stress areas in regulations, such problems and costs for companies in the UK who want to avoid redundancies by using short term working.

How does the Government balance the need for an effective regulatory framework - providing the necessary benefits and protections - with the commitment to improve the conditions for business success?

 

Government needs to make sure it always applies proper risk based analysis when it is formulating new policy. We have been alarmed by the apparent move in Europe away from risk to hazard based policy making.

 

Recent changes to draft EU pesticides legislation resulted in the basis of the legislation being changed from risk-based criteria to hazard based ones. To deny approval of pesticide products using intrinsic properties of a chemical based on hazard cut-off criteria or classification categories is scientifically questionable. Risk assessments must be based on rigorous science and weight of evidence.

 

In the case of pesticides, the legislative process failed to take a holistic approach to regulation, based on a clear understanding of the consequences for agricultural productivity, resistance management, food prices, food security and trade, as well as potential consequences for the wider environment before the criteria were adopted.

 

When assessing safety, the optimum scientific approach is to consider harmful properties and their potency (hazard) and to understand their occurrence or in-use scenarios relative to humans or the environment (exposure). These two elements can then be used to determine the level of risk and it's acceptability in relation to either humans or the environment. Risk = hazard x exposure. This approach is predicated on the concept that there is a threshold for a biological/toxicological effect, i.e. the "dose makes the poison".

 

How might a proportionate and targeted response to improving the regulatory framework in the wake of the financial crisis be made?  What lessons are there for the wide regulatory reform agenda?

The Chemical Industries Association seeks an improvement in the quality and application of regulations rather than deregulation. High hazard industry does and should meet tough regulatory standard to protect the health and safety of employees and the public.

 

How could the Government improve its capability to regulate in a proportionate and effective manner?

An open dialogue with stakeholders is important right through the policy development process. Government must seek input from stakeholders on the broad theme and objectives of policy and then on the detail to ensure it is workable. Whether this requires formal consultation will depend on the nature of the policy work.

 

Consultations should be set within broader frameworks and each proposed piece of legislation should be evaluated against Better Regulation principles established by the Hampton and Macrory reviews. In particular, it would be useful for consultations on legislation to show how the legislation interacts with other regulatory frameworks.

 

It may also be relevant to begin using standard templates for certain types of consultation. This would include: best-case and worst-case scenarios of implementation, accuracy, or relevance of the information presented in the consultation; an analysis of key variables (i.e. sensitivity analysis); a simple presentation of advantages and drawbacks of different in a table; and the mechanisms in place to ensure relevant monitoring and review takes place. 

We feel that Regulatory Impact Assessments are often of poor quality because of false assumptions that stakeholders could have highlighted if given the opportunity. We would welcome more rigorous consultations to ensure RIAs are consistently of high quality.

We give a cautious welcome to the idea of regulatory budgets. Rigorous assessment of the net benefit, and in particular the accurate specification of not only one-off but also recurring costs, should be central to the whole regulatory process. Regulatory budgets should not preclude revision/abolition of past regulation. The ultimate objective should be to prevent the net cost of the aggregate regulatory burden increasing. Ideally any new regulation should be balanced by repeal, or administrative simplification, of existing legislation.

 

Whether there is a coherent package of regulatory measures for improving the conditions for business success; and how regulatory reform initiatives fit into wider Government support.

2. Design of new regulations

Does Government understand businesses sufficiently to design effective regulations?  Is sufficient emphasis given to small businesses and competition issues? 

The role of the business relation function in the Department of Bussiness, Enterprise and Regulatory Reform is essential for Government understanding business when designing regulations. The Chemical Unit helps to ensure that the business voice is represented to other Government departments. We would welcome further moves to improve the understanding of business across Whitehall.

We would like to see more emphasis placed on competition issues as the chemical industry exports 60% of its products. We have to compete against countries with lower labour costs and energy prices so it is vital that exporters are not further hampered by poorly conceived or implemented regulations.

Is there sufficient consideration of how regulations will be implemented, including an appropriate focus on compliance and enforcement issues?

Consideration to how regulations will be implemented needs to be given more attention. For instance REACH regulations have already been adopted into UK law but we are not yet clear how the EU and Member States will ensure that products imported into the EU comply with the REACH regulations. If imports are not properly regulated this has significant implications for the competitiveness of EU manufacturers.

 

Before Government rushes to regulate it must do more to determine if current failings lie within the regulations or with enforcement. For example we believe that the current recast of the EU Integrated Pollution Prevention and Control Directive is unnecessary. The UK has successfully implemented the IPPC and before the imposition of more regulations on compliant member states there should be a concerted effort to enforce the existing regulations across all Member States.