Fourteenth Report Contents

Instruments of interest

Draft Drivers’ Hours and Tachographs (Amendment etc.) (EU Exit) Regulations 2019

41.The EU Drivers’ Hours Regulation8 specifies that drivers must not drive more than a certain number of hours in any given day, week, and fortnight. They must also take a minimum of breaks and rests. These rules apply to drivers of most large vehicles.9 The rules are enforced through the inspection of tachographs by the Driver and Vehicle Standards Agency and the police. A tachograph is a device installed in a vehicle that drivers must use to record their driving, break and rest times. The EU Tachograph Regulation10 specifies the rules relating to the construction, installation, use, testing and control of tachographs. EU law will no longer apply to international road transport operations after exit day. These draft Regulations therefore ensure that the European Agreement concerning the Work of Crews of Vehicles engaged in International Road Transport (‘the AETR’),11 a United Nations Economic Commission for Europe Agreement, applies after exit day. The UK, the 27 EU Member States, and a further 21 countries (including EEA Member States Norway and Lichtenstein, but not Iceland), are Contracting Parties to the AETR. The Department for Transport (DfT) explains that the EU Regulations and the AETR contain the same rules, so international road transport operations will be subject to the same drivers’ hours and tachographs requirements. The instrument also creates three new offences and amends two existing offences to ensure that there are adequate enforcement provisions in relation to the type-approval, installation and use of tachographs. The House may wish to be aware of the creation of new offences using secondary legislation; however, DfT has confirmed that the criminal offences are being created under the European Communities Act 1972 (not using powers in the European Union (Withdrawal) Act 2018).

Draft Employment Rights (Amendment) (EU Exit) Regulations 2019

Draft Employment Rights (Amendment) (Northern Ireland) (EU Exit) Regulations 2019

42.The purpose of these draft Regulations, laid by the Department for Business, Energy and Industrial Strategy (BEIS), is to ensure that there is legal clarity and certainty in employment law in a possible ‘no deal’ scenario. The instruments propose to repeal powers of the Secretary of State to make secondary legislation in relation to the UK’s obligations under EU Directives dealing with certain aspects of employment law such as parental leave, part-time work and fixed-term work, and information and consultation of employees, as this would no longer be appropriate after exit. BEIS explains that the impact of these changes would not be material, as other powers to amend those aspects of employment law will be retained. The draft Regulations also propose changes to legislation in relation to European Works Councils (EWCs) which the Department says would protect arrangements for existing EWCs but no longer allow for the establishment of new EWCs in a ‘no deal’ situation. The Committee considered these draft Regulations when they were initially laid before Parliament as proposed negative instruments. At the time, the Committee received a submission from the Trades Union Congress (TUC) raising concerns about the proposals.12 While the Committee found that the Department’s response to the submission addressed the TUC’s concerns, the Committee recommended an upgrade of the instruments to the affirmative procedure on the ground that there were sensitivities around the proposed changes to employment law, and that the House may welcome an opportunity to debate the draft Regulations.13

Draft Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019

43.The EU Financial Conglomerates Directive (“the Directive”) was implemented in the UK through the Financial Conglomerates and Other Financial Groups Regulations 2004.14 It seeks to address the lack of specific prudential treatment for financial conglomerates. A financial conglomerate is a group with at least one entity in the insurance sector, and at least one entity in the banking or investment services sectors. One of these entities must be located within the European Economic Area (EEA) while the other(s) may be located anywhere in the world (including the EEA). In the event of ‘no deal’ with the EU, this instrument changes this geographical restriction so that one entity must be located in the UK, rather than the EEA (as the EEA will be treated as a third country by the UK after exit day), while the other(s) may be located anywhere in the world. HM Treasury (HMT) explains that

“… in practice this change will not have a material effect on financial conglomerates already operating in the UK. A financial conglomerate with at least one entity operating in the UK before exit met the Directive requirement by having at least one entity operating in the EEA. Post-exit, the same financial conglomerate will continue to meet the new requirement in the instrument.”

44. The functions currently carried out by the European Supervisory Authorities (in particular, the European Banking Authority, European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority) will be transferred to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). These functions include the responsibilities for making technical standards, publishing and maintaining a list of financial conglomerates and receiving information that financial conglomerates are required to provide under legislation. HMT is confident that both the Bank of England, including the PRA, and the FCA are effectively resourced and are making adequate preparations ahead of exit day.

Draft Merchant Shipping (Marine Equipment) (Amendment etc.) (EU Exit) Regulations 2019

45.Conformity assessments of marine equipment involve a process of demonstrating that a product, service or system (such as fire-fighting or navigation equipment) meets certain requirements, including relevant international testing standards. If the product passes, an approval is issued by the conformity assessment body, enabling the equipment to be placed on the market and on-board ships. These draft Regulations establish UK conformity assessment procedures, replicating the existing EU conformity assessment procedures and seek to ensure that the UK will continue to apply international standards for marine equipment. At present, EU organisations, known as “EU Notified Bodies”, assess and approve the conformity of marine equipment. This instrument provides for the continued acceptance of marine equipment approved by an EU Notified Body. There are currently 10 EU Notified Bodies based in the UK,15 which will automatically become “UK Approved Bodies” on exit day. If any of these bodies wish to retain their notified status in the EU, they would need to apply for designation as an EU Notified Body in the relevant EU Member State. Industry had raised concerns about possibly needing to pay twice for conformity assessments should the Government decide to time-limit the continued acceptance of EU approved marine equipment. However, the Department for Transport explains that “phasing out continued acceptance of EU approved equipment would require further secondary legislation to be brought forward” and the potential impacts “would be fully assessed by the Department before any decision to proceed with such secondary legislation is made.” When this instrument was first presented as a proposed negative, the Committee recommended that it should be subject to the affirmative procedure, so that the House might consider any potential impact on UK manufacturers.16  We welcome the Department’s acceptance of that recommendation.

Draft Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residue Limits) (Amendment etc.) (EU Exit) Regulations 2019

46.These draft Regulations, laid by the Department for Environment, Food and Rural Affairs, address deficiencies in retained direct EU legislation to ensure that the regulatory regimes for veterinary medicines and residues surveillance can operate and be enforced after the UK leaves the EU. The Committee considered the draft Regulations when they were initially laid before Parliament as a proposed negative instrument. The Committee noted that the instrument proposes a new requirement on holders of marketing authorisations for veterinary medicines to establish themselves in the UK if they wish to continue to market their medicines after exit. The Committee found that while the financial and administrative impact of this requirement on companies is expected to be small, some companies may choose not to establish themselves in the UK, which could lead to a reduction in the number of veterinary medicines being readily available after exit. The Committee also noted that it was unclear whether other proposed changes could lead to a lowering of safety standards, including in relation to the import of veterinary medicinal products and feeding stuff. The Committee concluded that the House may wish to explore these potential risks and concerns through debate, and recommended an upgrade of the draft Regulations to the affirmative procedure.17

Horizon 2020 Framework Programme for Research and Innovation (EU Exit) Regulations 2019 (SI 2019/21)

47.These Regulations, laid by the Department for Business, Energy and Industrial Strategy (BEIS), revoke provisions in retained EU law in relation to the setting-up and operation of Horizon 2020, the EU’s programme for supporting research and innovation. The Committee cleared the Regulations from scrutiny when they were initially laid before Parliament as a proposed negative instrument. While the Explanatory Memorandum states that the instrument does not impact on the ability of UK stakeholders to participate in the Horizon 2020 programme, the Committee sought additional assurance from the Department. BEIS told the Committee that, in a ‘no deal’ scenario, the UK would be able to take part in the programme as a third country and would not be required to have implemented the Horizon 2020 provisions that this instrument revokes. The Department pointed to announcements from 201618 and 201819 in which the Government guaranteed to underwrite all Horizon 2020 funding in the event of a ‘no deal’, and also explained that the instrument would not affect the UK’s ability to seek participation in any future EU research programme, such as Horizon Europe, which will run from 2021 to 2027.

9 Goods vehicles weighing over 3.5 tonnes and passenger vehicles with 10 or more seats.

11 As amended, of 1 July 1970.

13 6th Report, Session 2017–19 (HL Paper 235).

14 Financial Conglomerates and Other Financial Groups Regulations 2004 (SI 2004/1862).

15 ABS Europe Ltd; BSI Group; BTTG Testing and Certification Ltd; BRE Global Ltd; Fleetwood Test House; INSPEC International Ltd; Lloyd’s Register Verification Ltd; UL International (UL) Ltd; TUV SUD BABT; and Warrington Certification.

16 10th Report, Session 2017-19 (HL 256).

17 9th Report, Session 2017–19 (HL Paper 251).

18 HM Government, ‘Chancellor Philip Hammond guarantees EU funding beyond date UK leaves the EU’ (13 August 2016): [accessed 29 January 2018].

19 Written statement by the Chief Secretary to the Treasury, 24 July 2018, HCWS926.

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