The government’s insouciance towards the future of Britain’s chemicals industry post-Brexit may come at a great price, writes Mary Creagh MP
After the chancellor delivers his budget speech today there will be a lot of talk about how the economy is doing following the referendum. Do not be fooled by Leavers’ assertions that the Remain campaign’s claims on the economy were exaggerated. Philip Hammond faces a £58bn Brexit black hole, a National Health Service which will suffer falling levels of spending per person by the end of the parliament, and away from the headlines, in businesses across the country the economic effects of Brexit are crystallising.
Last week I asked the chancellor what he was doing to prevent British jobs and investment moving offshore after 100,000 firms in the UK registered companies in Ireland to hedge against the uncertainty created by Brexit. He called me hysterical. Setting aside his sexist language, I can understand why the chancellor must be feeling nervous, and wishing everyone would stop asking him hard questions. The environmental audit committee’s inquiry into the future of chemicals regulation after we leave the European Union heard the Chemical Business Association say that 20 per cent of their members are ‘investigating moves out of the UK’ to ensure business continuity after the United Kingdom leaves the EU.
For the past 10 years, UK businesses and the government have been working with our partners and allies in Europe under the ‘REACH’ chemicals regulation. It aims to ensure that everyone across Europe is protected from hazardous substances, and that EU chemicals businesses are able to trade with each other on a level playing field. REACH registers, evaluates and assesses 30,000 substances from paints and pesticides, to the non-stick coating on frying pans to the sulphites that Brotherton Esseco make in Wakefield and sell to winemakers in France and Italy.
The government hopes to cut and paste the whole of EU law into UK law with the ‘great repeal bill’. The environment secretary admitted that this will not work for one third of EU environmental legislation. REACH will be one of the most difficult areas to unpick during our divorce from the EU. This is because it is a governance structure, rather than a list of banned or restricted substances, implemented by the European Chemicals Agency in Finland. There is simply no UK agency ready to step up and take over the registration, evaluation and assessment functions performed by the ECA.
The uncertainty around what happens to UK companies when we leave the EU is harming businesses now. I can assure readers there was no hysteria at our committee evidence hearing. TechUK, the industry body for the tech sector told us that the risk of new paperwork and tariffs as a result of leaving the customs union is ‘causing waves’ in the industry, and warned of the risks of ‘market freeze’ and supply chain disruption.
The automotive, aerospace, defence industries and small engineering firms are also affected. Car and ‘plane parts have to be manufactured, and coated to a consistent standard. The EU is the global standard. Moving away from that standard means that businesses in the UK run the risk of duplication of regulation (paying once in the UK and once in the EU) or of divergence – where EU chemical regulation moves away from UK regulation, causing UK companies to lose market share. And there is a risk that the UK becomes a dumping ground for chemicals which are no longer legal in the EU, if we water down our standards after we leave, as some Brexiteers would like.
Last month a civil servant told the Guardian that ministers ‘have not done their homework yet’ on issues like this. A leaked civil service memo revealed the environment is a ‘low priority’ for the government in Brexit negotiations. The same memo stated that the chemicals industry is a ‘medium priority’, displaying a degree of insouciance towards our second largest export to the EU after cars. REACH is a complex area of policy, as my committee colleagues will tell you, but the chancellor needs to come up with more than sexist put-downs when people ask legitimate questions about the future of British jobs, investment, skills and supply chains and public health protection and environmental standards. If he does not, that Brexit black hole in the public finances will continue to grow, sending more money out of our overstretched public services. And that is something that nobody, whether Remainer or Leaver, wishes to see.
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Mary Creagh MP is chair of the environmental audit committee of the House of Commons. She tweets at @MaryCreaghMP
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