Lords consideration of the Road Vehicle Carbon Dioxide Emission Performance Standards (Cars, Vans and Heavy Duty Vehicles) (Amendment) Regulations 2022 - Nov 30

Moved by

Baroness Vere of Norbiton
That the Grand Committee do consider the Road Vehicle Carbon Dioxide Emission Performance Standards (Cars, Vans and Heavy Duty Vehicles) (Amendment) Regulations 2022.

The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)
My Lords, there are two statutory instruments being considered together in this debate. I will begin with the regulations on vehicle type approval, as the carbon dioxide emissions instrument is being made as a consequence of the type- approval instrument.

As the department responsible for vehicle regulation, we have conducted intensive work to ensure that there continues to be a functioning legislative framework for this crucial sector of the economy. The EU type-approval scheme for road vehicles, such as cars, buses and goods vehicles, is being converted to an independent GB type-approval scheme, replacing the current interim arrangements whereby EU type approvals have been accepted following scrutiny by the Vehicle Certification Agency—the VCA. Alongside this, these regulations continue interim arrangements for motorcycles, agricultural tractors and machinery engines.

The purpose of type-approval legislation is to enforce prescribed safety and environmental standards. EU law previously set out the regimes under which a new vehicle, engine or part was required to be tested. Most of the standards come from an international body, the United Nations Economic Commission for Europe, or the UNECE, and the UK will of course continue to play a prominent role in this organisation.

The Road Vehicles and Non-Road Mobile Machinery (Type-Approval) (Amendment) (EU Exit) Regulations 2019, debated in your Lordships’ House on 20 February 2019, introduced an interim provisional approval regime lasting two years, until the end of 2022. This required motor vehicle manufacturers to submit an EU type approval to the VCA to permit registration. Trailers, machinery engines and replacement parts continued to need an EU type approval.

Under the withdrawal Act, the EU law on type approval is retained in UK law. There are around 2,500 pages setting out detailed technical standards for cars, buses and goods vehicles. This SI corrects deficiencies and creates a GB type approval, although I emphasise that, at present, the technical standards are essentially identical to those in the EU, so for manufacturers this is initially an administrative exercise.

This SI will require manufacturers of road vehicles to transition into the GB type-approval scheme no later than 1 February 2026, with approval being available from 1 January 2023.

With respect to the Northern Ireland protocol and unfettered access, this instrument will exempt vehicles that meet EU rules, which are made in or approved in Northern Ireland, from the GB type-approval regime.

This SI gives Ministers the powers to amend the retained direct minor EU law on road vehicles; in other words, the detailed technical specifications originally set by the European Commission. There will be a statutory requirement to consult representative bodies, such as the Society of Motor Manufacturers and Traders—the SSMT—and similar groups, whenever Ministers seek to amend the technical standards. This will ensure that the vehicle industry and interested non-governmental organisations will be able to have their say on any proposals that we make.

Machinery engines placed on the market from 1 January 2023 will be required to obtain GB approval under a new provisional approval scheme for machinery engines, which recognises an EU approval. These arrangements are already in place for tractors and motorcycles. For all three groups of product, the provisional schemes will continue until the end of 2027, by which time we expect to have an independent GB type-approval regime available for all these groups of vehicle or engine.

I turn to the second SI, relating to carbon dioxide emissions performance standards. This instrument amends various retained EU new car, van and heavy-duty vehicles carbon dioxide emissions regulations to ensure that they can continue to function appropriately in the UK.

The road vehicle carbon dioxide emissions regulations were retained following EU exit and establish carbon dioxide emissions standards for manufacturers of new vehicles across the UK. For cars and vans, regulations establish how the carbon dioxide emissions framework is to operate, including how carbon dioxide emissions reduction targets will be set, monitored, reported and enforced. They also include several flexibilities to help manufacturers meet their targets, such as reduced targets for small-volume manufacturers and additional credits for producing low-emission vehicles.

Similar regulations for heavy-duty vehicles were also retained following EU exit. However, they do not set mandatory carbon dioxide emissions targets on manufacturers until 2025. Until this time, manufacturers are legally required to annually report specific data points on their vehicles to the enforcement body, the VCA.

All this instrument does is correct for deficiencies and inoperability within the retained regulations: there is no change in policy. The primary corrections are replacing references to EU type approval with EU, GB and UK(NI) type approval, where appropriate, to reflect these type-approval schemes. As these regulations apply UK-wide, it is appropriate to reference all three type-approval schemes as, due to the protocol, vehicles registered in Northern Ireland will continue to receive EU type approval, or now, UK(NI) type approval.

These corrections will ensure that carbon dioxide emissions from vehicles with GB or UK(NI) type approval are regulated. If these corrections were not made, over time the carbon dioxide emissions of potentially millions of new vehicles would be unregulated, risking legally binding carbon budgets and climate commitments.

Some minor EU exit-related deficiencies were also corrected in this instrument, and a simple typo made by a previous SI was fixed.

These two instruments address EU exit-related deficiencies in retained EU law, enabling the creation of an independent type-approval scheme while ensuring continued effective regulation of carbon dioxide emissions. I commend these regulations to the Committee.

Lord Jones (Lab)
My Lords, I thank the Minister for her introduction. It is a matter of supporting the 2022 regulations. It is clean, green and 21st-century. I rise on the principle that the Executive should always be questioned by the Back-Bencher—by the legislature. That is a parliamentary principle of long standing, and I am simply taking this opportunity, knowing that time is of the essence.

Paragraph 7.1 of the helpful Explanatory Memorandum, on the policy background, is very blunt and to the point. Paragraph 12.5, under the heading “Rationale”, is a helpful foundation statement, which no doubt the department has worked hard to produce.

What is the department’s estimate of the number of vehicles on our roads that now follow the April 2019 regulations of the EU Parliament and the EU Council? I presume that many do not—and legally. I am sure the Minister will tell me in her reply.

The Minister mentioned consultations, which is a big plus. In proposing these regulations, what consultations has she had with the Mayor of London? Maybe there were none.

Looking at the road vehicles EU exit regulations—they are numbered “XXX”—I found them a bewildering plethora of initials. In a way, they are as long as Hilary Mantel’s novels and quite bewildering in their detail—but this is a detailed issue. The DVLA is a huge employer in greater Swansea. As a member of my noble friend Lord Kinnock’s shadow Cabinet, I recollect that we heard proposals to move the DVLA to England. They never materialised, of course—it would not have been seen as a positive move—but, without a doubt, the DVLA is a major employer. All of Britain much depends on it. Can the Minister say how many people are now employed at the DVLA in Morriston, Swansea?

Lastly, in paragraph 7.8 on page 6 of the Explanatory Memorandum, there are quite a few references, direct or otherwise, to the Secretary of State’s powers. Considerable influence is being granted there. The Minister might wish to indicate why that should be so. Also, in paragraph 6.21, we see the word “probably”. That is not very exact; perhaps we could have a reply on that via officials, if not directly from the Minister. That paragraph also contains the phrase “in the time available”. That seems somewhat up in the air; perhaps it is slipping through without explanation, in that sense. Time is of the essence. The Minister was persuasive and comprehensive. I conclude.

Baroness Randerson (LD)
My Lords, I thank the Minister for her introduction. I suggest to her that it should be obligatory for any of her ministerial colleagues who thought that Brexit was a good idea to read through these regulations line by line. I congratulate the noble Lord, Lord Jones, on his determination in managing to do that because it really is a pretty mind-bending process to come to terms with this instrument.

This is a classic case of many hours of lawyers’ time having already been spent, and even more hours of manufacturers’ and retailers’ time being needed in future months and years, to get detailed but essential standards transposed from EU law in UK/Great Britain law and for everyone involved to understand exactly how they will work. The Explanatory Memorandum explains that, for very good reasons, there will have to be delays and waivers for some regulations as manufacturers desperately try to get to grips with a complex new situation.

For that reason, I am amazed that no full impact assessment has been made. This issue affects everyone from major manufacturers to the hundreds of small producers who supply them. Fifteen organisations were consulted and managed to produce 69 responses—that was pretty clever as a response rate, I thought—yet the financial impact of this measure is supposed to be less than £5 million. That is just ridiculous.

There is a side issue among the real pot-pourri of issues in this document, which is a totally different factor: the removal of the maximum height for HGVs. We have discussed this here before and I am aware that Network Rail is very concerned by the impact of bridge strikes on their services. This height relaxation will inevitably mean more bridge strikes. What consultation has been undertaken with Network Rail about the now permanent relaxation of HGV heights?

16:30:00

I return to the core issue of concern: the creation of a GB type-approval scheme by the end of 2027, with divergence from EU standards. This will apply to a wide range of vehicles and their associated machinery. To start with the principle behind this, can I ask about this date? It is at odds with the end of 2023, which has now been thrown into the melting pot as the date for the end of existing EU law in Great Britain’s law. Everything has to be reviewed by the end of 2023 and will either be accepted or rejected by then. How does the 2027 date fit in with the 2023 date?

I ask a basic question: why would one want a separate GB scheme? Has this been agreed as a sensible course of action with environmental regulators and manufacturers, and what is its policy intention? Is it to achieve higher environmental standards or not to have to raise them every time the EU does? What impact will having separate and different standards in the UK have on the ability of manufacturers to sell overseas? Was there a specific consultation about this or are we just creating a new paper mountain?

Paragraph 6.2 of the Explanatory Memorandum casually refers to 4,500-plus pages

“of retained EU law … in the fields of motor vehicle and machinery engine type approval”.

All those pages of details have been reached after painful years of cross-European consultation. I emphasise the point just referred to by the noble Lord, Lord Jones: a great deal of power is being given to the Secretary of State here. This does not or should not just replace the EU regulations without the due process of consultation and verification that has taken place over years in Europe. We cannot have a Secretary of State who simply says “yes” and rubber-stamps something different in Britain. Has anyone drawn this issue to the attention of those people in Government who are pressing for all EU law to fall by the end of 2023? It strikes me that this date is not realistic.

Separately, I am concerned by the plethora of dates in this. I have detected the following dates, and I am not sure this list is comprehensive. Various places refer to December 2022—this is the sunset clause; that is why we have it—the date for revocation in the new Bill is 2023; and passenger, car, bus and goods vehicles have issues referring to 1 February 2024. Some provisional approvals then lapse on 1 February 2026. Then there is the end of 2027, when the Government’s GB-type approval scheme will come in, except for trailers, which have two years longer. On top of that, there are a series of waivers for certain situations where manufacturers have basically said, “Help! We can’t cope.” It is a mess.

Added to that, we have the United Nations Economic Commission for Europe, which covers 75%-plus of approvals. No wonder manufacturers are begging for extra time. All this simply distracts them from the core thing we should be encouraging them to do, which is to work towards ever higher and better environmental standards. I am old enough to remember the mess that our car industry was in in the 1970s and 1980s. In the past 30 years, we have seen a tremendous success story with the rebuilding of our car industry. I fear that we are in grave danger of losing what has been a great success story for Britain with the type of approach that we have here.

I turn briefly to the CO2 emission performance standards, which do three things. First, they correct an error in the formula. I have a question for the Minister: is there any evidence that that has had a practical impact? Has it been a problem? It illustrates how difficult it is to do all this sort of work at pace in so much detail without making mistakes. Secondly, they update standards according to the latest—2019—EU regulations. Thirdly, they expand the references to include a broader range of types of approval references now needed following Brexit. That is important for the control of CO2 emissions.

As ever, Brexit has made this more complicated because we now have EU, GB and UK(NI) type approvals. Even if there are changes to the protocol, surely we will need to continue to adhere to EU regulations because the EU is our major export market. These regulations demonstrate the dilemma that the Government face: the need to update to the latest and best standards in order for our manufacturers to compete. It makes the Bill to revoke EU law by the end of 2023 look ridiculous, to be honest.

I have a very specific question about the Department for Transport’s progress. I referred earlier to the 4,500 pages. I ask this question because, as the Minister knows, we have been here for many hours in the past couple of years transposing all this legislation, recasting it and, in some cases, going into contortions in order to make it fit. We are now going to have to do it again. I am a member of the Common Frameworks Scrutiny Committee. We had a ministerial letter this week that referred to the fact that the National Archives are being called into play to trace EU law in order to ensure that it is all found. How is the Department for Transport is getting on with tracking EU law and coming to terms with the task it faces in the next year?

Lord Tunnicliffe (Lab)
My Lords, I, too, thank the Minister for presenting these two SIs. I welcome these instruments in relation to approval for road vehicles and, specifically, the creation of GB type approval. As a result, cars, buses and goods vehicles will be required to transition into GB type-approval schemes by no later than 1 February 2026.

I begin by asking the Minister to explain what engagement the department is undertaking with manufacturers, particularly smaller businesses, to make them aware of the new approval regime. Similarly, the instrument will make new approvals first available from 1 January 2023. Given that that is now only one month away, is the Minister confident that the DfT is fully prepared? What resources have been allocated?

Turning to a separate issue, the regulations relating to carbon dioxide emission performance standards amend a reference to an EU type approval to reflect the creation of the GB type-approval scheme. Can the Minister confirm that this aims to provide continuity, rather than a separate change of policy?

We will not oppose these regulations but I hope that the Minister can clarify these issues a little further.

Baroness Vere of Norbiton (Con)
I am grateful to all noble Lords who have taken part in this short debate. I will endeavour to answer as many questions as possible. As ever, I am fairly sure that a letter will be forthcoming afterwards because I am also fairly sure that there will more information that I need to tell noble Lords.

I will start with the noble Lord, Lord Jones, who asked for an estimate of the number of vehicles now on the road that would be covered by the 2019 regulations. There are about 4 million; basically, anything that entered into service in 2020-21 would have been covered by the 2019 regulations.

The noble Lord went on to talk about consultation, as did the noble Lord, Lord Tunnicliffe. There has been an enormous amount of consultation and engagement with the industry around type approval. It is incredibly important so, over the past two years, we have consulted with the industry—including the Society of Motor Manufacturers and Traders, which is very effective in what it does, the Motorcycle Industry Association and the Agricultural Engineers Association —and with both individual manufacturers and their suppliers, because the supply chain for vehicle manufacturing can be long. This has informed the development of the scheme as well as providing the opportunity to help manufacturers to prepare for any changes.

We also consulted formally in the summer. The feedback that we received has been incorporated into the statutory instrument. The main feedback received from the industry was that it needed more time to prepare. We were pleased to give it that; we therefore delayed by seven months the date we had proposed for new models to obtain approval. We also permitted selected waivers to run for a little longer than originally proposed, giving the industry more time to adapt.

We have been engaging with the industry on this for such a long time. For example, the Vehicle Certification Agency—the VCA—has been running workshops throughout the year to ensure that stakeholders understand the approval process and are ready for its implementation. All in all, the vehicle manufacturers are largely content with the approach and the level of continuity—this is in essence continuity—that we have provided. They are familiar with type approval as a regulatory process because they are well aware of the EU type-approval process, and they are keen that Britain continues to regulate via this mechanism rather than other mechanisms that are used elsewhere in the world. We have not specifically consulted the Mayor of London specifically. We have focused very much on consultation with the industry; it is important that we do so.

The noble Lord, Lord Jones, went on to mention the DVLA. As a former Roads Minister of three years standing, I have great respect for the work that happens in Swansea. Indeed, I have been to visit the enormous offices in Swansea where about 6,000 people work. They do a fine job. They have cleared the backlog in all areas, apart from where there are complex medical decisions to be taken; those will rely on some information coming forth from the NHS. I am really proud of the work that they have done; they have worked very hard over a long period of time.

16:45:00

A number of noble Lords mentioned the powers. We are dealing here with very small technical amendments that often start life in the UNECE. Although the UNECE has the word “Europe” in it, it is actually not very European at all. It is a much broader organisation that includes many countries around the world. In my letter to noble Lords I may perhaps identify some of them that are definitely not European but come under the UNECE. It is in the UNECE that the technical changes are first made; that is the genesis of the technical changes.

I have been privy to some of the conversations at the UNECE and the sorts of things that it talks about are small: the size of the indicator lever or something like that. They are the sort of things that I do not believe should come before your Lordships’ House for debate in the Chamber or, indeed, in the Moses Room. They are things one needs to talk to manufacturers about. Technical changes that will be made are agreed at an international level, and then they go into the system. I believe that the Secretary of State having the power to put those technical changes into the system is appropriate.

The noble Lord mentioned “probably” and “in the time available”, which unfortunately I did not have time to reference in my Explanatory Memorandum, so I will probably have to write to him on that to provide a little more information.

Turning to the comments of the noble Baroness, Lady Randerson, there has been very little change, apart from the fact that manufacturers will be dealing with a different organisation for their type-approval process. The fundamental testing that a manufacturer has to do and the documents that it needs to provide have not changed, so very limited familiarisation needs to happen because the underlying technical requirements remain exactly the same as previously.

The only costs to the industry will be for British companies that did not previously work with the VCA and will result from the processes of applying for GB type approval. It is assumed that manufacturers that have already done the testing needed for EU type approval would not need to do additional testing, so it would just be the administrative process of taking the papers they had sent to the EU and sending them to the VCA if they are asked for two different type approvals. The costs are purely administrative, and we estimate that they will be not more than around £3 million a year across the entire industry, which is not very significant. We estimate that it will add less than £1.50 to the cost of a new vehicle, given that around 2 million new vehicles are registered every year. The VCA has been preparing for this change for many years. It charges fees to recover its costs from the industry and it is staffed to provide these type approvals. It has a very good record with the industry in terms of the speed with which it has previously been able to do type approvals, and I am content that it will be able to meet the needs of the industry.

The noble Baroness mentioned the height relaxation. This is to align type-approval regulations with the law that already applies to all vehicles in circulation. It is essentially removing administrative red tape around getting lorries and trailers on the road. We do not anticipate it increasing the number of vehicles exceeding 4 metres in height. I accept that bridge strikes remain a challenging issue, and we are always trying to get the traffic commissioners to write to operators to remind them to plan their routes carefully and not strike our bridges.

Turning to the Retained EU Law (Revocation and Reform) Bill, the department is reviewing its catalogue of all retained law, including that for automotive standards, and will decide how best to proceed once the Bill is finalised. On tracking EU law more broadly, I have seen the spreadsheet and it is pretty big. I think we are making good progress, but I will write with a little more information. In the Department for Transport, much of our EU law is safety-related, so it is not the case that vast quantities would be ignored or allowed to lapse because we clearly need it for safety reasons.

Why do we need this scheme? It is simply a duplication? To a certain extent it is. We are taking a scheme that already exists and saying, rather than sending in papers to the EU, send them to the VCA so that you have GB type approval. The key thing is that it also means that the system can be enforced by the VCA and the DVSA when they do their spot checks. Without the SI, we would not be able to enforce it, so it is really important. However, in general not much has changed, because the underpinning for all this is international UNECE regulations.

The noble Baroness, Lady Randerson, also mentioned the impact of the carbon dioxide formula error. We do not believe that there was any impact. No carbon dioxide target calculations have taken place. The typo is replacing NEDC carbon dioxide with NCTP carbon dioxide. I will write if I have any more information, but I do not believe that it has any real-world impact at all.

I accept that there are a number of dates in here, but this is a very large industry that is well aware of the dates by which it has to do certain things.

Baroness Randerson (LD)
The noble Lord, Lord Jones, and I mentioned the powers going to the Secretary of State. Can the Minister tell us a little more about the advice that will go to the Secretary of State? It is all fine so long as we are piggybacking on EU standards, but surely the Government are not going to all this effort just to permanently piggyback on EU standards. The Government clearly want to diverge and if we are to do so, there has to be a sound technological basis for it.

Baroness Vere of Norbiton (Con)
No, that is not quite right. We are not piggybacking on EU standards, because EU standards are underpinned by UNECE standards and the UNECE has nothing to do with the EU. They underpin EU standards and will underpin our standards. Changing UNECE standards involves lengthy negotiations and discussions and technical experts all getting together to make improvements in our system.

Historically, when we go into UNECE negotiations, advice is provided to Ministers in the normal fashion with various experts saying, “Minister, this should be our negotiating position”, and we go in there and try to get our position. We are a leader in that group as we have very strong technical expertise in the field of vehicle manufacturing. When a decision is made, it is a bit like the European Commission: we are not losing any oversight at all here, because that decision would have gone through the European Commission with no oversight by Parliament either.

I am happy to write with more information as to what the process would be should the technical standards change and we need to change our type-approval system, but I cannot imagine that it would be significantly different from what already happens when we approach the UNECE to make technical changes.

The noble Lord, Lord Tunnicliffe, was right when he summed up and said that this is continuity and not a change of policy. There is no change of policy here; there is no change in terms of the carbon dioxide emissions. We are maintaining the standards for carbon dioxide emissions, and we are maintaining the standards within the type-approval system. The simple fact is that this is very technical and many of the names are changed—and no more.

I believe that I have covered engagement, so I hope that I have covered all the questions I am currently able to, but I will write a letter. I beg to move.

Motion agreed.