The chemicals sector faces £2bn of post-Brexit bureaucracy, double the cost of initial industry estimates, as Britain puts in place its own regulatory regime, ministers have warned.
As Liz Truss and Rishi Sunak promised to ‘cut EU red tape’ during the Tory leadership campaign, the cost of local UK red tape after Brexit is rising.
A government impact assessment, seen by the Financial Times, set the central estimate of chemicals registration costs on a new UK database – often duplicating existing EU registrations – at £2 billion.
Last year the chemicals industry warned that the new regime – known as UK Reach – would cost around £1billion – but the government now accepts that many more substances will need to be registered than previously thought. thought before.
The UK regime would be far more expensive than the EU Reach system; British companies have spent £500m to comply with the Brussels regime over the past decade, gaining access to 27 markets.
A Defra spokesperson said it was “working closely with industry and NGOs to find a lower cost solution for UK Reach registration which still ensures high levels of protection for human health and safety.” ‘environment”.
Defra’s impact assessment implied a £91,000 bill for each substance registered under UK Reach and that 22,400 ‘separate substances’ would fall within the scope of the new regime.
Ministers plan to extend the deadline for registering with UK Reach to spread the costs. The government has pushed back the requirement for full datasets by at least two years until October 2025.
Britain’s new Reach regime has pitted ministers against a wide range of manufacturers, from chemical companies to their customers in sectors including automotive, aerospace, food and drink, steel and fragrances.
The Chemical Industries Association said it wanted strong regulation “but unnecessary mass re-registration does not equate to higher safety and health standards”.
While Sunak, former Chancellor, and Truss, Foreign Secretary, have promised to review all retained EU legislation and scrap excessively onerous rules, replacing it with UK regulations is likely to prove costly and disruptive.
Many ‘Brexit benefits’ have yet to materialize six years after the exit vote, while new border controls have hampered trade and have been blamed for contributing to travel chaos in the port of Dover.
According to the Independent Office for Budget Responsibility, Britain will be 4% poorer in the medium term than if it had stayed in the EU, cutting Britain’s GDP by £80bn and around £40bn of pounds sterling the receipts of the Treasury.
Following the 2016 Brexit referendum, Britain’s chemical industry initially lobbied for the UK to retain its associate member status in the EU Reach scheme, warning it would cost UK companies up to £1 billion pounds to create a British copycat version.
Under EU Reach, chemicals must be registered with the European Chemicals Agency (ECHA) in Helsinki, each accompanied by a large amount of testing and data.
In the 2020 Brexit trade talks, the UK failed to negotiate reciprocal access to the database, leaving companies facing huge bills to create duplicate datasets to back up their records UK Reach.
Among the challenges for UK Reach is the lack of capacity and expertise within the Health and Safety Executive. A National Audit Office report said registrations could be pushed back to 2027, with the HSE exploring plans to extend the deadlines further.
The spike in UK Reach costs emerged after the Treasury admitted last week that the UK’s Brexit divorce bill could hit £42.5bn, up to £7.5bn more than originally planned.
Treasury Minister Simon Clarke said revised inflation assumptions and the recent assessment of the UK’s liabilities to the EU pension scheme were the “main drivers” of the revised estimates.