Draft Marking of Retail Goods Regulations 2025

The Committee consisted of the following Members:

Chair: Sir Desmond Swayne

† Anderson, Callum (Buckingham and Bletchley) (Lab)

† Cocking, Lewis (Broxbourne) (Con)

† Cooper, John (Dumfries and Galloway) (Con)

† Creasy, Ms Stella (Walthamstow) (Lab/Co-op)

Dyke, Sarah (Glastonbury and Somerton) (LD)

† Edwards, Lauren (Rochester and Strood) (Lab)

† Farron, Tim (Westmorland and Lonsdale) (LD)

† Hinder, Jonathan (Pendle and Clitheroe) (Lab)

† Hudson, Dr Neil (Epping Forest) (Con)

† Kyrke-Smith, Laura (Aylesbury) (Lab)

† Mayhew, Jerome (Broadland and Fakenham) (Con)

† Mohamed, Abtisam (Sheffield Central) (Lab)

† Prinsley, Peter (Bury St Edmunds and Stowmarket) (Lab)

† Russell, Sarah (Congleton) (Lab)

† Smith, Jeff (Lord Commissioner of His Majesty’s Treasury)

† Taylor, Rachel (North Warwickshire and Bedworth) (Lab)

† Zeichner, Daniel (Minister for Food Security and Rural Affairs)

George Stokes, Abi Samuels, Committee Clerks

† attended the Committee

Allister, Jim (North Antrim) (TUV)

First Delegated Legislation Committee

[Sir Desmond Swayne in the Chair]

Draft Marking of Retail Goods Regulations 2025

18:00:00

I beg to move, That the Committee has considered the draft Marking of Retail Goods Regulations 2025. It is a pleasure to see you in the Chair, Sir Desmond. I am grateful for the opportunity to discuss the draft regulations, which were laid before the House on 5 June and which will protect the availability of retail goods in Northern Ireland. The purpose of this legislation is to deliver the UK Government’s long-standing public commitment to safeguard the supply of retail goods into Northern Ireland, to maintain consumer choice for the people of Northern Ireland and to protect the UK internal market. It will do so by providing the Secretary of State with a targeted power to implement “not for EU” labelling in Great Britain. I will first set out the background to the policy. The Windsor framework, which was agreed between the United Kingdom and the European Union in February 2023, replaced the original Northern Ireland protocol. A key component of the framework is the Northern Ireland retail movement scheme, which simplifies the movement of goods from Great Britain to Northern Ireland by removing the requirements for costly certification and controls that were necessary under the original Northern Ireland protocol. This also allows goods to move on the basis of UK food safety standards. The scheme operates alongside other schemes and flexibilities that smooth the movement of goods between Great Britain and Northern Ireland under the Windsor framework. To benefit from those simplified arrangements, business operators must label certain retail goods as “not for EU”. Such labelling requirements are being introduced in phases, with the final tranche of products coming into scope on 1 July 2025. At that point, a much larger group of retail goods will need to be labelled to be eligible to be moved via the scheme from Great Britain to Northern Ireland. Given the size of the retail market in Northern Ireland relative to that in Great Britain, certain businesses may decide that it is not commercially advantageous to label their goods exclusively for the Northern Ireland market. This runs the risk that businesses would have to remove their goods from sale in Northern Ireland rather than make the necessary changes. That is not an acceptable outcome for this Government. We believe that the smooth operation of the Northern Ireland retail movement scheme is essential to ensuring product supply in Northern Ireland. We will therefore ensure that no incentive arises for businesses to avoid placing goods on the Northern Ireland market through this legislation. That brings me to the purpose of the draft regulations, which will empower the Secretary of State to issue a notice requiring that certain retail goods be labelled as “not for EU” when placed on the market in Great Britain. To make this determination, he will need to be satisfied that the supply of retail goods into Northern Ireland will be seriously adversely affected. He will also need to be satisfied that this is a direct result of the requirement to mark a product as “not for EU” to move into Northern Ireland via the Northern Ireland retail movement scheme. The Secretary of State will consider a variety of evidence, including information on the availability of goods in Northern Ireland, the way in which goods are moving between Great Britain and Northern Ireland, and representations made by UK businesses on making goods available in Northern Ireland. He will also consult Scottish and Welsh Ministers, in recognition of the fact that food labelling is a devolved matter. He may engage the Windsor framework independent monitoring panel, which was established through the “Safeguarding the Union” Command Paper, for its advice. Once a notice is enforced, relevant business operators in Great Britain will need to ensure that goods in scope of a notice are labelled “not for EU” before they are placed on the market in Great Britain. By extending the labelling requirement to the much larger GB market for certain products, we will take away the incentive for businesses to stop supplying goods to Northern Ireland. The extended requirement will use the size of the whole UK market as an economic incentive for businesses to label their goods. This will ensure continued product availability and consumer choice in Northern Ireland and uphold the commitments made in the “Safeguarding the Union” Command Paper. The timing of the draft regulations is critical. With the final phase of labelling requirements under the scheme commencing on 1 July, we must legislate now to provide a credible and timely mechanism to deter businesses from taking decisions to remove their products from the market. We must have the tools to act, should it appear likely that products may no longer be available in Northern Ireland. I will outline the key provisions of the draft regulations. The Secretary of State must issue a marking notice specifying which goods must be labelled in Great Britain and from what date. He should do so after making a determination that the supply of certain retail goods “is, or is likely to be, seriously adversely affected” as a result of the “not for EU” labelling requirement. The notice must be published in the London Gazette and Edinburgh Gazette and must be accompanied by a written statement to Parliament explaining the rationale. Separately, we will publish the notice on gov.uk, as well as promoting and explaining the new requirement to businesses. The obligation would fall on the relevant business operator that first places the goods on the market in Great Britain; this is typically the manufacturer responsible for producing the product, who will have the greatest ability to affect its packaging. Exemptions will apply to qualifying Northern Ireland goods, food for special medical purposes and small companies, in line with this Government’s commitment to support growth. Enforcement powers will be delegated to local authorities, with a regime of improvement notices and fixed monetary penalties for non-compliance. Together, these provisions will ensure that there is a clear deterrent for businesses that may choose to withdraw supply from the Northern Ireland market, as well as an active tool that will be deployed in that event. That will protect consumers in Northern Ireland, as well as trade within the United Kingdom internal market, thereby reinforcing Northern Ireland’s place in the Union. This will also support our relationship with the European Union. Through our common understanding, which was published on 19 May following the UK-EU summit, we and the EU have confirmed that we will jointly take forward a range of measures as part of our reset in relations, including a UK-EU sanitary and phytosanitary agreement. Once finalised, that will remove a broad and wide-ranging set of SPS and agrifood requirements for goods and plants moving from Great Britain to Northern Ireland. We also expect that it may remove the need for businesses to label the majority of their goods as “not for EU” when moving them into Northern Ireland. Achieving such benefits, however, relies on the UK being a reliable partner that delivers on its existing commitments. To that end, we must implement the arrangements for the Windsor framework in a full and faithful way, even where our ambition is that those arrangements may not be needed in future. We therefore expect that the draft regulations will maximise compliance with labelling requirements from 1 July and will prevent the movement of unlabelled goods onwards into Northern Ireland. We believe that the draft regulations are a pragmatic and proportionate response to a material risk. They will support the continued flow of goods across our United Kingdom, protect consumer choice in Northern Ireland and reinforce our commitment to the Union. I commend them to the Committee.

18:08:00

It is a great pleasure to serve under your chairmanship, Sir Desmond. I thank the Minister for introducing the draft regulations. The Government are right to focus on strengthening trade in the internal market and ensuring that Northern Ireland is not disadvantaged in any way by de-listing. Maintaining a wide variety of product choices and availability is crucial: not only does it benefit consumers, but it encourages competition. However, it is important to consider the regulations in the broader context of the Government’s economic policies. Unfortunately, recent measures taken by the Chancellor, such as the increase in national insurance contributions, have led to significant increases in costs for business. Although the draft regulations exempt small businesses, as defined in the Companies Act 2006, they do not exclude medium-sized or large businesses, which together account for 53% of private-sector employment in the UK. The impact assessment sets out that, over a 10-year period, businesses will face between zero and £53.8 million in total one-off labelling costs, including package redesign and the costs associated with setting up new product lines, and between zero and £279.4 million in total ongoing labelling costs, including product line changes and transportation. That is a considerable cost to push on to businesses in the full knowledge that it may ultimately be paid for by consumers. What assurances can the Minister provide today that the regulations will not add to inflation, which is something that the Government have yet to get under control? The draft regulations set out that the intention is to provide businesses with the opportunity to comply with any notice before a fixed monetary penalty is imposed. They therefore allow a sufficient period of time to be granted to businesses to make the necessary changes. The period can be extended by agreement, where a business has demonstrated sufficient progress but has been unable to become fully compliant in the timeframe allowed. Can the Minister outline how many businesses he expects to seek an extension and what the cost will be for local authorities to process applications for extension? I would also like to ask about Labour’s proposed new deal with the EU. Can the Minister clarify whether the deal will facilitate trade across the Irish sea, and what impact that might have on these regulations? Although we do not want to see customers in Northern Ireland suffering as a result of the unavailability or insufficient supply of retail goods, we have concerns that the regulations will be considered another blow to business confidence and business finances, so I will be grateful if the Minister can give reassurances on those points. We look forward to scrutinising the matter further and to the Minister’s addressing our concerns about the potential consequences of the draft regulations for businesses in an increasingly difficult climate.

18:11:00

It is a joy to serve under your guidance this evening, Sir Desmond. I thank the Minister very much for his introductory remarks. I support the draft regulations, which will provide the Government with a power to introduce “not for EU” labelling across Great Britain should it be needed to protect the UK internal market and consumer choice in Northern Ireland. They make it clear that the Secretary of State can decide to apply such labelling only where there is evidence that the supply of the product is seriously adversely affected by business operators withdrawing from the Northern Ireland market. I am pleased to observe that small businesses will not be expected to adhere to this measure and that Northern Irish goods will not need to be labelled to be placed on the market in Great Britain. Food for special medical purposes will also be exempted. Over the past several years, Liberal Democrats have raised concerns about the approach being taken to this issue. More recently, we have raised concerns about the risk that other British businesses will lose out on trade with Northern Ireland as a result of the additional burdens associated with labelling. Despite that, we appreciate that the Government have taken a more workable and phased-out approach than the blanket label system that the previous Government proposed. The draft regulations will ensure that the requirements are applied in a more limited and intelligent way, rather than in the comprehensive way that would have done unnecessary damage economically not just to farmers and producers in Northern Ireland, but right across the island of Britain. This instrument takes a more sensible approach: it will allow discretion, limit damage to business and minimise red tape, bureaucracy and unnecessary business costs. Of course, it will not end such costs altogether. That is a reminder that the deal cooked up in early 2020 has a lasting, damaging impact on the UK economy and on our farmers, and that non-tariff trade barriers with Europe create real friction and cause real harm to farmers right across the United Kingdom and to food producers of every kind. It is worth remembering that 17,000 businesses since January 2020 have stopped trading with the European Union, fundamentally because of non-tariff barriers to trade such as this, so I echo the Conservative spokesperson, the hon. Member for Epping Forest: I am very interested to hear what the Minister has to say about the extent to which the EU reset will affect the requirements of this agreement and whether there will be any easing in trade friction. This is not an issue that can be considered on its own. The impact on food producers on both sides of the Irish sea is significant. That comes alongside the impact on farmers’ confidence and business planning as a result of the inheritance tax changes; the 76% cut in basic payments for farmers this financial year; the £100 million reduction in like-for-like farm funding announced in the spending review last week; the enduring impact on British farmers of the unfair and unbalanced trade deals negotiated by the previous Government; and the trade friction caused by the separation of our farmers and food producers from their biggest external market, which is of course the European Union. We believe that food security must be treated as a public good, which is why I was pleased that the Farming Minister has agreed to meet me and the noble Lord, Lord Curry, in the coming weeks to discuss food security; I will be delighted to take advantage of that offer. Nevertheless, the draft regulations are a significant improvement on what came before. It is right that discretion is being allowed. It is right that it is being done in a limited way, with small businesses exempted. The damage that will be done, both in Northern Ireland and on the island of Great Britain, will be mitigated by the draft regulations, but of course they will not entirely eradicate the damage that we have done by severing ourselves from our biggest market and our biggest international trading partner.

18:15:00

It is a pleasure to serve under you, Sir Desmond. As a Member who represents a Northern Ireland constituency, I am grateful for the opportunity to speak about the draft regulations. They come in a context in which there has already been an indisputable, substantial and worrying diversion of trade in terms of the supply of goods and produce to Northern Ireland. The most recent figures from the Northern Ireland Statistics and Research Agency indicate just how significant that is, yet within the Windsor framework there is supposedly a mechanism under article 16 to enable the Government to take action should there be a diversion of trade. However, this Government, like the last, are blind to that issue and do not want to take on the EU on any of these matters. It is important for the Committee to understand the genesis—how we got to this point. It all arises from an SPS regulation, EU regulation 2023/1231. This is a regulation that was made by a foreign political organisation—the EU—and the most astounding thing about it is that it makes rules that exclusively apply to non-EU territory. It makes regulations that apply not to itself, but to this United Kingdom. This is the first time since Brexit that the EU has asserted legislative power over the United Kingdom. It tells this United Kingdom that, in a series of three steps, there shall be introduced by this United Kingdom “not for EU” labelling on goods moving within this United Kingdom from Great Britain to Northern Ireland. This is the diktat of the EU: the three steps in Regulation 2023/1231. As the Minister has alluded to, we come today to the final third step, which is to be introduced in just a few days, on 1 July. Building on the previous two steps, it decrees that goods that are moving from Great Britain, allegedly within the UK internal market, must, by EU law, carry a “not for EU” label. That, of course, has cost implications for those who are sending them, which is why, as a result of the requirements already imposed, a number of companies have simply opted out of supplying to Northern Ireland. Here is the most ludicrous aspect of this SPS regulation: it creates no prohibition on any EU citizen—most particularly in the Republic of Ireland—purchasing any of these “not for EU” goods. So we put on GB suppliers a costly obligation to engage in labelling of goods that they might be sending to Northern Ireland, but, within Northern Ireland, anyone from the Republic of Ireland can come and buy those goods and can do whatever they want with them. This is supposedly about protecting the EU single market. How can it be that we have this ludicrous situation that goods are labelled as “not for EU” but can be brought into the EU with no consequence, all under an EU regulation that puts a burden on the United Kingdom but no burden on its own citizens? I guarantee that if anyone went now, at this very moment, to any of the supermarkets in Northern Ireland around the border, in Enniskillen, Londonderry or Newry, they would see people filling up their car boot with goods labelled as “not for EU”, because they are cheaper. Yet we have this ludicrous situation whereby we are now going to impose an even wider duty on British manufacturers. For what purpose? For the purpose only of showing how compliant doormats we are for the EU, for no practical purpose whatever. That is the reality of the situation. I therefore say to the Committee that it should not approve a regulation of this genesis and this nature. Of course, it is going to burden on industry in Great Britain, and it is not as if there were not already burdens. Even under the internal market scheme, if someone is sending produce to Northern Ireland, they must fill in a customs declaration, which is an expense in itself, and must belong to a trusted trader scheme, which is a further expense. Now, on top of that, they must label their goods as “not for EU”, even though there is no purpose, other than that which is farcical, in doing that. I say to this Committee: surely, out of respect for your own GB businesses, you should not be rushing into approving a regulation such as this, because it will add burdens, and it will cause companies to de-list. Paragraph 5.2 of the explanatory memorandum recognises what some of us have always been saying: that creating an Irish sea border—creating barriers within our own supposed internal market—will discourage trade. That is why the Government say they are bringing these regulations—to protect against discouraging trade—but will it? First of all, any “small company”, which is a company with fewer than 50 employees, is not affected: it can de-list Northern Ireland with no consequence. So, in my constituency, artisan cheese people who might buy from a small supplier in Wiltshire, or dear knows where, will no longer simply be supplied, with no penalty upon the provider, because small companies are exempt. This will also enforce the requirement on GB producers to label their goods, even though their goods will never come to Northern Ireland. That is what Members who represent other parts of the United Kingdom should realise. The draft regulations, if the Government act upon them, will require producers in GB, supplying only to GB, to put on their produce, “not for EU”. These regulations are ill-considered and will do nothing to address the fundamental problem of the distortion and upset to the UK internal market that has flowed from the Windsor framework and the protocol, which were identical in this regard. If this Government want an answer to the Irish sea border, it lies in the very simple but workable proposition of mutual enforcement: we send goods to a recipient country, meeting its standards, and vice versa. We do not need any of this crazy, trade-reducing paraphernalia. We certainly do not need to add extra cost to business, which is what these regulations will foolishly do, all for the purpose of the Prime Minister being able to say, “I’m a faithful implementer of the Windsor framework,” even though the Windsor framework is tearing apart this Union and is literally divorcing Northern Ireland from its natural market, which is so impeded by regulation, to which this legislation is adding.

18:26:00

I am grateful to all hon. Members who have contributed to the debate. I thank the shadow Minister, the hon. Member for Epping Forest, for his support and for raising some important questions. Of course, we want to minimise costs to business, and we made the decision to introduce a targeted power, as opposed to a mandatory requirement for all goods, to prevent some of those costs. As we set out in the impact assessment, the indicative cost to business of applying “not for EU” labelling to a subset of product lines is significantly less and will vary depending on the product. Moreover, the non-monetised benefits, particularly safeguarding food security in Northern Ireland, will be a crucial part of maintaining a strong economy. The shadow Minister asked how many businesses are likely to seek extensions, but I think that that will only become apparent over time. He also asked about costs to local authorities; given that the statutory instrument is a contingency power, enforcement costs will only be incurred should the powers in the SI be activated. Any enforcement activity would be undertaken by the local authority as part of existing food labelling checks to minimise the burden. I listened closely to the hon. Member for Westmorland and Lonsdale and, as I so often do, I found a lot in his comments to agree with. I very much look forward to our discussions with Lord Curry in due course. The hon. and learned Member for North Antrim, very importantly, provided a voice from Northern Ireland in this debate. He asked why we are not triggering article 16, but that would happen only in the event of a massive distortion to trade. A decision to activate article 16 would be contrary to Northern Ireland having stable arrangements for trade now and in future, and that is what we anticipate will happen.

That is news to me. I do not have article 16 in front of me, but I do not believe that it says “massive distortion”. However, what article 1 of the Windsor framework does say is that the EU will respect the territorial integrity of the United Kingdom. Where is the respect for the territorial integrity of the United Kingdom in the EU insisting that we have its “not for EU” labelling? Where is the respect there?

The respect is that we now have a good agreement with our friends in the European Union. I think the hon. and learned Gentleman would do well to recognise the advantages that we are gaining from that, both for Great Britain and for Northern Ireland. Triggering article 16 would disregard the benefits that the Windsor framework offers and that businesses rely on, including those that are taking advantage of Northern Ireland’s unique access to the United Kingdom and EU markets. We will keep this legislation under review. The statutory review clause requires the Secretary of State to conduct the first review after two years, rather than the customary five, and that will allow for scrutiny of the policy in the context of the proposed SPS agreement. Once completed, the SPS agreement will facilitate the smooth flow of agrifood and plants from Great Britain to Northern Ireland, protecting the UK’s internal market, reducing costs to businesses and improving consumer choice. As I have noted, we expect the requirement to label goods as “not for EU” to diminish significantly as a result of the agreement, which may in turn reduce the need for the power conferred by these regulations. We must meet our existing international obligations to reach that point. We must continue to fully implement the Windsor framework in good faith, while ensuring Northern Irish consumers are protected. That is why this legislation is essential in supporting this Government’s renewed partnership with the EU, which will deliver a broader range of benefits for people and businesses in Northern Ireland and across the United Kingdom. I conclude by returning to the primary purpose of this legislation: to provide a safeguard against reduced product availability and to maintain consumer choice in Northern Ireland. This Government are committed to delivering on the commitments made in the “Safeguarding the Union” Command Paper for the people of Northern Ireland. The draft regulations will demonstrate that commitment by ensuring that the Government are able to act decisively if required. Question put and agreed to. Resolved, That the Committee has considered the draft Marking of Retail Goods Regulations 2025.

18:30:00