Feature articles

26 November 2020

How can pest management companies prepare as the end of the Brexit transition period looms?

BUSINESS | PPC101 DECEMBER 2020

The UK has left the European Union, but much of what that means for pest control is not yet known. We currently sit in the transition period – where nothing feels different, but a deadline looms. Marketing and Communications Manager, Scott Johnstone, summarises what we do know about the end of the transition period and what’ll be different on 1 January 2021. 

Brexit and the impact on pest management sector BPCA

I have been procrastinating over writing this article for a while now. I’ve not been putting it off because it’s hard to write (which it is), or because it’s tedious (which it is), but because so much is still uncertain. No matter how many articles we read, Government advice pages we trawl or webinars with civil servants we sit in on, there seems to be little clarity on what the UK will look like in 2021.

Until we know what our trading relations will look like with the EU, many things feel like what-ifs and maybes - and who wants their trade association issuing advice on what-ifs?

We do know things will feel different because that’s what the government wants. After all, if Brexit changes nothing, what was the point of the upheaval or the estimated £130 billion price tag?

Let’s start by thinking about what might be important to pest management companies and then take a look at what we know. Things that might be on your mind are the impact on:

  • Products
  • Supply chain
  • Customers
  • Workforce.

Where are we now

At the time of writing, negotiation with the EU is still ongoing, but PM Boris Johnson has asked us to all prepare for a ‘no-deal’ Brexit.

We live in this intermediary bubble called ‘the transition period’ where everything around us is still aligned to the EU. But bubbles pop and this bubble is scheduled to be burst on
1 January 2021.

Between the endless Covid-19 news cycles, we get the odd update on how the EU-UK trading negotiations work. Until we know what that relationship will look like (as well as the UK’s trading relationship with non-EU countries), there is only so much business owners can do to prepare.

Whatever happens, Brexit is likely to impact all our businesses short and long term – even if you don’t trade internationally.

The Withdrawal Agreement Bill, negotiated with the EU by Theresa May, and then by Boris Johnson, includes the following terms:

  • Money that is owed by the UK (the ‘divorce bill’)
  • The EU-UK border
  • Citizens’ rights.
  • The transition period is the UK’s opportunity to negotiate a trade deal – however, there still is the chance we may end up without an agreement, ie ‘no-deal’ Brexit.

Whatever happens, Brexit is likely to impact all our businesses short and long term – even if you don’t trade internationally.

Scott Johnstone, Marketing and Communications Manager, BPCA

Chemical regulation and product authorisations

Pre-Brexit, public health pesticides have been controlled and regulated by the European Union through the Biocidal Product Regulations (BPR). 

The UK will establish its own regulatory scheme on 1 January 2021 with the Health and Safety Executive (HSE) operating as the UK’s regulator unless you’re in Northern Ireland. Under the terms of the Northern Ireland Protocol, the EU rules will continue to apply in Northern Ireland after 1 January 2021.

The UK Government says that from 1 January 2021, Great Britain (England, Scotland and Wales) will have in place a regulatory framework for biocidal products. It will reflect the current EU framework (EU BPR), but they will operate independently of each other.

Certain EU functions have been removed, such as union authorisations and mutual recognition as they will no longer operate in Great Britain. Just because a product authorisation is changed in the EU, it doesn’t mean it’ll change here (and vice versa).

Existing EU product authorisations will still be valid, so we shouldn’t expect products to disappear from shelves overnight. Product and active substance authorisations will be valid until their normal expiry date.

New products and actives will go through HSE’s new regulatory process.

On 1 January 2021 EU REACH Regulation for biocides will be copy and pasted into UK law under the European Union (Withdrawal) Act 2018. A crucial part of EU REACH is the principle of ‘no data, no market’ – ie you need to provide robust data about a substance’s hazard properties before it can go to market. The copy and pasted version will be called UK REACH. Every change after that point will be a divergence from EU REACH.

...once existing authorisations expire, they will have to go through UK REACH. Even products already authorised need to resubmit all their data to HSE...

But here lies a potential problem for the UK market; once existing authorisations expire, they will have to go through UK REACH. Even products already authorised need to resubmit all their data to HSE within two years, as the UK will lose access to the European Chemicals Agency (Echa) database after the transition period ends. For some manufacturers, this will be very expensive.

Assuming they want to continue selling in the EU market, chemical manufacturers will also need to go through EU REACH. Whilst some of the data might be shared between submissions, this process will still be incredibly time consuming and expensive. A chemical manufacturer we spoke to has estimated that it will cost £70m for its products to go through UK REACH, even if it already has EU REACH.

Chemical Watch, in its Brexit and chemicals regulation document (2020), makes it clear that their sector would have preferred to stay aligned with EU REACH. They said “chemical company warnings of the cost of double registrations and the unpreparedness of downstream users should they acquire chemical importer status have fallen on deaf ears.”

Each approval holder will have to make a business choice. Will I pay for my product to go through UK REACH? Will I sell enough of my product to make it worth the effort? The products that we use for public health pest management are, by and large, niche already, meaning we could see more products removed from shelves and new products never make it to the UK market.

The impact on our products and how Brexit will affect our ability to control pests is uncertain. There is little you can do to prepare for this beyond taking a serious look at your non-toxic pest management skills and thinking about how you could adapt your practice for a potentially reduced toolkit.

Impact on supply chain

This largely depends on whether we do or don’t have a trade deal with the EU and what those terms are.

No-deal is likely to be very disruptive and has a knock-on effect to every supply chain, pest management and otherwise.

Extra import and export checks will be in place regardless, and we’ve all heard apocalyptic descriptions of endless queues at border points. Michael Gove said in his Reasonable Worst Case Scenario (RWCS) document that 40-70% of trucks travelling to the EU might not be ready for new border controls and we could have queues of up to around 7,000 port bound trucks in Kent, leading to two-day delays.

A lot of businesses have what’s called a just-in-time (JIT) supply chain; this is when a firm looks to cut costs by having limited goods or materials in stock, producing and delivering those goods just in time to be sold.

Transport issues could cause delays, which will cause considerable disruption in general but especially to those businesses operating on a JIT basis.

Pest control product manufacturers and distributors have prepared as best they can, so we certainly shouldn’t be panic buying biocides anytime soon. That being said, having a slightly larger stockpile of your products might be worthwhile (an extra month’s worth sounds sensible).

Talk to your suppliers now. Make sure you’re not caught short. We know Manufacturing and Distributor BPCA members have been all over the guidance and have plans in place to be able to fulfil your orders.

Impact on your customers

Deal or no-deal is the question when it comes to thinking about the impact on your customers.

Covid-19 looks set to plunge the UK deeper into a recession, and Brexit is likely only to make your customers’ financial situations worse if we don’t negotiate a trading deal with the EU.

Things could get tough for your customers, meaning some may be looking at their pest management services to make cost savings.

No-deal means currency fluctuations, tariff changes and customs disruption that are likely to lead to delays and price changes on some goods, for businesses and consumers alike. This will likely affect your customers, particularly in the food sector.

In 2016, over 40% of the UK’s £30.3 billion food imports were from the EU. As it stands right now, the UK is looking at a 6% duty tariff on pesticide products going into the EU. There is currently no published UK tariff schedule, as we use the EU tariffs at the moment, but the standard World Trade Organisation (WTO) terms are the same (6% duty payable by the importer on entry). While eleventh-hour changes are possible – the position now is that tariffs will be imposed at current WTO rates.

Tariffs aside, industry leaders are worried about border checks and transport times. The British Retail Consortium (BRC) said: “The retail industry has been crystal clear in its communications with the government over the past 36 months that the availability of fresh foods will be impacted as a result of checks and delays at the border.”

Even if our supply chain is relatively unaffected, we need to consider that customers may be having a tough time of it. We saw how lockdown had a knock-on effect for pest management businesses, with 74% citing difficulty getting on-site and having contracts cancelled when leisure and hospitality venues were forcibly closed.

Food aside, other prices are likely to creep up too. Government’s Yellowhammer report warns electricity, gas, medication, and imported goods are likely to see significant price rises. Things could get tough for your customers, meaning some may be looking at their pest management services to make cost savings.

Impact on your workforce

f your pest management businesses employ staff who are European Economic Area (EEA) nationals, then you might be worrying about whether they’ll be able to live and work in the UK post-transition.

Thankfully, the guidance on this is relatively clear, regardless of whether we leave the EU with a deal or not.

EEA nationals will need to make an application under the EU Settlement Scheme online by the deadline of 30 June 2021 by visiting gov.uk/eu-eea

Looking forward, things are less clear. The UK Government has indicated it would like to introduce a points-based immigration system, similar to Australia. How this will work for pest professionals is unclear, but if you rely on EEA nationals in your workforce, this could cause you issues in the future.

Final thoughts

The end of the transition period and ‘Brexit proper’ will undoubtedly change our lives, as pest professionals and more generally as citizens. Amidst a pandemic, Brexit couldn’t have come at a worse time. While we can’t anticipate everything that’ll happen in 2021, bracing for a deeper recession and doing the appropriate planning is well worthwhile.

2020 has been tough. 2021 could be just as challenging.

This article is inadequate to prepare you for the changes ahead, and this isn’t for the lack of trying. No country has ever divorced from the EU before. As with any dissolution of a 48-year-old relationship, it’s going to be a bit messy and somewhat rocky at the start. Brexit may well bring with it opportunities, but honestly, after much research, I can tell you that article is even harder to write.

The best advice we can give is to stay informed, ask questions and don’t bury your head in the sand. Communicate well with your suppliers, your workforce and your clients to try and catch potential issues as early as possible.

BPCA will continue to produce guidance where we can, and we’re always here to help members struggling to navigate this complicated time in history.

Further reading

gov.uk/transition
britishchambers.org.uk/page/brexit-hub
home.chemicalwatch.com/brexit
iod.com/news-campaigns/brexit

Source: PPC101

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