Lord Kamall (Con)

My Lords, I am grateful to the Minister for introducing these regulations. Although we support a strong and properly resourced system of post-market surveillance for medical devices, I am afraid we have significant concerns about the Government’s approach to this instrument. As the Minister said, these regulations introduce a significant shift in how medical device registration is funded. As she outlined, manufacturers will now be required to pay an annual fee of about £300 per device category, replacing the previous one-off registration fee of £261. A further annual maintenance fee of £300 will also apply. This is a substantial change to the cost base for manufacturers. Of course, while large companies may be able to absorb these costs, there is huge concern among the small and medium-sized enterprises that make up a large part of the UK’s health technology sector. The Government argue that these fees are necessary to fund the MHRA’s post-market surveillance functions. We do not dispute the importance of ensuring that devices used across the NHS are safe, effective and properly monitored. We also do not oppose the notion of charging fees. However, the question before us is not whether surveillance matters but whether the Government have provided the evidence and analysis required to justify the scale, structure and timing of these new changes. I am afraid that, both here and in the other place, we are concerned that the Government fall short on these. The most striking omission is the absence of the full impact assessment. Instead, the Government relied on de minimis assessment on the grounds that the fee remains partially subsidised for one more year. Of course, we welcome that, because it helps to cut the costs for some of the manufacturers but, at some stage, manufacturers have to be weaned off these subsidies—or what some people term “corporate welfare”. Yet Ministers have already confirmed that the subsidy will be removed in 2027-28, when the full recovery model will be introduced. We think that this is an extraordinarily short-term approach for a regulatory change with such long-term consequences. It is difficult to understand how the Government can justify this new fee regime, when it clearly imposes additional costs on businesses without providing Parliament with a full and transparent assessment of its impact. The Minister will know that industry bodies, including the Association of British HealthTech Industries and the British In Vitro Diagnostics Association, have repeatedly raised concerns about the uncertainty surrounding long-term fee levels. It is only right, therefore, that we raise their concerns here. The BIVDA has warned that, under the original proposals, some IVD manufacturers could have faced fee increases of up to 5,000% due to the granularity of the GMDN categories. Let us be clear: we are grateful that the Government have since moved to a higher-level categorisation—they should be given credit for that—but the underlying uncertainty remains. The MHRA’s own modelling suggests that the full cost recovery could require charges of more than £800 per device category. This is not a marginal adjustment for some of those small companies. It could be the difference between entering the UK market and walking away from it. The Minister will be aware that these concerns were echoed in a Delegated Legislation Committee in the other place. Yet, despite these legitimate questions, the Government have still not provided clarity on how the new fee structure will affect different types of manufacturers. Unfortunately, they have also still not provided clarity on how they intend to mitigate the risk of reduced product availability, particularly for low-volume devices, including those used in diagnosis of rare diseases. This is not an isolated change; it follows recent regulations on post-market surveillance on in vitro diagnostic devices. The cumulative effect is a regulatory environment that is shifting rapidly without the stability or predictability that businesses need in order to plan investment and product development. We are disappointed by these regulations—not really their content but more the lack of the full impact assessment. The Government have not provided clarity on the long-term fee levels, addressed industry concerns about the risk of product withdrawal or given Parliament the information that it requires to scrutinise the consequences of this new fee regime. A proper impact assessment should have been conducted to avoid problems later. Noble Lords will know that I take an interest in the phenomenon of unintended consequences. They will be aware of the “dash to diesel” when, in 2001, the then Chancellor of the Exchequer introduced a system of car tax to incentivise motorists to switch to diesel cars in order to meet lower CO₂ emissions targets. That was understandable, but it was later found to have also led to an increase in emissions of harmful nitrogen dioxide and particulates. The reason I raise this is that, at the time, it had been claimed that some civil servants raised concerns about this consequence but were ignored. This is not a party-political issue. The question is whether Governments of any colour have learned the lessons from that incident. How do we make sure that, when potential consequences are raised with the Government, they are seriously taken on board, particularly in terms of a full impact assessment? Given the current concerns that have been raised, rather than introducing these new charges now only to find out that, as a result of the consequences, they will have to be reversed or tweaked, surely it would be better for the Government to pause the process to introduce the new charging regime until a proper and full impact assessment has been conducted. We understand that the running costs of the MHRA have to be met somehow and we agree with the Government that they have to wean companies off those subsidies in the adjustment. However, in the other place, my honourable friend the shadow Minister for Health, Caroline Johnson, pointed out that previous calculations of the cost base of the MHRA had not taken account of, for example, the impact of the rise in NI contributions on the running costs of the MHRA, so the Government have had to find some extra money to plug that gap. Perhaps that is why this SI has been rushed through without a proper, full impact assessment, although it may well not be. My honourable friend also asked about a consultation that revealed widespread concern, with only 10% support. The Minister replied that changes had been made following discussions with a “trusted advisory group”. My honourable friend then asked: “Who is in the trusted advisory group? Whose voices from micro and small businesses were heard in that group?”.—[Official Report, Commons, Third Delegated Legislation Committee, 21/1/26; col. 7.] Unfortunately, she has not had an answer.