Product Regulation and Metrology Bill [HL]

Baroness Lawlor Excerpts

Wednesday 20th November 2024 Grand Committee

[Lord Russell of Liverpool (CB)]

I shall quickly respond to the noble Lord. One of the reasons why I asked the Minister for some detail about the breadth and depth of the consultation his department has had with business was to find out what business really thinks. I would say, in riposte to the noble Lord, that the key thing that should drive decisions on whether we align with the European Union or any other jurisdiction should primarily be what business is telling the Government. Businesses have a far better idea of the economic state, presently and potentially, of the markets they do business with. In fact, they have a much better idea than either Ministers or civil servants. From my point of view of trying to speak on behalf of business, listening to them on what they think should be the priority would seem the sensible thing to do.

[Baroness Lawlor (Con)]

My Lords, I thank the Minister for his generous allocation of time the other day to discuss some of the issues; I am very grateful for that and to his officials. I apologise for missing the debate on group 1 because of train delays for hours, but I rise now because my Amendment 6 cannot be called if Amendment 4 is agreed. I will speak to Amendment 9, which would disallow regulations that disadvantage the UK under its trade treaties. I will highlight the CPTPP and the UK’s main bilateral trade agreements with Australia and New Zealand. I support Amendments 15 and 37 in the name of my noble friend Lord Frost, and I add my Amendment 39 to prevent dynamic alignment with the EU.

The aim of these amendments is to ensure that the UK can help shape and promote free trade globally to the benefit of free trade under a rules-based agreement at international level. That is inconsistent with locking the UK into the EU’s protectionist arrangements, even on a case-by-case basis, I fear. They are different; they are under code-based legal systems and they are shaped by different legal thinking from that underpinning UK law, which is more pro-entrepreneurial and innovation-open. I do not believe we should saddle UK producers and consumers with the cost of complex EU protectionist law rather than be open to the best and most similar arrangements elsewhere—foreign laws—or our own laws that can benefit our economy.

I shall give an example of what I mean by protectionist and inward-looking EU law and then look at how it affects growth figures and jobs; I disagree with noble Lords who suggest otherwise. One illustration comes from the EU’s digital commerce and AI sector. The damage was annotated in a September 2024 study, Rules Without End: EU’s Reluctance to Let Go of Regulation, by two EU-friendly economists, Guinea and du Roy. They concluded that,

“the EU rulebook added 562 new pages and 511 new articles on Data & Privacy; as well as 271 new pages and 247 new articles on E-commerce and Consumer Protection”,

amounting to nearly 2,500 new restrictions for data and privacy and 1,200 for e-commerce and consumer protection. The cost was highlighted former MEP Luis Garicano, who concluded that this coincided with a 50% drop in the number of new apps coming onto the market. Meanwhile, the report said, a study by the Bank of Spain,

“found that each additional regulatory provision was associated with a 0.7 percent decline in the employment rate of the affected sector”.

Other noble Lords with whom I disagree have tried to draw our attention to employment rates. The Ernst & Young investment monitor for 2024 indicated that the UK had the largest number of jobs created by FDI in 2023. The UK was at 52,000, France was at 40,000 and Germany was at 14,000. Project numbers in the UK were increasing; in France and Germany, they were falling.

The other indicator to which I would like to draw your Lordships’ attention—I hope the Minister will look sympathetically on these amendments—is GDP share. The EU’s declining share of global GDP is mirrored in its recent growth figures. Whereas UK growth in the year ending June 2024 was 0.7%—yes, that is disappointing—the eurozone’s was behind that, despite having three G7 members among its number. In the third quarter—that is, since June—figures for UK growth are up by 0.5% and the eurozone’s by a disappointing 0.2%. For those reasons, there is a strong economic case for not locking us into the EU’s protectionist arrangements. Despite the best will in the world in Brussels to move out of them, the EU seems to get stymied each time by ever greater protection, as these studies suggest.

--- Later in debate ---

[Baroness Lawlor (Con)]

May I clarify something? I specified that e-commerce was part of this study, in line with other digital arrangements. Many producers sell their goods through e-commerce.

[Lord Sharpe of Epsom (Con)]

My Lords, before I start, I thank all noble Lords, who have been incredibly generous to me this afternoon and this evening. I am immensely flattered.

I say to the noble Lord, Lord Hunt of Kings Heath, that, having been on the wrong end of a couple of punishment beatings by the Secondary Legislation Scrutiny Committee, I am a changed man. I have seen the light. I am reformed. I urge the Government to follow my lead and reform themselves.

This has been a most interesting debate. I thank all noble Lords for introducing their amendments and points of view with such admirable clarity. I thank in particular my noble friends Lord Frost and Lady Lawlor for their amendments. I have signed Amendments 4, 9, 15 and 42; I will explain why.

These amendments would ensure that we maintain our competitiveness on the global stage without being governed solely by EU standards. Amendment 4 seeks to remove a broadly drawn power that allows the Secretary of State to align UK product regulations with EU environmental laws. The provision, as currently drafted, could potentially lead to extensive regulatory alignment on environmental standards without proper parliamentary scrutiny or oversight. I am sorry to harp on about this but the Delegated Powers and Regulatory Reform Committee has expressed significant concerns about this clause, stating that it grants

“Ministers maximum flexibility to choose the direction that the law will take”.

Specifically, the committee warned that this could allow Ministers to align UK law “completely” with EU regulations, even when that may not be in the best interests of the UK or its regulatory framework. Through an overreliance on EU standards, we risk locking ourselves into a regulatory framework that does not necessarily reflect our national interests; of course, we acknowledge that it also might.

Amendment 6 in the name of my noble friend Lady Lawlor and Amendments 15, 36, 37 and 42 in the name of my noble friend Lord Frost are critical for positioning the UK as a global leader in product regulation and consumer protection. They would allow the UK to benefit from the best practices in product safety and environmental regulation from across the world, including from the US, Canada, Japan and other advanced economies. By allowing broader access to international standards, we would ensure that the UK can adapt to global trends and provide consumers with high-quality products. There should be no reason for the Government to oppose such an amendment—unless they are looking for dynamic alignment with the EU.

Amendment 15 is an excellent amendment that would ensure that the UK’s trade agreements with key partners are not undermined by regulations introduced under Clause 1. Those agreements represent some of the most dynamic and rapidly growing economies in the world; ensuring that we do not disadvantage our position with these treaties is crucial to the future growth and success of our global trade. This amendment is about maintaining and strengthening the UK’s competitiveness on the global stage.

The countries involved in these trade agreements, such as those in the CPTPP, are the fastest-growing economies in the world. In ensuring that regulations do not undermine our standing in these markets, the UK is better positioned to take advantage of these growing economies. If we align rigidly with Europe in this way—this is not an ideological point but a practical one—we risk missing opportunities in these markets, where growth is happening at a much faster pace than in the EU.

My noble friends Lord Jackson and Lady Lawlor hinted at this, and I also looked at some of the figures. To put things into perspective on the US versus the EU, in 1982, US and European Union GDPs were broadly similar. However, fast forward to today and the US’s economy is now roughly 45% larger than the EU’s, both in nominal terms and on a per capita basis. Those figures are from the World Bank. Purchasing power parity in the US is 38% larger than in the EU. The US has outpaced the EU significantly in its economic growth. I am not saying that this is due solely to differing regulatory regimes—of course it is not. These numbers encapsulate many varying factors, but it cannot be denied that regulation plays a major part in economic development. The simple conclusion is not that we should slavishly align with the US, just that we should retain flexibility.

The argument is clear: the EU is not the only partner with which the UK should align. We are seeing stronger growth opportunities in markets such as the US, Japan and Australia, with countries that are part of key trade agreements such as the CPTPP and in other areas. Given that the Government have talked extensively about boosting the UK’s growth prospects post Brexit—arguments with which we wholeheartedly agree—it is difficult to understand why they would not support an amendment that protects the UK’s position in these high-growth markets.

If the UK is to remain competitive, it must have the flexibility—which I do not believe is an abstract notion, as claimed by my noble friend Lord Kirkhope—to engage with the most dynamic global markets, rather than being rigidly shackled solely to the EU. There is no logical reason to oppose this amendment, unless there is an ideological fixation on aligning solely with the EU.

This amendment gives the UK the flexibility to take advantage of the best international practices without being locked into EU-centric frameworks that might not be in our best interests in the long term. I urge the Government to accept Amendment 15 in the name of my noble friend Lord Frost.

I will speak briefly on Amendment 17. I have great respect for the arguments made by all its proponents—my noble friend Lord Kirkhope, the noble Lords, Lord Russell, Lord Browne and Lord Fox, and others. In fact, I agree with their reasons for proposing the amendment, but it is perfectly reasonable to arrive at different conclusions. I agree with the noble Baroness, Lady Ritchie, who is no longer in her place but who, in an earlier debate, said that we should reset our relationship with the EU. Of course we should but, for the reasons that I have outlined, this is the wrong way to do it.

I oppose Amendment 17, which proposes to replicate EU law in relation to relevant product regulations. The notion of mandating such alignment with EU regulations post Brexit is not only inappropriate but, we believe, detrimental to the UK’s ability to independently shape its regulatory future. The amendment, by insisting on replicating EU law as the default position, undermines the very essence of the UK’s independence post Brexit. It will inevitably involve importing aspects of EU law that do not suit this country’s future. The entire purpose of leaving the European Union was to take control of our laws, regulations and trade policies. This amendment would force us to retain EU regulatory alignment, unless Ministers could justify divergence—a process that still places undue reliance on the EU framework. Our focus should be on maximising global competitiveness and exploring new trade opportunities, not tying ourselves to EU standards that might not be in our best interests while also accepting that they might.

Finally, I reassure the noble Lord, Lord Russell, that the new leader of the Opposition is well aware of what we are doing. I urge the Government to accept the amendments that I have signed, as I believe they are pro-business, pro-trade and pro-consumer.