Product Regulation and Metrology Bill [HL]

Lord Foster of Bath Excerpts

Committee stage
Monday 25th November 2024 Grand Committee

[Lord Foster of Bath (LD)]

My Lords, this is an important group of amendments. No doubt, the noble Lord, Lord Sharpe, will shortly set out his amendments but, as I understand them, by deleting bits of the Bill they provide an opportunity for us to have a debate on what is meant by a “product” and by the “use of products”. The other two amendments are in the names of the noble Baroness, Lady Crawley, and my noble friend Lord Fox and have a similar purpose. My noble friend cannot be with us today because he is abroad on parliamentary business in connection with NATO. These amendments will help us to get more clarity on what is covered by a “product” and its use and will help to future-proof the legislation, in the case of Amendment 12 by ensuring that all digital and non-digital products are within scope and in the case of Amendment 13 by ensuring that all operating systems and internet-connected products are within scope.

The noble Baroness, Lady Crawley, very clearly set out the arguments for why this is needed, and I fully support her, but my noble friend Lord Fox’s amendment, which is also a probing amendment, seeks to find out whether the Government’s intention is that operating systems and interconnected products will be covered by the provisions of the Bill. Some may recall that in an earlier grouping I expressed concern about what appears to be the limited way in which the Government consider products as just things. I sought to explain that we cannot always consider a product in isolation as some products are installed as part of a system, and I argued that we should take the whole system into account.

My noble friend’s amendment expresses a similar point. It seeks to ensure that the Bill recognises that the operational characteristics of many products are, effectively, changeable. For instance, household products are increasing controlled by operating systems that can be and are controlled by the vendor remotely. The legislation needs to take this into account in two separate ways. The first, and most simple, is that there should be a clear obligation on the vendor to demonstrate good faith in ensuring its products’ operating systems are up to date and are protected, for example, from external malign attack. Secondly, there needs to be a process whereby material changes in the characteristics of a product continue to meet regulations that they met before the changes.

Many noble Lords will already have heard my noble friend Lord Fox’s particular concern about references to the health and safety of domestic animals in the Bill. He has picked it up on several occasions. He sought to explain his amendment to me in relation to those references. He pointed out that, for example, a remote vacuum cleaner may be programmed to behave in a way that ensures that family pets are not in danger of being harmed by it. He went on to point out that a remote change might disregard this safeguard and so endanger the health and safety of domestic animals. My noble friend argues that without his amendment, or something similar, it would appear that there is no way in which the measures in the Bill could enable the policing of such remote revisions to product properties.

More generally, these amendments in this group seek to probe the Government further on what they believe are covered by “products” and which uses of products are covered by the proposed legislation. I very much look forward to hearing the Minister’s response on those issues and to hearing the noble Lord, Lord Sharpe, explain his amendments more effectively than I have sought to do.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Baroness, Lady Crawley, for her remarks. Obviously, defining “products” is a key consideration in much of what we have to discuss in this Bill. It is a subject to which we will return later today. I thank the noble Lords for introducing their amendments. It was very eloquently done. They certainly deserve consideration and comprehensive answers from the Government.

I will speak to Amendments 18 and 19 standing in my name. The Bill as it stands—and I am afraid this is going to be rather labouring a point that we discussed a lot last week—has been widely criticised for being skeleton legislation with much of the substance being delegated to Ministers through statutory instruments. The Delegated Powers and Regulatory Reform Committee has rightly pointed out that this leaves “almost no substance” or perhaps, as the noble Baroness, Lady Crawley, described it, no clear markers in the Bill, giving Ministers excessive and unaccountable discretion to regulate in important areas, such as product marketing and safety, without sufficient parliamentary scrutiny or oversight.

Clause 2 is a prime example of this, because it grants wide powers to Ministers to make regulations on a wide range of product characteristics—but without any clear or substantive detail. By keeping paragraph (a), the Bill opens the door to the possibility of Ministers creating regulations that lack transparency or specificity. I find the wording concerning and unnecessarily vague. For example, the phrase “other characteristics of products”—or, as the noble Lord, Lord Foster of Bath, described it, “just things”—is far too broad and could allow the Government to regulate anything under this clause, with little or no clear limit or definition.

The lack of clarity here is a significant issue, not least because businesses and producers rely on clear, specific regulations to know what is expected of them and to ensure that they remain compliant. Under this clause, they are left in the dark. What exactly are we talking about when we refer to “other characteristics”? Are we talking about the design of products, marketing methods or even the raw materials that are used in manufacturing? Small businesses and start-ups are especially vulnerable to such unclear regulations, as they may struggle to interpret or comply with such an open-ended provision.

This provision, in effect, gives Ministers the power to define and change the scope of regulations without sufficient clarity or transparency. Ministers could, under this clause, make regulations to cover an incredibly wide range of product characteristics, creating significant uncertainty for the market. We believe that this is an unacceptable level of ministerial discretion. With such a clause, the Government could, in effect, regulate anything and everything related to products. We do not think that we can afford to pass a Bill that leaves businesses and consumers in the dark and subject to the whims of ministerial power. This clause should be completely rewritten or removed. If the Government cannot provide a more specific targeted framework for these regulations, we must consider removing it entirely on Report.

With Amendment 19, there are the same issues. At present, there is no clear definition of what constitutes the “use of products”, nor any explanation as to how the Government intend to regulate it. This lack of clarity presents a significant issue, as it allows Ministers broad and undefined discretion to determine how products should be used and how they are to be regulated. This could easily lead to overreach, and, given how the Government have argued so far in some areas, regulations could be imposed with little or no accountability or scrutiny, leaving businesses uncertain about the future of their operations.

I am very pleased that the Minister has talked repeatedly about giving businesses certainty, particularly in aligning with EU regulations. However, we need more in the Bill to suggest certainty in the areas that I have just described, and I hope that he will be able to provide some reassurance.

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The list in Clause 2 is non-exhaustive and demonstrates the range of matters that our existing product regulations cover to help businesses to deliver a high level of product safety. I hope that I have been able to provide reassurance on all these matters and I would ask that all the amendments in this group not be pressed.

[Lord Foster of Bath (LD)]

I am grateful, because this takes this back in a sense to an earlier group. The Minister has again referred to the issue of installation. Can he say categorically, on the issue of use, whether use will always include installation—or is it that it “may” include installation, as he said? Is it “will” or “may”?

[Lord Leong (Lab)]

I can give the noble Lord the assurance that it is “will”.

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[Baroness Brinton (LD)]

I am very grateful for the explanation from the noble Lord, Lord Holmes, of his amendments on AI and digital products, which are particularly appropriate, given the comments from the noble Lord, Lord Lansley, on the first group when we were discussing sandboxes, because of his experience during the passage of the digital medicines Act three or four years ago. A number of noble Lords in this Grand Committee worked on that—I am looking at the noble Lord, Lord Hunt, in particular.

I raise this because one area that concerns me about new products, especially those using AI, is that we do not have the same mechanisms that we have, full of fault though they are, for being able to allow our personal information to be used and to give our consent. I have mentioned before the issue of my dentist. Before you go to see your dentist, you have to go online to fill in a consent form, and at some point mid last year I noticed that there was something about the IT suppliers and it said, “It is assumed you give your consent”—and 10 layers further down they had a completely different set of consents that breached UK GDPR law. Had I not been working on another Bill about digital consent, I would not have looked much further. I have to say that the moment my dental surgery was aware of this, that firm was not just told to change it but was sacked. My problem with AI is that none of that work is visible; it is completely invisible.

My question to the Minister is, in the discussion about sandboxes but also about products that will come under this Bill: will he ensure that our current GDPR laws—and indeed our copyright laws in relation to music—are complied with at all times, so that there would not be any freedom for somebody using AI to develop a product to breach those? I say that in light of the final remark the noble Lord, Lord Holmes, made about consultation. Two sets of Government Ministers have had a very bitter time about patient data and care.data—the noble Lord, Lord Hunt, is smiling at me—when the public were not fully informed about what was going on, and in both cases the proposals had to be abandoned.

[Lord Foster of Bath (LD)]

My Lords, the first amendment of the noble Lord, Lord Holmes, Amendment 14, seeks to ensure that the production reliance on software and artificial intelligence are included in the scope of the Bill. Clearly, all our remarks are somewhat irrelevant if the Minister gets up and says, “No, they are not”. However, on the assumption that the Minister is going to say, “Yes, they are”, I draw particular attention, if I may, in supporting all the noble Lord’s amendments, to Amendments 75 to 78, on the issue of labelling. This seems to me to be an opportunity for real joined-up government thinking.

The Minister will be well aware that the Communications and Digital Committee, on which I had the opportunity to serve at the time of this, produced a very detailed report on the development of LLMs, large language models, and AI. In so doing, we particularly raised concern about the way in which these large language models were being trained by scraping tons of data from a variety of sources, then creating products over which they were then able to get intellectual property coverage. In so doing, they had scraped a great deal of data.

Amendment 78 in the name of the noble Lord, Lord Holmes, in respect of the labelling and so on, requires the Secretary of State to lay

“regulations to ensure no product or content … uses an individual’s image, likeness or personality rights without that individual’s express consent”.

Had I been drafting the amendment, I would have gone much further, because it seems to me that a large amount of other data is scraped—for instance, novels written by authors without their permission. I could go on; it is well worth looking at the Select Committee report.

Does the Minister accept that this is a real opportunity to have joined-up thinking, when the Government finally decide what their position is in relation to the training of LLMs and people being required to get the permission of all data owners before they can bring their product to market? Does he agree that the labelling of such products, when developed, should include specific reference to them having gained the appropriate permission, paid the appropriate fee or got the appropriate licence to make use of the data that was made use of in the training of those AI products?

[Baroness Freeman of Steventon (CB)]

My Lords, I shall speak briefly to Amendment 75, which was very eloquently introduced by the noble Lord, Lord Holmes. My academic background is in the research of communication and how people make decisions based on information that they are given. That touches quite a lot on how people assess the reliability and trustworthiness of data.

Amendment 75, on the labelling of AI-based products, includes a proposal about communicating the data used in the training of the AI. I think it is really important that people who have products that provide information on which they might be making decisions, or the product might be acting, are able to know the reliability and trustworthiness of that information. The cues that people use for assessing that reliability are such things as the size of the dataset, how recently that data was gathered and the source of that data—because they want to know if that data, to use the example of the noble Lord, Lord Holmes, is on American cheeses, British cheeses or Italian cheeses, all of which might need a different temperature in your fridge. I urge the Minister to look at this, because the over-trust or the under-trust in the outputs of data make such a difference to how people respond to products. I think this is very important.

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[Lord Jackson of Peterborough (Con)]

My Lords, I support the probing Amendment 45 from the noble Baroness, Lady Brinton, as she referenced my earlier Amendment 33. She expressed in a more erudite and articulate way what I should have said last week on Amendment 33. However, I think we have both alighted on the fundamental problem in that subsection, which is that despite its opacity and the fact that it is drawn very widely, it does not achieve what we all hope it will achieve—in other words, to point out the obligations on buyers and sellers. The noble Baroness quite rightly pointed out the lacuna inherent in that.

My very brief question to the Minister is whether it might be possible—this is not a criticism but merely an observation in respect of the drafting—for this subsection to be redrafted before Report so that that confusion that we see now, which could potentially give rise to substantial amounts of litigation, is ameliorated and we could have tighter wording to address some of the issues that the noble Baroness and I have pointed out.

[Lord Foster of Bath (LD)]

My Lords, so many of our deliberations in our various sittings have been seeking to put some flesh on to the skeleton nature of the Bill before us; I have done that on a number of occasions, as have many other noble Lords. For instance, in our last-but-one grouping, I proposed that we seek to use the Bill to address concerns about data scraping for the development of new AI products. I gently point out to the Minister that he told me that this would be covered by the Data (Use and Access) Bill. I have double-checked Hansard and can tell him that at the end of the debate on that Bill, when this was raised with the noble Baroness, Lady Jones, the Minister responsible, she replied that this issue was not covered by that Bill and that DCMS and DSIT Ministers are jointly working and looking forward to bringing forward proposals in due course. She ended by saying:

“We will announce more details in due course”.—[Official Report, 19/11/24; col. 197.]


So it is not covered, and this is a good opportunity to do it.

As the noble Baroness, Lady Crawley, and other noble Lords who have spoken have pointed out, this is an area, in terms of online marketplaces, where there is an urgent need to put flesh on the bones and to have a clearer understanding of the definition of an online marketplace and of what regulations should apply to them. I have frequently raised in your Lordships’ House my concerns that consumers have far less protection from faulty products bought online than they have when they purchase them on the high street.

It simply cannot be right, as we have seen from all the evidence that we have all received from various organisations, such as the British Toy & Hobby Association, Which? and Electrical Safety First, as well as others, that so many unsafe products are available for sale online. In an earlier contribution, the noble Baroness referred to the fact that 86% of toys sold online do not comply with UK safety requirements. I have referred to the sad fact that many electrical appliances purchased online do not meet appropriate safety requirements and, sadly, have led to loss of life and damage of a great deal of property.

It certainly cannot be right that products that have been withdrawn by a manufacturer, often because of concerns about safety, can still be purchased online, and it certainly cannot be right that consumers have not only less protection but fewer opportunities for redress when purchasing products online compared to what they have when purchasing them on the high street. I support all the amendments addressing those concerns because collectively they would improve consumer protection by ensuring accountability by imposing a clear and enforceable duty on online marketplaces to ensure the safety of products sold on their platforms, especially those coming from third-party sellers overseas. Incidentally, I shall later propose an amendment that would strengthen the extraterritoriality covered by the Bill.

The amendments that we have before us further protect consumers by removing anonymity so that third-party sellers can no longer hide behind platforms to evade product safety regulations and by making it easier for them to seek any form of redress. It establishes direct liability on platforms for unsafe products sold throughout them, which leads to the opportunity for much greater fairness in terms of redress because, at the moment, consumers dealing with faulty high street products expect and receive a full refund or replacement, but when problems arise with online purchases, particularly from overseas sellers, consumers often seem to have no recourse. Amendments in this group deal with that issue. Finally, the amendments would clarify something that is lacking in the Bill at the moment: the issue of accountability. Who is actually accountable in the multinational marketplace structures that we have to deal with now?

Given that these platforms are evolving at an incredibly rapid rate, with people almost daily finding new ways to market their products, we need amendments that ensure that there is no room for manoeuvre to get around the regulations by online marketplaces now and, crucially, in future. We need a clearer definition of what we mean and what is covered by an online marketplace, and I welcome and support the amendments in the group that do just that.

I add one additional point. In Clause 10, the definition of an online marketplace includes,

“any other platform by means of which information is made available over the internet”.

Clause 10 does not define “the internet”, despite quite a point being made of doing so in other legislation. Indeed, other pieces of legislation prefer the phrase “internet service”, not just “internet”. To avoid further ambiguity, I have proposed in Amendments 117 and 122 that the Bill uses “internet service” instead of “internet” and that the definition of “internet service” is exactly as set out in the Online Safety Act 2023.

Given, for instance, that the Tobacco and Vapes Bill has this definition simply copied and pasted into it, I see no reason why this Bill could not do the same. Failing to do so would unhelpfully leave the definition to common law. We should be aiming to ensure that levels of protection and redress are as powerful online as they are on the high street. Amendments in this group will achieve this and will also ensure that we have a future-proofed definition of “online marketplace” and that clear duties and responsibility towards consumer protection are imposed on all relevant bodies. On these Benches, we certainly support them.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords for introducing their amendments in this group. I shall briefly speak in favour of Amendments 48 and 71. I thank the noble Baroness, Lady Crawley, for bringing attention to the critical issue that addresses the responsibilities of online marketplaces and also, if I may, pay tribute to her wider work in this area as well as that of my noble friend Lord Lindsay, who is not in this place but whose exemplary work as president of the Chartered Trading Standards Institute deserves a mention.

This sector has grown exponentially in recent years and plays a dominant role in modern commerce. This amendment, therefore, highlights essential duties for online marketplaces. For example, a 2023 TSB study found that Facebook Marketplace accounted for 73% of purchase fraud cases. If you think about fraud and its growth in terms of the British crime statistics, that is a significant percentage of British crime, not just online crime. Over one-third of adverts on Facebook Marketplace are scams, we are told, so this amendment would help to level the playing field by ensuring that online marketplaces meet the same safety standards as physical retailers. This would foster fair competition and ensure that businesses prioritising consumer safety are not undermined by unscrupulous practices.

It is vital that we ensure online marketplaces, which facilitate the sale of billions of products, do not become conduits for unsafe goods or fraudulent activity, as all noble Lords have rightly highlighted. Without robust regulations, consumer trust and market integrity are at significant risk. We ask noble Lords to take seriously this amendment to uphold consumer protection, market fairness and safety standards, and think that the Government ought to recognise the urgency of addressing these concerns and act decisively.

On Amendment 71, I support it as a necessary step to protect consumers in the rapidly growing online marketplace sector. The extension of liability to online marketplaces and others under Section 2(3) ensures that those who facilitate the sale of unsafe or defective products are held responsible. Such measures are crucial to maintaining consumer confidence, especially as online shopping becomes so dominant.

We think it is essential that the Government protect consumer rights in all the marketplaces, especially online. We urge the Government to listen to those two amendments in particular but, frankly, there is merit in all the amendments we are debating in this group, and I hope to hear some positive news from the Minister.