Product Regulation and Metrology Bill [HL]

Lord Fox Excerpts

Report stage
Wednesday 26th February 2025 Lords Chamber

[Lord Jackson of Peterborough (Con)]

Then the noble Lord would support a purpose clause, which—one might make the case—is much clearer and more explicit. Incidentally, I agree with every word said by my noble friend Lord Lansley and will be supporting his amendment later.

But, as the noble Lord, Lord Hunt of Kings Heath, rises to the Dispatch Box, I would just like to conclude my remarks with the words of his noble friend the Attorney-General. This has been mentioned before, because it is very important within the context of the Bill. It is not just that this is primary legislation; it is unclear. It gives ministerial fiat—wide-ranging ministerial powers—and there are not explicit protections. Indeed, the Delegated Legislation Committee specifically says there are not proper procedures for even consultation with key stakeholders. But the noble Lord will know that on 14 October, the Attorney-General—who is not as high-profile in this House as he used to be—said in his Bingham lecture on 14 October that

“excessive reliance on delegated powers, Henry VIII clauses, or skeleton legislation, upsets the proper balance between Parliament and the executive. This not only strikes at the rule of law values … but also at the cardinal principles of accessibility and legal certainty. In my view, the new Government offers an opportunity for a reset in the way that Government thinks about these issues. This means, in particular, a much sharper focus on whether taking delegated powers is justified in a given case, and more careful consideration of appropriate safeguards”.

I could not have put it better myself. On that basis, I hope that Ministers may be minded to support my noble friend Lord Sharpe’s amendment.

[Lord Fox (LD)]

My Lords, it is a pleasure to take part in this Report debate and to speak to this amendment.

I am grateful to the noble Lord, Lord Jackson, for reminding us that we are not relitigating the Brexit debate, because sometimes in Committee it was very hard to understand that point, given the speeches that came from his Benches. We are not relitigating the Brexit debate; we are trying to put in place a regulatory regime and the ability to deliver regulation that benefits the people of this country.

I was minded to consider that if I was using an electric lawn-mower and I started either to be electrocuted by it or have my toes removed by it, the last thing I would worry about was whether the regulation for that was autonomous. I would be worrying: why was it not safe? Why was the product not preserving my rights as a consumer not to be electrocuted or amputated? There is a serious point to this. If the noble Lord wanted to put a purpose to the Bill, its purpose is not to deliver some mystical autonomy—if we look at Amendment 8, we see that the Minister, far from delivering autonomy, is going to tie us to a whole bunch of other regulatory regimes. It is about delivering a regime that protects people and the environment, and gives consumers right of recompense if they are sold faulty products—all those sorts of things that we see before us. If we look in the draft code of conduct, that is what is set out in the introduction to it.

Sometimes we use before Clause 1 purpose amendments to make sure that we are the first speaker up. I do not think in this case that was in the mind of the noble Lord, Lord Sharpe. His amendment is designed—

[Lord Jackson of Peterborough (Con)]

Will the noble Lord give way?

[Lord Fox (LD)]

If I can finish my sentence, please. The noble Lord’s amendment is designed to completely change the purpose of the Bill. I think he has admitted that, and that is right. I suggest that in all the discussion we have had, all the amendments that we have talked about through Committee have been about the consumer, safety and the other issues that actually matter. If we want a purpose, I am very happy to sit down with the noble Lord, Lord Sharpe, and the Minister and we can draw up a purpose that encompasses that if it makes people feel happier, but the key issue is not the autonomy, it is the effectiveness of that regulation. I give way.

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

I remind noble Lords that we are on Report, we are not in Committee. It is very clear in the Standing Orders that you can speak only once on Report unless you are the mover of the group, in which case you can respond to the Minister. It is not within the rules to have this sort of debate. That is for Committee, not for Report.

[Lord Fox (LD)]

I am grateful to the noble Lord. Our focus will be—

[Lord Jackson of Peterborough (Con)]

Will the noble Lord give way?

[Lord Fox (LD)]

No, as the noble Lord just said—

[Lord Jackson of Peterborough (Con)]

The noble Lord agreed to give way.

[Lord Fox (LD)]

I give way to the Whips to suggest what to do.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I realise that I should apologise to the House, because I should not really have intervened on the noble Lord. In apologising to the House, I suggest that we allow the noble Lord, Lord Fox, to finish his speech.

[Lord Fox (LD)]

Thank you. There is not much more, your Lordships will be pleased to know. We will be focusing on the key issues. When we come to further groups, your Lordships will see that the work we on these Benches have done has been to try to prioritise proper scrutiny of the issues that I have talked about—safety, the environmental impact and the consumer, as well as legal issues—and to make sure that that can be done and this Bill changed in a way that survives contact with a huge government majority in the House of Commons. That is what we will be doing, and that is why we will not be supporting the noble Lord, Lord Sharpe, on his amendment.

[Baroness Lawlor (Con)]

I am awfully sorry: I was not quick enough on my feet before the noble Lord, Lord Fox, spoke. I should like to speak for a few minutes in support of my noble friend Lord Sharpe—if that is all right with the noble Lord, Lord Hunt.

I support my noble friend’s amendment because I think it sets out the framework and purpose clearly, and that is very important when we are making laws by statutory instrument. Besides, I think it is important to retain regulatory autonomy, and I will discuss that point with the noble Lord, Lord Fox, in a later group, but I do not think this is the time to have that discussion. It is regulatory autonomy that allows us to do all kinds of things to protect our consumers and ensure that we make the right sorts of laws for our products and our economy. That regulatory autonomy also allows us to align with any laws we like from any jurisdiction and, of course, the Government have a point in that.

My concern about not having an explicit regulatory autonomy aim in the purpose clause is that it would make us out of step with our existing arrangements with other trading partners, where we have agreed outcomes, conformity assessment procedures and other arrangements to recognise. We should not militate against that, which we may be in danger of doing if our purpose does not state these things explicitly.

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[Lord Holmes of Richmond (Con)]

My Lords, following the theme of benign attention from government to amendments that have washed up in this group, I shall speak to my Amendment 41. In doing so, I declare my technology interests as set out in the register, not least as it applies to Socially Recruited, an AI business.

There are many things that are not in the Bill, data centres being one of them; yet these are the factories and foundries that are going to fuel our fourth industrial revolution, which is already well under way. We might think back to all that Victorian factories legislation, all quite appropriate and proper, whereas all I am seeking here is not even a whole statute—which we could have on data centres alone—but merely one amendment, which I hope the Government can look benignly upon. It simply asks the Government to undertake a consultation to look at a new standard for the measurement of the power usage of data centres.

We are going to rely increasingly on data centres for almost everything that we do in this country. How we power them, where we site them, the inputs, the outputs, where the technology comes from—all of these are key features currently utterly unconsidered in any legislation or regulations. All that my Amendment 41 seeks to do is suggest that the Government launch a consultation, following the passage of the Bill, to look at the effectiveness of a,

“metrology standard for the power usage of data centres”,

and, not least, to reconsider the current power usage effectiveness—PUE—standard and whether it is up to the job in hand.

[Lord Fox (LD)]

My Lords, this has been a really interesting debate. It is a shame that we cannot have this debate on group 3, where we could set out some of the issues that I am going to explain very briefly—without repeating the speech that I am going to make in group 3 —on how scrutiny can be enhanced for secondary legislation. I share the concern of your Lordships’ House that insufficient and inadequate scrutiny happens even when we have statutory instruments. As the noble Lord, Lord Hunt of Wirral, pointed out, we need something better than the way in which we deal with statutory instruments at the moment. Very rarely, if ever, are they turned away; we have regret Motions that, in sum, make no difference at all.

To some extent, we are protecting a paper tiger here. What we should be talking about is whether there is a way we can make sure that these future regulations go through a process that is properly scrutinised. The proper debate on that will happen in group 3, and we will take it through. I completely agree with the noble Lord, Lord Jackson, that the issue of criminal sanctions is a concern and that we need to have a way of scrutinising it. That will be included when I speak to group 3, as will be the environmental measures raised by the noble Lord, Lord Holmes, in this group, and by the noble Baroness, Lady Bennett, in the next group.

We do have a way of having greater transparency, but it is not by statutory instrument to be nodded through over and over again. We have to be honest with ourselves about what we actually do when we are dealing with secondary legislation. That is why I have been working very hard, and why I welcome the conversations I have had with the Minister and his team, to try to open up something that will not only give us better scrutiny—I would say nearly proper scrutiny—but also something that will survive contact with the government majority at the other end. That is the opening point which, to some extent, is a speech for a different group.

With respect to this group, Amendment 61 mandates additional consultation, and Amendment 55—which has strangely been put in group 12—strengthens the affirmative process. I was very pleased to see the name of the noble Lord, Lord Anderson of Ipswich, added to those amendments; I very much appreciated his speech today, and that of the noble Lord, Lord Pannick. Those amendments add further resilience and help to meet some of the issues that were raised by your Lordships’ committee.

Once we have discussed the changes in group 3, hopefully with the response of the Minister, they will also contain some of the issues raised by the noble Lord, Lord Deben. Again, the fundamental question is: how do we properly review legislation? I am hoping that we have come up with a way that will do this. That is why we are keeping our powder dry on these Benches. We have put a lot of work and a lot of hope in what we are going to be doing in the next group, and I think we can give your Lordships’ House, and indeed parliamentarians as well as all the external bodies, a way of participating in the proper pre-scrutiny of statutory instruments before they ever reach your Lordships’ House, whether it is by affirmative or negative process when they get here.

[Lord Leong (Lab)]

My Lords, first, I welcome the noble Lord, Lord Hunt of Wirral, to his place; I look forward to working with him constructively in the months ahead. I thank the noble Lord, Lord Fox, for giving us a little peek into what to expect in the next group.

I have listened carefully to the concerns around the scrutiny of such regulations from Peers, the Delegated Powers and Regulatory Reform Committee, and the Constitution Committee. I have also read my noble friend the Attorney-General’s lecture, which we have taken on board. That is why the Government propose to introduce a mandatory consultation requirement on the Secretary of State to consult such persons as they consider appropriate. This was welcomed in the DPRRC’s latest report; I particularly appreciate the committee’s constructive engagement. Consultation is a crucial part of the Government’s commitment to continued stakeholder engagement.

I refer to Amendment 4, in the name of the noble Lord, Lord Lansley. Basically, we are amending the Bill to require consultation. The Government will need to consider how to ensure that the UK is a good place to manufacture, develop and supply products. I am sure that businesses will let us know their strong views.

Amendment 61 has been drafted in such a way to ensure that consultation is appropriate to the circumstances, reflecting the potential risks posed and those with an interest. This is well precedented in existing legislation and allows for a variety of approaches, including: calls for evidence on specific areas, such as the recent common charger and outdoor noise calls for evidence; full consultations, such as that undertaken as part of the product safety review; and technical discussions to consider sector-specific actions—for example, on cosmetics—where a specialist scientific committee has been commissioned to form an opinion.

We have set out more details in an accompanying statement within our new code of conduct on how, when and with whom the Government currently engage on regulatory matters associated with product safety and metrology. This code of conduct is available in the Library of the House, and I hope Peers will find it a useful document.

Amendment 60 seeks to introduce a mandatory six-week minimum period for consultations. We believe that this will not always be necessary or appropriate because changes to product and metrology requirements can range from minor technical amendments to more substantial changes. It is important that the consultation requirement gives flexibility to the Secretary of State to consult as needed, and as appropriate, on a case-by-case basis. However, we have not stopped at a consultation requirement.

We have thought hard about an overall package of amendments. I now refer to Henry VIII powers. I thank the noble Lord, Lord Pannick, for his insightful contribution, and the noble Lord, Lord Anderson of Ipswich, a member of the Constitution Committee, for his contribution.

We have heard the concerns expressed about Henry VIII powers and are amending the Bill to eliminate most of them. Amendments 44 to 47, 62, 63 and 65 therefore restrict the number of Henry VIII powers to the absolute minimum necessary. We are removing entirely the power to amend or repeal provisions of the Consumer Rights Act 2015. We are putting in the Bill repeal of the absolute minimum necessary for provisions in the Consumer Protection Act 1987 and the Weights and Measures Act 1985. Commencement regulations will be used to bring those repeals into force at the right time, once regulations are made under this Bill to remove duplication in the statute book or to provide for regulatory continuity. We are pleased to see the DPRRC welcome these amendments.

Alongside these changes, the Government have introduced two small changes through Amendment 42, which is a necessary technical fix to the Bill, and Amendment 52, which is consequential.

I understand that noble Lords have concerns about the creation of criminal offences, which is the subject of Amendment 39, from the noble Lord, Lord Jackson of Peterborough. I reassure the House that regulations that introduce or widen the scope of criminal offences will be subject to the affirmative procedure. This is right and proper. To inform this debate, an Explanatory Memorandum will justify the proposed changes and be drafted after the justice impact tests and impact assessments have been completed. Additionally, the Government have brought forward an amendment to remove the criminal offence in the Weights and Measures Act 1985 applying to the sale of goods in non-permitted quantities.

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[Lord Foster of Bath (LD)]

My Lords, before turning to my Amendment 7, I pick up the points raised by the noble Lord, Lord Lansley, in relation to his Amendment 28. Perhaps to his surprise, I accept that this is a case where there may be dynamic alignment between us. As he rightly pointed out, in Committee I tabled amendments in relation to the need for a liability approach and a redress mechanism. In fact, I went further and suggested that we need to do things such as remove the anonymity of sellers on online platforms so that such a redress mechanism would be possible. Like the noble Lord, I certainly hope that the Minister—who, as he says, has been enormously helpful—will be able to explain how the Government intend to handle this issue. It is my understanding that it may not be possible to do it through this legislation but that alternative routes will be found. I very much hope that is the case.

I similarly hope there will be a positive response to Amendment 7 in my name and those of my noble friend Lord Fox and the noble Earl, Lord Lindsay. In your Lordships’ House I have frequently raised my concern about the safety of lithium-ion batteries and the urgent need for tighter reform. In doing so, I have pointed to significant support for such action from a wide range of bodies including Electrical Safety First, local fire brigades, many local councils, insurance companies and many others. They have all pointed to the need for tighter regulation in this area.

One of the sponsors of the amendment, the noble Earl, Lord Lindsay, is the president of the Chartered Trading Standards Institute, which is equally concerned about this issue. Its concerns, like mine, have arisen from the tragic loss of life we have seen and the huge amount of damage to property from fires caused by, for example, poorly manufactured lithium-ion batteries or faulty charging systems. It is worth reminding ourselves, I hope for the last time, that the London Fire Brigade has to respond to such a fire every two days. It is now the fastest-rising cause of fires throughout the city. More than 180 parliamentary constituencies have had fires caused by lithium-ion batteries in the last two or three years. Work needs to be done.

I am delighted that Electrical Safety First, in its very good report Battery Breakdown, has provided a great deal of technical information about not only the fires but their causes, and has provided some sensible solutions and ways forward. I am therefore delighted that in the debate on the previous group of amendments, the Minister made absolutely clear that there is now a commitment to detailed consultation before new statutory instruments are brought forward on this matter and lots of others that will come forward. It is right that the technical expertise that Electrical Safety First, for example, has demonstrated is made use of.

Lithium-ion batteries are clearly not the only high-risk products that need to be identified and regulated appropriately. Fireworks are a good example. But many are not covered by existing product safety regulations or covered adequately by the General Product Safety Regulations. I am also concerned that we need not only to cover a wide range of products but to have future-proofing for the legislation to be flexible enough to take into account new products that come on to the market in future.

Sadly, at the moment there is no systematic approach to the identification and regulation of such high-risk products. Hence my amendment relates to

“the marketing or use of certain products, or categories or groups of product, that present a high risk (known or emerging) to consumer health and safety”.

I am particularly grateful to the Minister and his officials for meeting with me, Electrical Safety First and the London Fire Brigade to discuss establishing such a proactive system for assessing and regulating high-risk products and emerging technologies. I am the first to accept that there are more ways than one of skinning the cat and that there may be alternative ways, other than my amendment, of achieving what I wish to achieve.

My noble friend Lord Fox’s Amendment 9 would require the Secretary of State to publish a statement, before SIs are laid, outlining how product risks will be identified and assessed, including those posing a high hazard, such as lithium-ion batteries. I am willing to accept that, if his amendment is accepted by the Government, and is backed by the appropriate statement and a code of practice in relation to the identification and regulation of higher-risk products, it may well provide a way forward and ensure the flexibility and transparency that my amendment has sought.

I will listen with great interest to my noble friend Lord Fox, and in particular to the response from the Minister. I very much hope that today’s outcome will mean that, at last, action will be taken to tackle the very real dangers to public health and safety caused by inadequately regulated high-risk products, including lithium-ion batteries.

[Lord Fox (LD)]

My Lords, I am looking forward to the novelty of my noble friend Lord Foster listening to me.

I will explain how Amendment 9, in my name, supports Amendment 7, in the names of my noble friend Lord Foster, the noble Earl, Lord Lindsay, and me. At the heart of both amendments is the desire to ensure that there has been sufficient scrutiny of the regulations that are designed to make products safe; I use that word advisedly, in support of the noble Lord Lansley, because “safe” is a good word to find in there somewhere, and I hope that through these discussions we will find a way. In my experience, the noble Lord, Lord Lansley, is relatively tenacious, so I suspect that something may emerge.

We need a process that takes into consideration all high-risk and higher-risk products. Lithium-ion batteries are a stark and horrific example when they go wrong, as set out eloquently by my noble friend, but there are other products, some of which we do not yet know about. Legislation has to be broad enough to be able to take those into consideration.

Amendment 9 also addresses the important elements of parliamentary scrutiny that we discussed in the last group. We have heard the concerns. If applied properly, this will go a long way towards ameliorating many of them. If we get it working properly, it will provide greater genuine scrutiny than the affirmative process tends to do, because it will edit secondary legislation before it is laid—in other words, it will have gone through a process.

Amendment 61, tabled by the Minister and signed by the noble Lord, Lord Anderson, undertakes that the Secretary of State will consult when the Secretary of State thinks it is appropriate. My Amendment 9 seeks to move this on to a more structured footing. It causes the Secretary of State to issue a statement that sets out the consultation process that the Secretary of State must undertake before tabling secondary legislation.

In some trivial cases, that will not be much consultation, but in other cases a great deal of work could be required, such as for an entirely new product, an entirely new use of an old product, or the reregulation of something that has proved problematic. All these would need to be addressed and assessed, to decide what level of risk we are dealing with. Higher-risk products would need a greater scrutiny process in order to reduce and mitigate risk, and make them as safe as possible.

As a result of this amendment, the Secretary of State would have to notify Parliament of the process for the identification and assessment of risks in products. I thank the Minister and his team again for the discussions we have had on this. We have had a number of meetings and each time we have moved forward in this process; together, we have been able to get to something that can work. I am happy that, rather than enshrining a particular technology in primary legislation, we are putting in place a process, and one that can evolve, if it needs to, going forward.

I hope that the Minister will set out further details of how this process will work and what the statement will include. I hope that he will take into consideration the concerns that have been demonstrated by my noble friends Lady Brinton and Lord Foster, as well as many other noble Lords during Committee. I should say, as an aside, that I was pleased to see the code of conduct, which is another brick in the wall, but this is the process by which that puts people’s noses to the grindstone and starts to apply it.

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I hope this reassures the House and I therefore humbly ask the noble Lord to withdraw his amendment.

[Lord Fox (LD)]

Before the Minister sits down, can I ask just briefly whether he can confirm that the consultation process which we have discussed, and he very carefully laid out, will include parliamentarians and the devolved Governments?

[Lord Leong (Lab)]

I can confirm that. In fact, the Secretary of State will publish a Written Statement when the consultation happens and this will extend invitations to civil society groups, any stakeholders, parliamentarians and interested parties.

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[Baroness Lawlor (Con)]

My Lords, I rise to speak in favour of my Amendments 21 and 59, and to support the amendments, to which I have added my name, from the noble Lord, Lord Frost.

Amendment 21 is designed to prohibit ambulatory provisions and dynamic alignment with any foreign law, including that of the EU, which is specifically mentioned in the Bill. Amendment 59 would introduce a sunset clause for regulations under subsections (1) and (2) of Clause 1 for using foreign laws under subsection (7), so that they expire after four years. As explained throughout all the proceedings on this Bill, this is an open-ended measure; it gives sweeping powers to the Minister to make law by decree, including to import and mirror EU laws. That is a very different matter from updating and making safe our own laws. I would like to thank the Minister for his constant courtesy and willingness to discuss these issues, and for making it a pleasure to work on this Bill, though the subject is not to my liking.

The Government justify this approach by referring to the highly technical nature of the Bill and the sheer number of regulations. They seek to reassure us by saying that they will use these powers only when in the best interests of the country. There are good reasons for prohibiting dynamic alignment with any foreign laws, as well as for not allowing ambulatory provisions. I will speak about those first. Not only should we do so to temper the use of the open-ended power proposed for the Executive, which is the subject of constant discussions and of my noble friend Lord Hunt’s eloquent and persuasive amendment today; there are also good economic and trade reasons to prohibit dynamic alignment with foreign laws, including those of the EU, which the Bill specifically mentions.

I would like to mention a few of those reasons. UK law is well tested and brings certainty to businesses in developing goods for market and competing overseas. Here, the Minister is on very strong territory in saying that many of us would be happy with such laws having gone through such a process, without having to go through parliamentary process every time. Our processes operate under a legal system that is celebrated for its expertise, experience and independence. It follows well-understood process systems: evidence-based testing, some scientific assessment, and consultation with consumers and producers alike. So, by the time the goods get to market and are approved, everyone understands what is at stake. They know the laws and they have been consulted on them; they trust the science and the evidence base.

However, laws and regulations made elsewhere under a code-based system—I refer particularly to the EU’s—are often based on input from officials who are remote from the area of law they are making. With the EU, there is the danger that we are importing anticompetitive laws because, as has been pointed out—including by one of the current President’s economic advisers—EU laws are protectionist. The EU has a different economic system, which was designed by the French to lock in, for very good reasons, the German economic growth that was expected after the Second World War. I can understand the French’s reasoning. They have a centralised command-system economy, which may work for France. So there are very good reasons not to import, on a dynamic basis, laws which are protectionist.

In Committee, I gave examples of where these laws add cost, drawn up by EU economists. They would also mitigate—some economic law lawyers will corroborate this—against our free trade treaties with other trading partners, such as the CPTPP. These are reached on the basis of mutual agreement over standards, which are subject to conformity assessment and independent dispute arbitration and regulation. If we are going to mirror—and mirror dynamically—one set of laws, particularly those of the EU, we may be increasing costs and changing standards, and be in breach of our agreement with the CPTPP.

I turn briefly to why we want a sunset clause. There are very good reasons for having sunset clauses. They bring benefits to legislation, and they give Parliament the chance to consider its merits after a fixed period, which is especially needed for a law imported by statutory instrument. They involve the user in the regulatory plan: for instance, they know that the law in question is going to be introduced on condition that it will be assessed, and that involvement can institute behavioural changes. A sunset clause helps to safeguard democracy and bring legal certainty. It makes clear in legislation what is subject to expiry, when, and under what conditions. Professor Helen Xanthaki, at UCL, has pointed out that sunset clauses improve the quality of legislation and they

“serve as tools of clarity, precision and unambiguity; and as tools for efficacy”.

For these reasons, I ask the Minister to consider my amendments and the others in this group. They open up this measure, and require any Government to be more open, broadly, to foreign laws, ensuring that any laws we do import are subject to a sunset clause and that there will not be dynamic alignment, which goes very much against the transparency and clarity that are the hallmarks of good legislation.

[Lord Fox (LD)]

My Lords, I was going to give a long analysis of the economics that demonstrate how poorly manufacturing businesses have performed since the implementation of the trade and co-operation agreement, but that would have been a Second Reading speech, so I decided not to give it. Instead, I will speak to the amendments we have before us. I am grateful to the noble Lord, Lord Russell, for tabling his amendment and for allowing me to sign up to it.

Members on the Conservative Benches seem to find terror wherever they go. There is danger; there are plots, schemes and Trojan horses all over place. I would not like to live in their world; it must be very frightening. This Bill does what it says it does, and this amendment does what it says it does. It makes simple a process that has been put forward very carefully and in a measured way by the noble Lord, Lord Russell of Liverpool.

There are all sorts of things that the Liberal Democrats would like to do that are far more extreme than the noble Lord’s amendment, but we recognise the limitations of this legislation and the nature of what we are debating. That is why I have supported the noble Lord, Lord Russell. It is a simple and modest measure that has the practical benefit of helping out businesses.

To close, the noble Lord, Lord Jackson, said that it would not be sensible to close off options—quite. Closer alignment with EU regulations within the government negotiated red lines would yield a boost to the UK economy of between 1% and 2%. That sounds like an option to me.

[Lord Sharpe of Epsom (Con)]

My Lords, in view of the lateness of the hour and the closeness of the dinner break, I will also be very brief. I thank my noble friends Lord Frost, Lord Jackson and Lady Lawlor for bringing forward these important amendments. I was happy to sign some of them. They raise a fundamental concern about the potential alignment with the European Union, specifically through regulations that could be made under the Bill. As my noble friend Lord Frost put it, that is a significant constitutional matter and, I might add, it is one that has been highlighted by the Constitution Committee—again, we are back to the committees of your Lordships’ House.

The issue at hand is that, as currently drafted, the Bill contains provisions which would allow the United Kingdom’s regulatory framework to align with EU laws in—this is key—a dynamic or ambulatory manner. This means that, as time goes on, our regulations could automatically change in line with the evolving laws of the EU without any further scrutiny or review by the Houses of Parliament. This is deeply problematic. It would allow the UK to be influenced by regulatory frameworks and standards that are set externally and potentially lock us into a regulatory direction that we do not wish to follow. That is not the same as saying that we should not be able to adapt, adopt, negotiate, recognise or seek mutual recognition of the best regulations from whichever equivalent regime they come from.

These amendments address and achieve the aims set out so eloquently by my noble friends. If my noble friend is minded to test the opinion of the House later, we will support him.

Product Regulation and Metrology Bill [HL]

Lord Fox Excerpts

Report stage
Wednesday 26th February 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, Amendment 8 is a vital safeguard to ensure that the UK’s regulatory decisions do not inadvertently disadvantage our trade relationships with some of the world’s most dynamic economies. The global economic balance is shifting. Others have alluded to the statistics in previous debates, but they are very straightforward and bear repeating. The US economy is growing while the EU’s share of global GDP is shrinking. Fifteen years ago, the US and the EU each accounted for around 22% of global GDP; today, the US share has grown to 26.3% while the EU’s has declined to 17.3%. These are simple facts, not qualitative judgments.

The economic future lies with markets that are expanding, not contracting; for the record, that is not the same as arguing that it may not still be in our interests to align with some of those in certain cases. Britain’s membership of the CPTPP, for example—one of the fastest-growing trade blocs—will soon be under way, creating immense opportunities for British businesses. With the US, our largest single trading partner, which accounts for about 16% of all UK exports, Britain trades under its own laws. It is essential that our regulatory framework reflects this reality and does not impose unnecessary constraints that hinder our ability to capitalise on these agreements.

The importance of strengthening our economic ties with the US cannot be overstated. On 20 January, the Minister acknowledged that:

“The US is a country that we have to deal with, and our businesses ask us to work with the US”.—[Official Report, 20/1/25; col. 1474.]


We agree. We recognise and acknowledge that the slow progress is no fault of the Government’s, and there will be more to say on that in the months to come; but alignment with the EU, for example, as President Trump’s advisers have made clear, would make a free trade deal with the US all but impossible. Stephen Moore, a senior economic adviser to President Trump, recently stated that Britain must decide whether it wants to follow “the European socialist model” or embrace the US free market. His warning is clear: if the UK continues to shift towards EU-style regulations and economic policies, the United States will be far less inclined to pursue a free trade agreement with it.

This amendment ensures that our regulatory framework does not create barriers to securing future trade deals or diminish the competitive advantages that we have gained because of Brexit. This amendment is about ensuring that our trade policy remains aligned with our national interest and therefore supports jobs, investment and economic growth on the global stage.

I draw attention to a serious concern raised about deep regulatory alignment with the EU, particularly in the context of the UK’s position with the CPTPP. When the UK acceded to the CPTPP, it underwent a regulatory review to ensure that its domestic regulations complied with CPTPP obligations. This included scrutiny of various sectors, including agri-food, where Canada raised concerns about the UK’s precautionary prohibition on hormone-treated beef. The UK was ultimately allowed to accede despite this issue, but significant uncertainty remains about how the UK’s alignment with the EU’s regulatory model in the agri-food sector, among others, would be received by other CPTPP parties. Regardless of whether it is better for the UK to align with the EU or the CPTPP, can the Minister confirm that this should be a matter for debate in Parliament? The potential implications of such a decision are far-reaching, and Parliament must have the opportunity to engage in a thorough and informed discussion on this matter.

As the Government have put forward a Bill that has done nothing but provide uncertainty to this House, my Amendment 64 introduces the basic yet crucial requirement of accountability. If their No. 1 priority is truly growth, they must give serious consideration to this amendment. All it does is ask them to conduct an impact assessment on future economic growth—in other words, it allows room for manoeuvre. Businesses need stability, consumers need confidence and Parliament needs clarity.

As we have discussed at some length, unnecessary ambiguity about the future regulatory framework risks deterring investment and slowing economic progress at a time when we can least afford it. To be clear, growth is not achieved through vague promises or by blindly introducing sweeping powers without accountability. It is achieved by ensuring that every piece of legislation contributes positively to our economy. That is an aim we believe this Government should share, and for that reason I beg to move.

[Lord Fox (LD)]

My Lords, I will speak to Amendments 8 and 64 in the name of the noble Lord, Lord Sharpe. We are playing on a similar set of variations that we have already played on in several groups. These two amendments are intended to impose additional restrictions on the implementation of this Act.

As we have heard, Amendment 8 prevents the Secretary of State making regulations that could be seen as disadvantaging the UK, or conflicting with its trade agreements. The amendment goes on to list a range of trade agreements, which assumes that if you agree with one of them, you are going to agree with all of them. There is a nature where you have to choose; there are puts and takes. All those trade agreements have varying conditions, and the Government’s job is to try to choose the best option, in a sort of 3D chess game, to make sure that they do the best for this country, as the noble Lord, Lord Sharpe, pointed out. But there is a sort of “cake and eat it” idea, that if we do not do the EU, then we can somehow do all those in the list set out by the noble Lord, Lord Sharpe. His example then illustrates exactly that we cannot, because there are issues in all of these that we will agree and disagree with. The Government’s role is to have a sufficient tool that enables them to move in the right direction.

I am surprised that the noble Lord chose an agri-food example because, as far as I am aware, that is not in the scope of the Bill, but I may be wrong. Perhaps there are other examples but, using his example, I do not see the banning of the hormone boosting of beef as being something the Europeans imposed on me. I am very pleased we have it, and if I am not in the European Union, I still expect the United Kingdom to uphold those kinds of standards for rearing meat in this country. If the Minister is proposing a wholesale change in the United Kingdom’s animal husbandry processes, techniques and security, then perhaps he should tell your Lordships what other things he expects to change about our food, because they are there to protect consumers from the effects of hormones and antibiotics leaking into our system. I know the noble Baroness, Lady Bennett, will probably have lots of statistics, but I hope she does not use them at this time of night.

Neither of these amendments is helpful to the process, and in both cases—particularly the second— I question how an impact assessment of what I think the Minister is proposing can be done. The impact will happen through the regulations that the Act is used to implement. Until we know what the regulations are, we do not know what the impact will be. It is perfectly reasonable for the Minister to say that when the Government are tabling a new regulation, we want to know what the impact of that regulation will be on the economy, the environment and other things. We cannot do a holistic analysis of the impact of the Bill without taking into consideration all the regulations that the Bill will cause to happen. I hope he understands what I am saying. With that in view, it seems to me to be deliberately slowing up the implementation of the Act, and we do not see that the nation benefits from that.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank all noble Lords for their contributions to this debate. The UK Government remain firmly committed to maintaining and enhancing our international trade relationships, ensuring that the UK remains an attractive and competitive trading partner and creating opportunities for UK businesses.

This is an enabling Bill; it does not override or contradict any of our trade agreements. Instead, the Bill provides the flexibility needed to ensure that our regulatory framework can keep pace with international developments, supporting both businesses and economic growth. This will support our current and future trade agreements.

Regarding Clause 1(2), the UK Government would not use this power, or indeed any Bill powers, in a way that would disadvantage the UK or its trade agreements, including those, as mentioned by the noble Lord, Lord Sharpe, set out in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—CPTPP—or, for that matter, any other trade deals the UK has signed since our exit from the EU. Any use of Clause 1(2) would also be subject to the usual process relating to secondary legislation, such as impact assessments and relevant parliamentary scrutiny.

In developing our trade strategy, we are clear that free trade agreements, while not the only tool, are an important lever for driving growth. The Government have announced their intention to publish an ambitious trade strategy that will consider the range of trade tools to drive economic growth, in addition to announcing their intention to deliver a UK free trade agreement programme.

The Government are committed to meeting their obligations under the free trade agreements and nothing in the Bill contradicts that. The powers will be used to make changes to legislation where that is in the UK’s best interests.

The noble Lord, Lord Sharpe, mentioned agri-food. Food is excluded from the scope of the Bill, under the Schedule. Agri-food is in our FTAs. This Government will not sign deals which undermine UK standards.

The Government have consistently stated that all changes to UK product regulation will be made in a way that upholds our international obligations, including our commitments in FTAs, as well as supporting UK businesses. This amendment seeks to solve a problem that does not exist. To be absolutely clear, the Bill is compatible not only with our existing FTAs but with our ambition to sign further agreements. Nothing in the Bill will prevent us signing ambitious agreements in our ongoing negotiations with partners, including India and the GCC; nor would it prevent us pursuing agreements with other partners, such as the United States of America, should the Government decide to launch additional FTA negotiations in the future.

I turn to Amendment 64. The Bill as drafted allows the Government to update domestic legislation, keep pace with global changes and ensure that UK product regulations keep pace with evolving technologies and emerging risks. These powers will support the interests of UK businesses and consumers, providing regulatory certainty and creating the conditions for investment, innovation and economic growth.

Regarding the economic impacts of the Bill, it has already undergone a comprehensive impact assessment, which considers economic and business impacts. It is available to noble Lords via the Bill page on the UK Parliament website. The impact assessment will also be updated and republished when the Bill moves to the other place to reflect any changes made to the Bill since it was introduced to this House.

All secondary legislation made under the Bill will be subject to the statutory and non-statutory assessments set out in our code of conduct. The code of conduct sets out the current framework, as well as how the Government intend to use the Bill to provide that product safety measures brought forward are proportionate and effective. Product regulation that is proportionate will protect consumers, support responsible businesses and drive growth across the economy.

I hope that I have been able to provide reassurance on this matter and the Government’s wider commitment to supporting economic growth. I therefore respectfully ask that the amendment be withdrawn.

[Lord Sharpe of Epsom (Con)]

I thank both noble Lords for their responses. I will answer some of the specific questions asked by the noble Lord, Lord Fox. First, I am very grateful for him calling me a Minister on more than one occasion; I would that were the case.

[Lord Fox (LD)]

It is Stockholm syndrome.

[Lord Sharpe of Epsom (Con)]

Secondly, I point out that the amendment does not prevent; it just says that it should not “disadvantage”. That is not mere semantics but a very substantive point which, I would argue, invalidates the noble Lord’s arguments.

To both noble Lords I would say that the reason I chose the agri-food example—I am well aware that it is not covered in the scope of this Bill—is that it is highly topical and relates to a current trade agreement. I say to the noble Lord, Lord Fox, that I did not say that we should not have a ban on hormone-treated beef; I said merely that the merits of such a ban should be debated in Parliament.

I thank the Minister for his response. It was very comprehensive, but it is disappointing that the Government will not accept Amendment 8. We believe this is a proposal that does nothing but strengthen the Bill. It promotes the very growth that Ministers are claiming to prioritise. Given the importance of this issue, I think we have not found agreement and therefore I would like to test the opinion of the House.

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Moved by

[Lord Fox]

9: Clause 1, page 1, line 21, at end insert—
“(4A) The Secretary of State must publish a statement setting out how they expect to identify and assess risks presented by products for the purposes of this section.(4B) A statement published under subsection (4A) may be amended or replaced from time to time.”Member's explanatory statement
This amendment requires the Secretary of State to publish a statement setting out how the Secretary of State expects to identify and assess product risks.

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[Lord Fox (LD)]

My Lords, briefly, I thank the noble Lord, Lord Holmes, for bringing this up. It was a good idea to have these amendments, and clearly the issue comes in two different parts.

I was happy to vote for the amendment in the name of the noble Baroness, Lady Kidron. The issue of what I would call piracy is one that we should all be very concerned about, having as we do a national creative industry that we need to protect and preserve.

I am going to throw myself on the mercy of the Government, because I am not 100% sure that some of the products being mentioned in connection with music fall into this category. Consumer products can do, or not, so to some extent we may find that the noble Lord’s suggestions fall into categories that do not necessarily get covered by the Bill. I will be interested to hear from the Government on that, because I should know the answer, but I do not. My sense, having heard what the noble Lord had to say on his Bill, is that we should have another conversation with the Minister about the code of conduct. There is quite a lot of work to be done on the pre-scrutiny of products process to understand where AI has come in.

To single out the energy use of AI from any other energy use is a little strange. If you are buying a product and you care about energy use, it is not just a question of the energy consumed by AI technology. If it is made of steel, a large proportion of the energy came from somewhere else, and that is still important if energy is important to us. On subjects like energy use, there is one set of considerations, and on the use of other people’s intellectual property there is another. That is where we should have a conversation with the Minister.

On the issue of design for accessibility, I agree with the noble Lord. Again, when we have that conversation, the Minister can suggest what the best route might be to take that forward. Perhaps there is more work to be done, and I am happy to join the noble Lord, Lord Holmes, and the Minister if they want me there.

[Lord Sharpe of Epsom (Con)]

That was an interesting, if brief, debate. Before speaking to my amendment, I thank my noble friend Lord Holmes for his important amendments. As has been pointed out, Amendment 37 deals with the concept of “inclusive by design”, which is obviously vital in creating products that cater for everyone. It ensures accessibility, usability and fairness across all sorts of diverse populations. By designing products with inclusivity in mind from the start, we acknowledge the varied needs of consumers, including those with disabilities, elderly users and so on.

Through his Amendment 36, my noble friend has raised an important issue. Labelling AI-generated content, including music, is crucial to ensuring transparency and consumer protection. This subject is growing in prominence and importance, and I have little doubt that we will return to it. In a world where AI-generated works are becoming more prevalent, it is essential that consumers can distinguish between content created by humans and that created by AI.

In addressing my Amendment 43, I begin by referencing the Government’s Explanatory Notes, which, as my noble friend Lord Camrose has mentioned, state that consideration is given to the need to be able to adapt to new technologies such as artificial intelligence. With that in mind, we have tabled this amendment to promote innovation and investment in the UK’s AI sector, which will continue to be vital in the coming years.

I agree with the noble Lord, Lord Leong, that this not an AI Bill, but this is not particularly an AI amendment. It is not about what AI is or does. Many of those discussions, as we have heard in this brief debate, have yet to be had in broader society, never mind in this House. However, we have to acknowledge that the UK has a thriving tech sector that has consistently been a leader in developing cutting-edge technologies, and we want to strengthen it by ensuring that we have sensible, pro-growth AI regulation that fosters innovation while safeguarding consumer interests. That should include a focus on small and medium-sized enterprises, which are vital for generating new ideas and driving technological advancements.

International competitiveness is crucial, especially in emerging technologies like AI. We have already seen how overly burdensome regulations such as those proposed in the EU’s AI Act can have a stifling effect on innovation. When the EU’s AI Act was in the works, executives from 160 leading companies in the industry came together and drafted an open letter warning of the potential negative consequences of excessively strict regulations. They highlighted that such an approach could ultimately harm businesses, slow innovation, put Europe at a competitive disadvantage globally and therefore, by extension, aid those in other parts of the world whose intentions are perhaps not so benign as we like to think ours are.

We must avoid falling into the same trap here in the UK. It is essential to ensure that AI is developed responsibly and ethically, but we must strike the right balance. Overregulating this vital sector could choke off the growth of our tech ecosystem, discourage investment and drive the innovation that we need here overseas. This amendment aims to protect this growing and vital industry. It is specifically drafted in such a way as to ensure that British industries have their interests taken into account, and that, of course, includes SMEs. I urge the Government to accept.

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[Lord Hunt of Wirral (Con)]

My Lords, while the Minister recovers his breath, we will all carefully reflect on every word that he has just said but, given the speed with which he delivered that speech, I hope he will forgive me if I do not respond in detail. I shall just deal with what we believe is the overly broad current definition of an “online marketplace”, as the scope could be inadvertent. I speak to Amendments 49 and 53 on behalf of my noble friend.

The current definition of an online marketplace would inadvertently capture a number of online services not thought of as marketplaces, such as search engines, online advertisements and price comparison websites. Potentially, even further removed services, such as app stores, could be captured by this proposed definition. This risks placing disproportionate requirements on services whose functionality is not what the Bill is intended to regulate and will require careful drafting of the necessary secondary legislation to avoid confusion and potential challenges. That is not guaranteed, however, due to the extensive delegation of powers and limited oversight provided by the Bill.

This broad scope will create unnecessary regulatory burdens on businesses that were never intended to be covered by the legislation. It could also discourage innovation and investment in digital services if companies fear that they will be subject to complex and costly compliance requirements. Our amended definition would therefore capture services that are not meant to be dealt with under the Bill but is more appropriate in its scope when it comes to goods and products, giving greater context and identifying the subjects of the sellers being provided, namely consumers and third-party sellers. I hope that gives an indication to the Minister of why we feel these amendments are required.

[Lord Fox (LD)]

My Lords, I thank the Minister and the noble Lord, Lord Hunt, for their comments. The noble Lord, Lord Hunt, in the amendments that he is putting forward, really puts his finger on the problem and the challenge of defining an online marketplace. What was not an online marketplace yesterday can be one tomorrow. You can be looking at what starts off as a chat site where people exchange photographs, which suddenly becomes somewhere you can sell things. The problem that we therefore have, in being very specific in the definition, is that we create the loopholes for other people to use.

I am sympathetic to the problem that the noble Lord sets out, which is the inadvertent inclusion of other things, but the more we try to nail it down with a framework, the less likely we are to legislate for what is coming round the corner. I am very happy to have that discussion with the noble Lord. Perhaps there is a way of having something that can flexibly move, but we have all seen the changing world of online selling—it is absolutely changing every day. I am sympathetic, but sceptical that the amendment would do what we need it to do.

I co-signed government Amendments 23 and 51, which took on board issues that I brought forward in Committee. I thank the Minister for his reaction to that. Overall, with the exception of that key issue—marketplaces are where this is happening and we need a process whereby liability can be properly attributed, but I am convinced that primary legislation will not be the place to do that because of the changing world that we live in—and with those provisos, I think we need a way of moving forward that gives us that flexibility.

[Lord Leong (Lab)]

My Lords, before I turn to the substance of the debate and the government amendments, I thank the noble Lords, Lord Hunt of Wirral and Lord Fox, for their contributions. The engagement that I have had has been very constructive; I hope that is reflected in the amendments the Government have brought forward.

On Amendment 49, I agree about the need for a clear definition of “online marketplace” in the Bill. One way in which we seek to achieve this is by setting out a straightforward definition that is broad enough to clearly capture the vast range of online marketplace models, as the noble Lord, Lord Fox, said so eloquently. This is important to avoid loopholes where an online marketplace could seek to define itself outside the scope of this regulation. For example, the definition should be clear that online marketplaces include those such as Amazon, which sell their own products alongside those sold by third-party sellers. We therefore believe that specifying in the definition that an online marketplace

“typically does not own the inventory sold”

could cause confusion. We would also like the definition to be clear that it captures not only online marketplaces that sell to consumers but those that may sell to businesses, such as B&Q Marketplace.

UK/US Free Trade Agreement

Lord Fox Excerpts

Monday 20th January 2025 Lords Chamber

[Lord Leong (Lab)]

I thank the noble Lord for making that important point. In Kyiv last Friday, and at the G20 summit, the Prime Minister said:

“I have been clear that we would like to have discussions about a trade deal with the US, that we don’t accept the argument that there’s a binary choice between a reset with the EU and a deal with the U.S. and obviously the time for those decisions will be in the weeks and months to come”.


The priority of the Prime Minister and the Government is economic growth. Free and open trade with our most economically important partners will be key to achieving that.

[Lord Fox (LD)]

My Lords, the Question and the Answer illustrate the weakness of our current position. I have also been reading the papers, and we seem to be relying on the sentimental feelings that President Trump may have towards this country, which is a weak position for us. Does the Minister agree with the leader of the Liberal Democrats, Sir Ed Davey, that the best way to negotiate is from a position of strength rather than weakness, and that the best way of bolstering that strength is by establishing a customs union with the European Union?

[Lord Leong (Lab)]

I thank the noble Lord for his question. We are in a position of strength when dealing with the US and with the EU. There is no question of a binary divide, but we should not take that for granted. We have to work with our partners, and two of our partners are among the biggest trading partners in the world.

Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024

Lord Fox Excerpts

Monday 13th January 2025 Grand Committee

[Lord Jones (Lab)]

My Lords, I rise on the principle that the Executive should be accountable. I shall be brief. I thank the Minister for shedding some light on these dense and complicated regulations. They are obviously of help to the department, to Ministers and to business, but I dare say the Chancellor of the Exchequer was not reading them on her recent outward journey to the People’s Republic of China.

I found the factsheet helpful, and I acknowledge the strong statements therein. It states that the requirements will

“make it challenging for individuals to create a fictitious identity, or fraudulently use another person’s identity, to set up or run a company”,

and talks about being

“registered with a UK supervisory body for anti-money-laundering purposes”.

As the Minister implied, economic crime is debilitating to the nation and, without a doubt, we have problems with it in Britain.

Who is the registrar and when was she or he appointed, for what term and at what salary? Is Companies House running smoothly, so as to cope with requests and approaches from directors and people with significant control? Are there bottlenecks or significant hold-ups, perhaps even labour disputes? Are there impediments to those who file? How many money laundering cases did the registrar take to court in 2023 and 2024? These questions are designed to be helpful. If they are not answered immediately, perhaps there might be a letter.

[Lord Fox (LD)]

My Lords, I thank the Minister for his explanation. For those of us who worked on the economic crime Bills, this is a welcome development. I am interested in the timeline, because it seems some time ago that we debated the Bill, which I believe has become an Act, and we find ourselves looking to the autumn of 2025 before some of these vital identity-verification processes will reach the statute book. I certainly do not blame the Minister, because he is new to this, but what is behind the delay and how many more statutory instruments are we due? I think there are still quite a few on the stocks. When can we expect them and what functions will they unlock? When we debated the original Bill, I think we all felt this to be a real and present issue that needed immediate, or near-immediate, attention. Clearly, things are dragging on and I wonder what is causing that.

Further to the noble Lord’s comments about the functioning of Companies House, we were absolutely clear that this would be a culture change for Companies House, which will cease to be a filing cabinet and start having to investigate and verify what is coming across its desk. The previous Minister was confident that funding was in place and that the process to create that new culture was under way. We would benefit from the new set of eyes from the Minister, if not now then perhaps in a separate meeting where we can review the functioning, including the future functioning, of Companies House—a follow-on from the meetings that were so helpful during the formulation of the Bill.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, I too thank the Minister for his explanation. These regulations are clearly a crucial step in modernising and strengthening the UK’s corporate governance. Building on the Companies Act 2006, they were laid before Parliament, as the noble Lord, Lord Leong, noted, by the previous Conservative Government in May 2024 to address the growing concerns about corporate fraud and business registration transparency.

The regulations introduce unique identity verification for individuals involved in setting up and controlling companies and will ensure that the integrity of the business registration process is robust. The initiative aims to combat the use of fraudulent or stolen identities in business dealings and will make it harder for individuals to engage in corporate fraud. The core aim of the regulations is to ensure that only properly verified individuals can establish and control companies. The registrar is granted the authority to impose further requirements on applicants, with the flexibility to adapt as identity-verification technologies evolve.

The regulations also introduce unique identifiers for verified individuals and authorised corporate service providers, streamlining the registration process and ensuring that the Companies House register remains accurate and reliable. I think I was the Minister whom the noble Lord, Lord Fox, referred to. I sincerely hope that the funding remains robust, as it was a few months ago. I look forward to hearing an answer to that question.

The ACSPs are now subject to stricter oversight, including anti-money laundering regulations, with provisions for suspension or deauthorisation if they fail to meet required standards. I will come back to that in a second. The noble Lord, Lord Fox, also asked why we need ACSPs. They, or their equivalents, are common in many jurisdictions and they provide an incredibly useful service to people who wish to set up a business but have neither the time nor the inclination to get into the weeds of doing so and prefer to subcontract it. I think it is perfectly reasonable that ACSPs exist and they just need to be properly verified.

While the intention behind the regulations is clear—they improve the integrity of company registration and prevent fraud—there are several areas where further clarification is required. Given that the regulations were last discussed under the previous Government, I would like to understand how the current Government intend to address the evolving nature of identity-verification technologies.

In addition, these regulations impose new obligations on ACSPs, particularly in terms of record-keeping and in providing additional information to the registrar. Although these measures are essential for transparency, I ask the Government, as the noble Lord, Lord Fox, also asked, to clarify how these new duties will be enforced. What penalties will be applied to ACSPs that are found to be non-compliant and what measures are in place to ensure that these rules are upheld consistently across all service providers?

I am also concerned about smaller businesses and individuals who may be impacted by these additional verification processes. Will the Government ensure that the new regulations do not create undue burdens on smaller enterprises, which may already be facing significant challenges in meeting regulatory and other requirements?

Finally, while the power to suspend or deauthorise an ACSP is necessary to combat fraud, I would like assurances that proper safeguards will be in place to protect service providers from unjust penalties or removal.

In conclusion, these regulations are important reforms to strengthen the UK’s business environment and combat fraud. As with any regulatory framework, careful consideration is needed on enforcement, monitoring and adaptation, so a review process will be essential to assess the regulations’ impact on businesses of all sizes to ensure that they deliver their intended benefits without imposing unnecessary burdens.

[Lord Fox (LD)]

With the Committee’s permission, I have just one question that I had meant to ask the Minister. It is around the obligation to retain identity information over seven years, which the noble Lord just mentioned. In the event of the ACSP going out of business, what is the expectation of how that information, which would not otherwise be retained, would be retained for the potential use of Companies House?

[Lord Leong (Lab)]

I thank all noble Lords who have spoken for their valuable contributions to the debate. I will respond to some of the points raised but, if I do not cover some, I will ensure that I write.

As to my noble friend Lord Jones’s question about the registrar, the current Registrar of Companies in England and Wales is Louise Smyth. I will write specifically on his other, quite technical questions.

The noble Lord, Lord Fox, raised a few questions, so I ask noble Lords to bear with me while I go through them. His first question was on the timeline. Identity verification will be required from approximately 7 million people in year 1. Since the Act received Royal Assent, Companies House has been busy cleaning the register. From March to November 2024, Companies House removed around 50,400 registered office addresses, 39,600 office addresses and 36,700 addresses of persons with significant control. It redacted around 37,100 incorporation documents to remove personal data used without consent and removed around 7,800 documents from the register, including 800 false mortgage satisfaction filings, which have previously required court orders.

Companies House has been really busy since the Act received Royal Assent, putting this in place. It has also employed more people to do this work, increasing its workforce from 1,400 to 1,700, with another 100 due to be in place before the end of the year. We need people to do this and Companies House is getting those people.

In answer to the question about funding from the noble Lord, Lord Sharpe, Companies House has been investing in new capabilities to prepare for the implementation of these reforms, as part of its wider transformation programme. This includes £108 million of funding for transformation across previous spending reviews and increased fees to fund a course of measures. As noble Lords know, incorporation fees have now gone up to £50 and any filing fees for confirmation statements have gone up from £15 to £34—so that is extra funding coming in.

In addition, funding of £20 million has been awarded via the economic crime levy for new intelligence cells in Companies House and the Insolvency Service, allowing both agencies to plan to step up their anti-money laundering work. A significant amount of preparation has been undertaken to reach this point, including system development, recruitment and training.

I shall move on to the couple of other questions that were asked. On the statistics, I mentioned earlier that something like 7 million unique officers or directors will need to be identified by spring 2025. The annual cost to a UK business of verifying this identity is estimated to be close to £19.50 in ongoing operational expenses.

Companies House is very experienced in dealing with a high volume of transactions. For example, in 2023-24, it processed something like 14.2 million filings. Companies House has been preparing customers, and there is a lot happening in the education and engagement process; in fact, the Companies House website shows a timeline when this is done, thus informing stakeholders about the introduction of these identity-verification requirements.

Various questions were asked about ACSPs. Let me go through them. A firm will not be able to register as an ACSP unless it is supervised under the UK’s anti-money laundering regulations, and the registrar will not accept applications if the applicant is not fit and proper. From then on, the ACSP must be supervised under the UK’s anti-money laundering regulations at all times. Companies House and the supervisors will regularly share intelligence and changes to an ACSP’s supervisory status; Companies House can suspend or deauthorise any ACSP if it thinks that it is no longer fit and proper to perform these functions.

In answer to the question from the noble Lord, Lord Fox, about what happens to an ACSP if it goes bust or closes, the ACSP must keep records of all of these IDVs for at least seven years. So records will be kept. I assume—I am looking at my officials now—that these records will eventually be passed over to the Registrar of Companies, but I will confirm that point in writing.

[Lord Fox (LD)]

On Companies House’s right to suspend an ACSP, what right of appeal does the ACSP have in those circumstances? Does it go to judicial review? What happens?

[Lord Leong (Lab)]

I do not want to go down that legal route. Based on normal administrative law, I assume that judicial review would apply, but I will come back with a more definitive answer in writing, if I may.

As I mentioned earlier, ACSPs will be required to keep records relating to the identity-verification checks they complete and to respond to Companies House’s spot checks. Failure to comply will be a criminal offence.

The noble Lord, Lord Fox, asked how many more SIs we will see. All I can say is that a mix of SIs will be laid in spring this year—before the summer, I assume—including ones applying reforms to limited liability partnerships. I hope that that satisfies the noble Lord.

In respect of the question from the noble Lord, Lord Sharpe, about enforcement, currently, if an individual officer does not comply to have their identity verified, sanctions are applied. It can be either a financial sanction or a criminal offence; that applies also to ACSPs.

I hope that I have answered all noble Lords’ questions. If not, I will definitely write to noble Lords.

Product Regulation and Metrology Bill [HL]

Lord Fox Excerpts

Committee stage
Wednesday 11th December 2024 Grand Committee

Finally, I shall briefly comment on Amendment 53. I commend the noble Lord in using the words “large language models”; they are not artificial intelligence. The amendment stresses that these are being rushed in with great environmental impact, as the noble Lord said. They are potentially reshaping our entire physical world as well as our virtual world. It is really important that we have regulation on how that reshaping happens.

[Lord Fox (LD)]

My Lords, I shall be brief and start with Amendment 79. We could join in the chorus of approval and my noble friend Lady Brinton could come up with dozens of examples that justify the noble Lord’s amendment but, in the interests of time, we will not. If noble Lords would like more examples, I am sure my noble friend could provide them. We very much support Amendment 79.

I commend the noble Lord for persuading the Public Bill Office to allow him to table Amendment 53. The spirit is very much met. Given the nature of all the digital Bills, with which he is completely familiar, I suspect this is an argument we will have again and again in those Bills. The spirit is correct.

I want to say a few words on Amendment 52 which are different from the words noble Lords have heard. I sit on the International Agreements Committee and we look at the CPTPP trade deal. Rules of origin are central to all this. The nature of CPTPP is that, for example, a product built in Malaysia can start to move freely within the countries that are signatories to that trade deal. Whether we have the details of the components of that product before it starts moving around our alliance depends on His Majesty’s Government asserting their right to know what is in those products. Whether the Government like it or not, in this Bill, with their signing of the CPTPP, they are going to have to start to interest themselves in a detailed way on what is in the stuff travelling around the CPTPP.

Why is that? One of the biggest exporters of components into Malaysia is China. That brings us back to the whole China question, which I will not repeat here. If, for example, we find that that country is the subject of either embargo or tariff, we will really have to know what is going on in all those products. So it makes a lot of sense, from the very start, for the department to flex its muscles and develop its skills to understand the supply chains of the things coming through people’s doors every day, courtesy of the large online retailers.

When a piece of electrical stuff comes through our door, we have absolutely no idea what is in it, where it was made and its safety for our families. We cannot know that without knowing the supply chain and the rules of origin of what is moving around our country. It is difficult, of course, but it is something in which we will have to increasingly interest ourselves.

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[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate, and I specifically thank the noble Lord, Lord Holmes, for his amendments. During the second day in Committee, the noble Lord illustrated his knowledge of and passion for the subject of AI.

I turn first to Amendment 53 on the review of large language models. We have already discussed the intersection or interaction between this Bill and AI in a previous group, and I will briefly restate some of the key points I made in that debate which are relevant here. Evidently, the use of AI in products is still in its infancy. How exactly this technology will develop remains to be seen, but we have drafted the Bill in such a way that it keeps pace with technological change; Clause 2(2)(a) allows regulations to take account of intangible components of a physical product.

However, the Bill does not and will not regulate digital products or artificial intelligence in and of themselves. Instead—I hope this reassures the noble Lord, Lord Holmes—the Government are developing a wider policy around AI, which I am sure will take into consideration proposals for AI safety legislation as announced in the King’s Speech. I recognise that noble Lords keenly anticipate the detail of these proposals, so I assure your Lordships that my noble friend Lady Jones will update the House in due course.

The Office for Product Safety & Standards is considering the use of AI in products and the regulatory challenges for product safety associated with that. We are just at the start of that process but know that it will become more important as technologies develop. I will ensure that the House is kept up to date with progress on this work.

Amendment 52 addresses product traceability and responsibilities within supply chains, including digital supply chains. I agree with noble Lords that it is essential that those responsible for producing or importing products are identifiable. Existing regulations already require relevant supply chain parties to maintain necessary documentation for tracing product origins and, as we consider updates to product requirements, we will also review these traceability provisions to ensure that they are fit for purpose. The noble Lord, Lord Fox, mentioned CPTPP, which in fact comes into force this Sunday when the UK becomes a full member. I suppose we will just have to review the application of this whole supply chain and traceability, and monitor how it goes.

[Lord Fox (LD)]

I thank the Minister, but perhaps there is another of his letters here—for which I also thank him. The CPTPP is not like the European Union—there is not a secretariat overseeing what is going on. If you think something wrong is going on, it is up to the Government to raise it. It would be useful to know how the department is now going to police or at least find out what it needs to deal with. Otherwise, it is essentially transparent.

[Lord Leong (Lab)]

I totally agree with the noble Lord. I will ensure that officials in the department look into this and either write to him or have a meeting on this.

Over the coming year, our priority will be continuing to address the sale of unsafe goods on online marketplaces—an area that noble Lords are right to highlight and on which they have demonstrated extensive knowledge and passion in the best traditions of this House. As outlined in the Government’s response to the product safety review consultation, we will also explore digital solutions, including the use of voluntary digital labelling, to streamline business processes and support authorities in monitoring product safety.

However, it should be noted that issues of traceability are much broader than ensuring the safety or proper functioning of products. This would bring in myriad other policy issues, such as the nature of global supply chains and cross-border jurisdictional arrangements. I believe that noble Lords would agree that these issues warrant careful discussion and debate, but they are distinct from the Bill’s purpose of ensuring the safety and functionality of products.

Amendment 79 relates to the creation of a mandatory inclusive-by-design standard. I am pleased to inform the noble Lord that the British Standards Institution has already developed and published a British Standard that provides guidelines for the adoption of an inclusive approach to the design of products. The standard sets out a strategic framework and processes to enable business executives and design practitioners to understand that inclusive design should be a core organisational driver.

I refer back to the example the noble Lord, Lord Holmes, gave of credit card payments. We have come a long way, but I still remember those zapping machines that zapped your credit card and you had to sign the receipt. That obviously creates a lot of situations where fraud can happen. Then we had the PIN, and nowadays contactless. I have been reading some articles before today’s debate, and some of the financial institutions are looking at mobile wallets, whereby an encrypted account number is embedded within the wallet itself. But these are early days, so we have to keep watching this area and see how it develops.

Furthermore, an updated version of the ground-breaking, government-sponsored, fast-track standard on inclusive data use in standards was published by the BSI in August this year and is free to download. This helps standards makers to work with data with inclusion in mind so that the standards produced are representative and include communities that are traditionally excluded, helping to minimise harm and deliver more robust products. Standards are voluntary in nature and the Bill, as with our current product safety regulations, continues to allow the use of standards to remain voluntary, avoiding potential barriers to trade.

I hope that the noble Lord is satisfied with the explanations given today and that the amendment will be withdrawn.

Product Regulation and Metrology Bill [HL]

Lord Fox Excerpts

Committee stage
Wednesday 27th November 2024 Grand Committee

[Lord Foster of Bath (LD)]

I rise briefly to support the amendments in the name of the noble Baroness. I also draw the Minister’s attention to the fact that when I moved Amendments 2 and 27 in an earlier group, on the issue of installation, I pointed out that in respect of the potentially very dangerous lithium-ion batteries used in EV charging-point systems, for example, and solar panel array storage batteries, there is currently no requirement on the competent person scheme individual who is installing those systems to notify relevant authorities of the installing of those batteries.

I pointed out at the time that lithium-ion batteries, about which we will no doubt speak a great deal when we come to group 5, can create huge fires at high temperatures and very toxic gases; I also pointed out that, crucially, they cannot be put out by the use of water. That is why it is so important that the relevant authorities, particularly the emergency services, are aware of the current location of such devices. The current arrangements require the individual house owner to make such a notification. My amendment argued that it should be the responsibility of the installer not only to check on the safety of the entire system but to make that notification. For that reason, I am particularly supportive of the noble Baroness’s amendment.

[Lord Fox (LD)]

My Lords, had I been a little shrewder on the grouping, I would have included in this group Amendment 106, which we will debate in the antepenultimate group of the Bill, as it also addresses Clause 7 and goes after the same objective of information sharing. Whether it is lithium-ion batteries or some other danger, it is important that we learn from the problems that are established and that the right people can get that information, so that learning process can start.

I suggest that, whether it is the process set down by the noble Baroness, Lady Finlay, which we support, or something like my Amendment 106, or something that the drafters sitting behind the Minister can do much better than we can, there needs to be a point in this Bill about a process of information sharing, whether it is set out in detail, as in my amendment, which talks about who or what those bodies are, or whether it is a more general duty, as the noble Baroness, Lady Finlay, has set out. We support these proposals, and I hope that we can have a debate next time. I hope that the Minister will acknowledge the need to understand dangers, learn from them and move to be able to prevent them.

[Lord Sharpe of Epsom (Con)]

I thank the noble Baroness, Lady Finlay, for her important amendments. I, too, am looking forward to exploring the meaning of “relevant authorities” in the next group. If this is really about product safety, of course we have to have regard to unsafe products, and of course that information ought to be shared with the emergency services, so I have absolutely no problem in supporting all those amendments.

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I urge the Government to take the amendments on enforcement very seriously. We realise that the Government’s intentions are good, but unless the clauses are heavily rewritten, we will return to them on Report.

[Lord Fox (LD)]

My Lords, very briefly, and complying with time constraints, I warned your Lordships and the Government when speaking to another group that the skeletal nature of the Bill allows everybody to superimpose all their worst suppositions on it. We have just heard a thorough example of that from the noble Lord, Lord Sharpe.

I am of course here to help. In considering previous Bills, it helped when the Government published their draft code of practice between Committee and Report, so that we could get an inkling of their thinking. Doing so will not change our need to address the skeletal nature of the Bill, but it might allay some of our worst fears about the intention, and guide us in wording the amendments we could table on Report to help tie things down a little more, along the lines of the fears outlined by the noble Lord, Lord Sharpe. Can the Minister say whether a code of practice is planned, and undertake to show us a draft of it between now and Report?

[Lord Leong (Lab)]

My Lords, I thank all noble Lords for their detailed consideration of the Bill, and especially the noble Lord, Lord Sharpe, for his thorough exposition of his amendments, based on his experience at the Home Office and previously as an enforcement officer. He obviously knows a lot about the various amendments he has tabled.

I hope to clarify the Government’s position and explain the reasons behind the approach we have taken. First, I will address the use of delegated powers in the Bill, noting the concerns of the Committee.

Product regulation must legislate for innumerable kinds of products, ranging from heavy machinery to children’s toys. This is best done through regulation, due to the amount of very technical and scientific detail required. In some cases, sectors can be covered by general requirements. However, often they require specific tailored regulations that recognise their individual requirements. For example, a penalty for failure to properly mark a product “harm suffered” is likely be different when comparing a highly sensitive product in a nuclear energy installation versus a lower-risk product.

To proportionately reflect the dangers of a sector, requirements, enforcement powers, offences and penalties must be tailored. This is how the regulators operate at the moment, with over 2,500 pages of technical product safety regulation on the statute book. Alongside reviewing this existing legislation, we will need to consider on an ongoing basis whether there are emerging products or hazards that would benefit from specific rules.

Product regulation is a regulatory area that we have seen go through significant disruptive change with the growth of e-commerce, and this looks set to continue with AI and 3D printing. The activities conducted by different kinds of businesses have changed as well. The spine of the existing system was codified in primary legislation based on bricks-and-mortar businesses, and that led to uncertainties and gaps in duties, penalties and enforcement powers.

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[Lord Leong (Lab)]

Personally, I do not see why there is anything wrong with it—but in this Bill itself, I am trying to say that we need the flexibility. I just have to continue.

Further clarification of powers and functions would restrict the ability for enforcement regulations to provide powers needed to enforce new product and metrology regulations. We must enable flexibility so that we do not create gaps in enforcement powers now or in the future. We intend to plug the gap in enforcement by making regulation applicable at the border, so that enforcement can take place before unsafe or non-compliant products are sold.

I understand the good intentions behind these amendments but, equally, I hope that I have resolved the concerns that led to them. The Bill provides simple, flexible powers that will help enforcement authorities to fulfil their roles. I submit that we have balanced parliamentary scrutiny with the necessary flexibility in a way that best serves the rule of law. It is for these reasons that I ask the noble Lord to withdraw his amendment.

[Lord Fox (LD)]

I asked a specific question about publishing the code of practice in advance. Can I have an answer, please?

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Moved by

[Lord Fox]

34: Clause 2, page 3, line 26, at end insert—
“(d) the licensing of voluntarily committed standard essential patents which protect technology essential for implementing technical standards;(e) limiting the remedies available when a patent mentioned in paragraph (d) is enforced.”Member's explanatory statement
This amendment seeks to ensure that essential software for regulated products which relies on standard-essential patents (SEPs) is shielded from unfair legal abuse.

[Lord Fox (LD)]

My Lords, I also support Amendment 35 in the name of the noble Lord, Lord Lansley. As opposed to the last group, which focused on a large number of slightly different issues, these two amendments focus on one area and, given that they are only in the names of the noble Lord and myself, you can be sure that they will be technical in content.

I am sure the Minister has often wondered why his mobile phone can operate on Bluetooth in any country of the world, and why the automated vacuum cleaner that my noble friend Lord Foster so ably described in the last session can pick up wireless instructions no matter where it is working. The answer is that sitting underneath all of those are things called standard essential patents, or SEPs. They are patents that are necessary to the implementation of a collectively-agreed technical standard—5G, wifi, Bluetooth and so on. Standardisation across communications technologies makes it possible for devices to work with one another wherever they are.

Connectivity is increasingly a part of the products that the Bill seeks to regulate, as we have heard. UK industry is at the forefront of developing connected products that aim to address some of the biggest issues that we face, including healthcare and climate change. The Bill is about ensuring product compliance with technical standards. Compliance or conformance with the technical standard can often be premised on the implementation of a particular technology; as I have said, wifi is an example. For a product to use the wifi logo and technology, its technical performance with the chip set has to be tested and certified. Bluetooth and other wireless technologies used for power management in the context of electric vehicle chargers and smart metering are all examples of where the technical standards of operation are underpinned by these SEPs.

I realise that the Bill is not about intellectual property, but it is about regulating the properties of things. Unless the situation of SEPs is fixed, those properties can be in a state of flux. SEPs should be treated differently from other patents, which is why we are introducing them into this debate.

Of necessity, as a result of a dominant market position, the SEP holders have to voluntarily commit to license their technologies on fair, reasonable and non-discriminatory terms. The licensing of SEPs is important in ensuring that UK businesses are able to use the most modern and effective versions of these technical standards. In practice, SEP holders often evade their voluntary commitments to license their patents fairly because of a lack of clarity over what constitutes fair, reasonable and non-discriminatory, caused by weaknesses in the UK’s legal framework. SEP holders can abuse their position as gatekeepers of these technical standards by using the threat of costly court action and injunctions to force potential licensees to accept excessive royalty demands or quit the market. That can effectively prevent smaller companies from entering into, and being able to operate in, a market. In the previous group, the noble Lord, Lord Sharpe, asked whether the Bill was pro-innovation or anti-innovation. Unless we round up this issue on SEPs, I have to say that it is absolutely stifling innovation.

In most cases, SEP holders are well resourced and aggressive, while many licensees, especially SMEs, lack the knowledge and resources to defend their rightful position in court or push back against the mere threat of litigation. Increasingly, there is a third sector of people who buy up the rights to these patents and treat them as a revenue stream, whereby they go after and literally squeeze the people who have to use these SEPs. In essence, it becomes a secondary market for these things, without the necessary protections.

There are two issues. First, the availability of injunctions to the UK’s current SEP framework means that both small and large technical innovators who operate downstream of the primarily foreign SEP holders can be forced to accept excessive SEP licensing fees because they want to use this technology. The second problem is the lack of transparency: they quite simply do not know who holds these patents until they get an injunction through the mail. That is the problem. With the threat of injunctions and lack of transparency, UK manufacturers are frequently faced with a no-win situation. They have to either pay these fees or get out of the market, because they cannot afford to defend them at an injunction. This is in spite of the SEP holders making a voluntary commitment to license the SEPs on fair terms as part of the standard-setting process. So there is a problem.

The situation creates significant cost and uncertainty for some of the most innovative UK firms, it stifles innovation and, importantly, in the context of this Bill, it challenges the efficiency and effectiveness of products that rely on SEPs and are regulated by this legislation. That is why it is appropriate to have this discussion here today. The UK IPO is aware of issues concerning the licensing of such technology but to date has done nothing, or has insufficiently acted, to protect UK businesses that must use these technologies. This amendment is an opportunity for the Minister to commit to legislative action on SEPs to address the critical issues of products being threatened with exclusion from the people who need them, the imposition of unfair royalties and SEP licences being refused to companies that need them. I beg to move.

[Lord Lansley (Con)]

I am most grateful to the noble Lord, Lord Fox, for explaining so expertly what standard essential patents—SEPs—are and how important they are to the use of legislation in specifying product requirements, which of course are directly linked to the standards that we will go on to talk about. We have previously talked about the importance of standard-setting, but there is no point in setting standards if they cannot be fulfilled, turned into product requirements and brought to the market—that is what we are talking about. In particular, the noble Lord was absolutely right to stress that we should be thinking in this legislation about how we can promote innovation. Addressing this issue is one of the central ways in which we can do that.

Our two amendments serve the same purpose. The only distinction is that I was trying to suggest, in this particular instance, the importance of taking a power and not attempting in the primary legislation at this point to specify precisely how that power should be structured, because it is necessary for there to be a full consultation about the changes that would need to be made—not least, probably, to the Patents Act itself. When we come back on Report, if we go down this path there may be a need to have a power to amend the Patents Act as well.

The point here is that, as the Intellectual Property Office itself said, SEPs will be

“of growing importance to the UK economy”.

This is not a small matter, and it is becoming more important because of connectivity, the internet of things and the multiple range of SEPs associated with many of these standards. The noble Lord, Lord Fox, is absolutely right about the problems that can emerge for companies, particularly SMEs, in understanding the visibility of SEPs and who holds them—and, for that matter, in being absolutely clear about which ones are essential and which are asserted to be so, but which are not in fact essential to the standard.

I shall not delay the Committee now, but I want to focus on the question of why we need a power. First, the Intellectual Property Office is trying to do its best within the powers available to it. In July, Ministers announced the establishment of the resource hub, which gives guidance in relation to SEPs and enables companies to understand the SEP ecosystem. However, that does not change some of the fundamental issues to which the noble Lord, Lord Fox, referred. There are licence holders who are delaying access to their patents, and who are using that as a mechanism to get terms that are not fair, reasonable and non-discriminatory. SMEs are finding it very difficult to know what FRAND terms look like in relation to many of these products.

There is another issue: not only the individual royalties that must be paid in relation to these licences, but the global royalties that need to be available. Although there is case law that can be looked at, it is very difficult for SMEs in particular to understand how that may be applied to them. Of course, there are global royalties being established through large cases, which delay access to this intellectual property for some of those who need to use it; they are therefore unable to know how viable their product may be.

These issues have been addressed in the European Union. At present, there is a regulation agreed between the European Commission’s proposal and the European Parliament, and it is awaiting the conclusions of the Council of Ministers. Let us just focus on that for two seconds. What does it do? It sets out that there needs to be transparency, a mandatory register, and the ability for an official body to undertake a reality check asking, in essence, whether something is actually essential to a standard. It facilitates fair, reasonable and non-discriminatory terms. It also delays for nine months the point at which any licence holder could go to court to secure an injunction for these purposes while there is a requirement for a negotiated process; indeed, it entertains the possibility that, under the regulation, this may relate not only to individual royalties for licences but to the aggregate of those royalties for licences. So there is a legal structure in the European Union for these purposes, in order to overcome what is otherwise, for SMEs in particular, an extremely difficult set of circumstances arising from case law for them to understand and interpret.

This is not a small problem for some SMEs. For example, I have been talking to Tunstall Healthcare, which I know well from its role in providing connectivity, particularly for people who require care at home; it looks after more than 100,000 of them. In order to access licences for 4G and wifi connectivity, it needs to negotiate many licences and to identify where they exist. A company called Bullet was trying to develop and market highly resilient smartphones, but it ceased trading, owing millions of pounds to SEP holders, which contributed to its inability to continue trading. So I think we need to act.

The IPO has said that it will respond to the consultation at the end of 2024—so any minute now. I am told, however, that that will not now happen in 2024. What I really want to hear from the Minister is, first, that this is a suitable Bill and a suitable opportunity to take a power—without specifying all the details of that power—to make provision in relation to SEPs. Secondly, I want to hear that the IPO and Ministers will undertake to respond to the consultation in the early part of next year, putting forward proposals for how the new power is to be used and inviting responses.

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[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Fox and Lord Lansley, for their Amendments 34 and 35. When I saw the first amendment, I had to go and check what SEPs means. Now, after speaking to officials, I think I know a little bit and I welcome the opportunity to address the issues raised regarding software products that rely on standard essential patents, or SEPs.

These amendments go far beyond the intended focus of this legislation by expanding the scope of regulatory powers. Due to their complexity, the regulation of SEPs should not be reduced to a short provision in a Bill that was not drafted with the intention of regulating in this sphere. Any policy measures need to achieve a balance between rights holders being able to appropriately protect and enforce their rights, and users’ ability to access such technologies and innovations through fair and appropriate licensing forms.

However, I agree with the noble Lords that this is an important issue. The Intellectual Property Office has already engaged extensively with industry and business to determine whether any change to the framework for SEPs is necessary in order to ensure that businesses can license SEPs effectively and fairly. This engagement has included a call for evidence and views, and a questionnaire has been sent out to small and medium-sized enterprises. In response, the IPO has already launched a SEPs resource hub—an information resource that helps to address the very problem the noble Lords have identified. The IPO is also considering whether to consult formally next year on measures, as indicated by the noble Lord, Lord Lansley, and further to improve transparency in the SEPs ecosystem and enable more efficient dispute resolution. Any such consultation would be subject to ministerial decision, and we are currently working on that. In the meantime, I assure noble Lords that the IPO is continuing informal engagement with industry on both this matter and the SEPs ecosystem more generally. I hope that is reassuring to the Committee.

While I agree that this is an important issue, this Bill is not the right avenue to address the problems that the noble Lords raise. I therefore ask that they withdraw or do not press their amendments.

[Lord Fox (LD)]

I sort of thank the Minister for his response, but not much, because I think he could have acknowledged that this is a problem, rather than that SEPs exist, because it is a problem. Whether or not the Bill is the solution to it, the Department for Business and Trade should have an interest in solving that problem, but it did not seem that there was much appetite for that. Perhaps the Minister could disabuse me of that by acceding to the suggestion of the noble Lord, Lord Lansley, to have a meaningful round table with the right people for us to further this discussion. If this is not the avenue to deal with it, we need something else, because it is a real and present problem that needs a meaningful solution.

While the efforts of the IPO are clear, the point of the noble Lord, Lord Lansley—I should call him my noble friend in this case—is that the IPO needs more power and something needs to be done. If it is not this, it needs to be something else.

[Lord Leong (Lab)]

I want to be very clear that the Department for Business and Trade wants to support businesses of all types and sizes, but we have to be fair as well, so as not to burden too many SMEs with regulations and financial costs. This area is being led by the IPO but, at the same time, there is a way that the Department for Business and Trade can engage with the IPO. I am than happy to arrange a meeting between the noble Lords, Lord Fox and Lord Lansley, and officials from the IPO and the Department for Business and Trade.

[Lord Fox (LD)]

I thank the Minister for that offer, which I am sure we will take him up on. If the Government wish to unburden small and medium-sized businesses, solving this problem would be a slam dunk. With that, I beg leave to withdraw Amendment 34.

Amendment 34 withdrawn.

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[Lord Fox (LD)]

Briefly, I of course support these four amendments from my noble friends, but I will say a few words on Amendment 56. In a previous group, amendments tabled by me and the noble Baroness, Lady Bennett, on the circular economy and disposal, also touched on these issues and it would be worth while looking at those in conjunction with the amendments from my noble friend Lord Redesdale.

To give a bit of advice to my noble friend, the noble Baroness, Lady Finlay, made some interesting points about it being fulfilment centres rather than the actual online marketplace. In some cases, the supplier is foreign but the fulfilment centre is local. Perhaps there is some advice to take from the thoughts of the noble Baroness, Lady Finlay, on that, as they seemed a way of bridging the issue of the supplier being a long way away in a different country, whereas the people dispatching the item are most definitely here. With those provisos, I reiterate my support for all four amendments.

[Lord Sharpe of Epsom (Con)]

My Lords, I will be very brief. I found that a most interesting explanation of lithium-ion batteries and their various aspects. I confess to not being an expert at all, so it is very clear that I—and, I imagine, the general public—need to be better informed on this. I imagine that regulations will form an essential component of becoming better informed.

It was interesting how the noble Lord, Lord Redesdale, said that he was worried about the scope of the Bill. This Bill will take pretty much anything you like—it is enormous—so I would not have too many concerns about that. I ended up, funnily enough, with a couple of questions, which we can perhaps discuss later. I am curious to know how much of the safety of these batteries is contingent on the way that they are stored, used and maintained. That would be an interesting subject to explore further.

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[The Earl of Lytton (CB)]

My Lords, members of the Committee will be aware that there are concerns relating to the suitability and safety of construction products, especially in the light of the Grenfell phase 2 report, and will know my professional interest in this area.

First, I pay tribute to the clerks in the Public Bill Office for their help in drafting this amendment, although its objectives and the rationale behind it are entirely my responsibility. I consider that the amendment speaks for itself in probing the Government’s intentions and resolve in bringing construction products specifically within the Bill’s scope, although they are not excluded, either by the Long Title or by the matters listed in the Schedule. My underlying purpose is to clarify this Bill’s specific focus in the objective regulation of a construction-related product’s inherent characteristics rather the nature of its use, particularly in combination with other products. To put it another way, it is concerned with the regulation, testing, certification and marketing of products for their specific stated use and application—namely, the aims of the Bill.

The British Board of Agrément—the BBA—is one of the main industry certifying bodies for construction products. In virtually all the BBA certificates I have looked at, it is made clear that the approval is for the specific use and application as presented. This is logical because behind every approval is an assessment or test of some kind that will be specific as to the proposed use. However, we know from the Grenfell phase 2 report how things can be misrepresented. Of course, none of this prevents misuse of some sort, or abuse, but it starts to clarify responsibility as applying to those who have true agency in the specification and use of products, especially where fire safety is concerned. I hope this gives the Minister an opportunity to confirm that, so far, I have got this right.

At the meeting with the noble Lord, Lord Leong, and officials, for which I thank him, it was suggested that while the provisions of the Bill cover construction products, in all probability any regulations would be made under a different legislative provision, such as the Building Safety Act 2022—so I looked in that Act for the word “regulation”. I got 650 hits, which sounds a bit like Henry VIII on steroids, I am bound to observe. I alighted on paragraph 10(1) of Schedule 11 to that Act which states:

“For the purposes of this Schedule, “safety-critical products” means construction products which are included in a list contained in construction products regulations”.


It is getting a bit circular, I suspect. Sub-paragraph (2) states:

“A construction product may only be included in a list under sub-paragraph (1) if … in the view of the Secretary of State any failure of the product would risk causing death or serious injury to any person”.


I would be grateful if the Minister could confirm that I am right in believing that this is the relevant regulation-making measure that might be used in the Building Safety Act to implement some of the provisions of this Bill, if they are not implemented directly. If so, it has to be noted that the Building Safety Act relates to critical life-safety risks to persons, first and foremost. The Bill does not use that metric, so I consider that the relationship between this Bill and the BSA, for example, needs further clarification.

It has long been my professional assessment that if a building is robust, occupant safety is likely to be assured as well, but focusing on critical fire risk which interests itself only with occupants’ risks consigning them to significant risks of an emotional and financial nature if the building lacks durability and is effectively considered expendable. In terms of human life, that is absolutely the right approach, and I get that, but in terms of mercantile practice and peace of mind, it is a philosophy with gaps, especially if the general Building Safety Act approach is one of proportionality or tolerable risk—although I question by whose objective standards those might be measured, but that is another question.

So if I am correct, even allowing for the point that a building is not “product” as a term of art, why regulate such an important matter as construction products to be used in a residential block via different standards as compared with, say, those for a fridge-freezer or a washing machine? As set out in Clause 1(4)(c), we are concerned with a product that could “reasonably be foreseen” to cause damage to property. How is that, in the case of buildings under the BSA, a proportionate or tolerable risk to life? In the Government’s view, does the latter include the former? If so, I would be delighted to get confirmation of that; it is something that I tried to get hold of right the way through the then Building Safety Bill’s time before us. If not, how does the BSA afford the implementation of product safety in construction products?

Note if you will that the assemblage of products and processes used as someone’s home represents their place of safety. It is often their largest investment; it is also often incomparably more valuable an entity than most consumer products, both to them and in market terms. So standards and regulation matter very much. I invite the Minister to enlighten the Committee on this apparent legislative inconsistency.

Had this amendment been debated earlier in the evening, I might have been tempted at this point to have a little rant about British Standards being set behind a paywall—as well as the invidious nature of that when they are also embedded in regulation; the regulation is open source but the BS is not—but I will leave that matter in part to one side for the moment. I appreciate that some of the points I have mentioned go beyond what I discussed in the meeting with the Minister so, if he is unable to answer them right now, perhaps he could write to me before the next stage of the Bill. I beg to move.

[Lord Fox (LD)]

I will briefly respond to the noble Earl. He is right to raise this issue, which is clearly important; we look forward to seeing how the Government respond to it. There are serious issues that need to be addressed somewhere. As has been observed by the noble Lord, Lord Sharpe, and others, the open nature of this Bill offers an opportunity for things like this to be properly discussed and to be, if not solved in this way, perhaps solved in another way.

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is very good to respond to this debate. I am delighted that the noble Lord, Lord Fox, sees that there is some advantage in the way that we have drafted the Bill.

I thank the noble Earl, Lord Lytton, for raising what is a really important matter. We all recognise that there are failings in the system by which construction products are tested, assured and made available for sale. The noble Earl described his amendment as probing whether the Government are prepared to use the powers in Clauses 1 and 2 to regulate products used in construction. The noble Earl has huge professional expertise. He referred to the BBA and the specific approval given but warned of the risk of misuse; I very much take that point.

The straightforward answer is that we think this issue is very important. We intend to bring forward robust regulatory reforms in order to provide confidence in the construction products regime and to ensure that only safe products are used in buildings and infrastructure. To that end, we also intend to ensure that the testing and assessment of products’ conformity must be undertaken by those who are competent, impartial and effectively held to account. We have committed to working with the sector on system-wide reform, including examining the institutions that play a key role in the construction products regime, so that businesses and, in particular, consumers can have confidence in the products and services they purchase. The proposed new clause to be inserted after Clause 2, through the noble Earl’s Amendment 46, would place a duty on the Secretary of State to use the powers and to make provision for construction products regulations within a year of Royal Assent of the Bill.

I turn now to the Building Safety Act 2022, about which the noble Earl made some interesting points. That Act already includes powers to introduce construction product requirements and regulations. We are exploring how best to use those available powers, including their sufficiency—I take his point on that—as part of considering system-wide reform. He will know that since the Grenfell tragedy in 2017 some action has been taken on construction products, but we know that more needs to be done.

In December 2018, regulations came into force that banned the use of combustible materials in and on the external walls of buildings over 18 metres. The national regulator for construction products was established in 2021 and leads on market surveillance and enforcement of construction product regulation across the UK.

The Government extended the period of recognition of CE marking for construction products in September this year to give the industry sufficient certainty to support supply chains and to allow time to address the inadequacies across the wider construction products regime, but we recognise that this action is piecemeal and does not go far enough. We have confirmed that we will respond to the Grenfell inquiry within six months. We are also committed to bringing forward proposals for system-wide reform of the construction products regulatory regime.

I have listened very carefully to the noble Earl’s analysis of the Building Safety Act and his suggestion that it is not sufficient for our purposes. We are considering this and I will write to him in some detail about the points he has raised. But to be fair to him, I have to say that this Bill does not specifically exclude construction products and that there could be an opportunity to use the Bill powers in the future should we discover that the Building Safety Act 2022 may be insufficient.

I hope that he will accept this as a positive response to the issues he has raised.

--- Later in debate ---

[Lord Thomas of Cwmgiedd (CB)]

My Lords, it is an enormous privilege to have been in a position to add my name to these two amendments and to have listened to the elegant description of the way in which they are meant to work, as explained by my noble and learned friend Lord Hope of Craighead.

I come to them from a slightly different perspective. The new Government have brought into being a desire to make the union work as a union by co-operation between the Governments in London, Edinburgh, Cardiff and Belfast. Looking particularly to Cardiff, one would have hoped that this is an ambition capable of easy realisation. These clauses give one an opportunity to mark that stated aim in very clear terms. It seems to me that if one looks at what the two clauses have brought about, which my noble and learned friend has so elegantly explained, one sees that they touch on areas of devolved competence, without any doubt at all, and there are legislative consent Motions before the respective devolved legislatures.

There are two areas, as my noble and learned friend has explained. One is consultation. I have never understood why across the board in areas such as this consultation is not mandatory. The previous Government were not very good at that; they did not uphold it properly, I regret to say. I hope they will now see a changed way through, and I very much hope this Government will accept the first amendment on consultation. I can see no argument whatever for not accepting that change.

The second area, as my noble and learned friend Lord Hope, explained, is common frameworks. He has explained how it is necessary to make the amendment, but I hope there is also something to the amendment that will breathe life back to common frameworks. It is fairly useful to go back to what was said in the communique issued after the heads of Government meeting in 2017:

“As the UK leaves the European Union, the Government of the United Kingdom and the devolved administrations agree to work together to establish common approaches in some areas that are currently governed by EU law, but that are otherwise within areas of competence of the devolved administrations or legislatures. A framework will set out a common UK, or GB, approach and how it will be operated and governed. This may consist of common goals, minimum or maximum standards, harmonisation, limits on action, or mutual recognition, depending on the policy area and the objectives being pursued. Frameworks may be implemented by legislation, by executive action, by memorandums of understanding, or by other means depending on the context in which the framework is intended to operate”.


Those were lofty ambitions. Regrettably, and it is not the occasion to go into it now, those ambitions were not properly realised. I pay especial tribute to what my noble and learned friend Lord Hope did when the United Kingdom Internal Market Act was promulgated in obtaining the clauses to which he has referred. It was only by his skill, diligence and considerable persistence—I say with respect—that we got these amendments through. Unfortunately, if there is not the spirit of co-operation—I regret that such spirit was not there for a lot of the past two or three years, although it came back towards the end, particularly under Mr Sunak’s Government—we cannot begin to hope for the lofty ambitions of a union where the Governments work together being realised again.

I hope that, because we have referred to common frameworks in this legislation, we will see them coming back. Much has been said about the need for co-operation and working together, but I think these two amendments are important because it is often said that men are judged not merely by words but by deeds—one could put it in a more colloquial phrase. It seems that these two amendments, drafted in the Government’s words, are and ought to be the deeds by which the Government show that they really mean to go ahead and operate on the basis of a union where, in these areas of devolved competence, there is co-operation but within a framework that permits divergence. Therefore, I very much hope that the principle of these amendments will be accepted, because it is so important to the future of the union.

[Lord Fox (LD)]

My Lords, my noble friend Lord Foster will speak to his Amendment 102 in a few minutes, but it makes sense to follow the noble and learned Lords with my comments on Amendment 47 and the two amendments in my name, Amendments 93 and 96.

It is an enormous pleasure and something of a responsibility to follow two absolutely fantastic speeches on this subject, and I am afraid that my mind did go back to the long nights of the internal market Bill and the tenacity—as the noble and learned Lord, Lord Thomas, set out—of the noble and learned Lord, Lord Hope, in bringing his amendments forward, because a really important thing was eventually done there.

The noble and learned Lord, Lord Hope, referred to the danger of impinging on the devolved authorities. I will give just one practical example and this is not theoretical, because it is already something that the Welsh Government have raised. In their response, the Welsh Government concluded that

“there are relevant provisions in the Bill which, for the purposes of Standing Order 29, are within the legislative competence of the Senedd and therefore a Legislative Consent Memorandum (LCM) is required”.

I do not think that is disputed by the Government.

For example, the power within Clause 1(1)(a) could be used to reduce or mitigate risks presented by products that endanger the health of a person, distinct and separate from any risks to a person’s safety. The use of “health” in Clause 1(4) broadens the scope of how power could be exercised beyond simple product safety, which is a reserved matter, and enables provision to be made for public health purposes, which is an area within the Senedd’s legislative competence. This is just one example.

In their response document, the Welsh Government raise issues covering product regulations, product requirements, emergencies, information sharing, cost recovery, consequential amendment of certain Acts, interpretation, and the Schedule. Happily, the Welsh Government seem okay with Clauses 5 and 6, but the rest of the Bill forms a grey area around competence and responsibility.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

Consideration of Commons amendments
Tuesday 23rd April 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, when I heard that the Government were bringing forward amendments to this Bill in the Commons, I was somewhat suspicious, but I am pleased to say that it seems, after yesterday, the Minister has migrated to a slightly calmer situation today, as the amendments in front of us are all amendments that we can pass without too much ado. Amendments 3 to 6 are useful clarifications of where we should be; the Commons has done a good job in clarifying that area and that should be noted. I am sure that Amendments 15 and 16 will be an understandable change to the original amendment of the noble Lord, Lord West. I would like again to thank the Minister and the Bill team for their openness and their help in working through these amendments and, of course, the previous Bill. With that, we on these Benches are happy to accept these amendments.

[Lord Coaker (Lab)]

My Lords, once again, I thank those in the intelligence community who defend our country. I thank all MPs and Peers from both Houses for their dedicated scrutiny of the Bill, which we fully support. As the noble Lord outlined, it is a good Bill that has been improved by your Lordships’ scrutiny, and it benefited from starting in your Lordships’ House before it went to the other place. I thank—as did the noble Lord, Lord Fox—the Bill team for their work and for their genuine engagement with us as the Bill progressed. I thank the noble Lord, Lord Anderson, for the detailed report that he did, which led to much of what we see in the Bill, and it is good to see the noble Lord in his place.

Computer Systems: Independent Testing

Lord Fox Excerpts

Monday 12th February 2024 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My noble friend raises some good points and, as I said, the Government are considering the right way to do that. If I talk about some of the difficulties, it might illustrate this point to the House. Amending legislation to enable cybersecurity activities involves accessing computer systems, and the data is complex. This needs a lot of thought. We would need to establish what constitutes legitimate cybersecurity activity and the boundaries of such activity. We would need to consider who should be allowed to undertake such activity, where the professional standards would need to be complied with and what reporting or oversight would be needed. We cannot make changes that would prevent law enforcement agencies and prosecutors investigating and prosecuting those who commit cybercrimes. It is right to consider this carefully and that is what we are doing.

[Lord Fox (LD)]

My Lords, the Minister set out a long list of things that need considering. I understand his point, so could he perhaps tell us the timetable for this process, when we might hear the verdict on all these considerations and perhaps see some legislation before your Lordships’ House?

[Lord Sharpe of Epsom (Con)]

My Lords, the public consultation on this process concluded only in November 2023, so we have not had a huge amount of time to consider all the responses. As I have explained, we will be reviewing how to take forward the recommendations and will update Parliament in due course.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

3rd reading
Tuesday 30th January 2024 Lords Chamber

[Lord Anderson of Ipswich (CB)]

My Lords, I echo all the thanks that came from the Minister. I do not think I can add to his list, but I certainly endorse everything he said.

Bills of this nature can be controversial. We are seeing this in some other parts of the world at the moment. That was not the case in your Lordships’ House. That is testimony to the care with which the Bill was prepared, the civilised way in which it was debated and the openness of the Government to some of the important points made during our debates. I single out in particular the work of the Intelligence and Security Committee for the great scrutiny that it applied to it.

If I may, I will depart briefly from the studied impartiality associated with the Cross Benches. With the Government and Opposition so closely aligned on a Bill, it was particularly useful that we heard from the Liberal Democrats—with their sometimes annoying but rather necessary process of probing amendments. They caused everyone to think carefully about what we were doing. All in all, it was a happy experience for me. I hope that this is a good model for future Home Office Bills.

[Lord Fox (LD)]

My Lords, having been cleared to annoy your Lordships’ House, I will do my best to do so.

This Bill started in your Lordships’ House and now heads to the Commons. Its primary purpose of enabling the intelligence services to better build their data models and teach their AI systems has been left completely unmolested by your Lordships. However, other parts of the Bill have attracted a fanfare of concern from certain external parties—particularly the large platforms. Whether the Government and Apple are at cross purposes or the Minister really is out to get it, we in your Lordships’ House were unable to muster sufficient traction to find out or clarify. It is now up to the MPs if they choose to pick up that particular baton.

There was also an unresolved issue around the triple lock and the Prime Minister’s role when they might be in conflict. Again, this has moved from our orbit. I hope the tenacity of the noble Lord, Lord Anderson, and the noble and learned Lord, Lord Hope, might still be involved somehow between here and the other place. The Minister raised the important issue of legislative consent. I hope he is successful in these negotiations.

I echo what other noble Lords have said. This has been a well-mannered and constructive process of discussion, with everybody moving in the same direction, albeit at different speeds.

I thank the Minister and the team he named for their time, availability and openness in our discussions. I also thank all the many external organisations and individuals who took time either to meet and brief or to send information which helped inform our debate. The discussion was greatly enhanced by the noble Lords, Lord Coaker and Lord Ponsonby, from the Front Bench, and by colleagues on their Benches, as well as the Cross Benchers. They played a pivotal role in our discussions.

Finally, I thank the home team: my colleague, my noble friend Lord Strasburger, and, most of all, Elizabeth Plummer in the Lib Dem Whips’ Office, without whom nothing is possible.

Investigatory Powers (Amendment) Bill [HL]

Lord Fox Excerpts

Report stage
Tuesday 23rd January 2024 Lords Chamber

Moved by

[Lord Fox]

1: Clause 2, page 6, line 7, after “must” insert “, as soon as possible and in any event within 24 hours,”
Member’s explanatory statement
This amendment requires a person granting an authorisation in urgent cases to notify a Judicial Commissioner within, at most, 24 hours that they have done so.

[Lord Fox (LD)]

My Lords, I will speak also to Amendment 7, which is in my name. These amendments require a person granting an authorisation in urgent cases to notify a judicial commissioner within, at most, 24 hours. This amendment would make it mandatory that, when the intelligence services use type 7A and 7B data for urgent operational purposes, they must report this to a judicial commissioner within 24 hours.

As your Lordships know, the current proposal in the Bill is three days. As it stands, the intelligence services can use those three days to interrogate a dataset that is ultimately ruled offside by the judicial council—three days to deploy AI models that work very quickly, in moments. The Minister responded, highlighting extra cost as a possible reason not to pursue this. Plainly, with all due respect, that is not true, because the data has to be reported anyway, and bringing it forward by a couple of days is not a relevant concern.

The spectre of weekends has also been raised. I assume that, given that this process is to facilitate urgent investigations, the intelligence services themselves will be working on Saturday and Sunday, and it is up to them to report their activity. Amendments 1 and 7 do not change the time duty for the judiciary to respond, so this would not affect the operation of the urgent inquiry. Should they not respond until Monday or otherwise, it is not the concern of the services. Clearly, it puts pressure on the judicial commission to some extent, but the intelligence services will have met their side of the obligation and can carry on with their important and urgent work until such time as the judicial commissioner makes a ruling. In any case, I am sure that there will be duty rosters and such things going on for this, so, again, I am not sure that the weekend is a concern.

Another argument that has been advanced and may yet return is that other legislation uses three days, so this should, too. The whole point of the Bill is to take advantage of new and innovative technology. It seeks to recognise the differences and change regulations accordingly. If the technology changes, as it does as a result of the Bill, so should reporting criteria. If there are other times that are different, perhaps we should be looking at those rather than at this amendment. In this case we are dealing with new technology, where artificial intelligence, once trained, can be deployed on data—which may or may not be allowed until such time as the judicial commissioner has ruled—and AI can produce its answers in minutes, perhaps hours.

In Committee I proposed that the use of this data for urgent operations should be reported immediately. I recognise that that was a very unreasonable suggestion, which is why these amendments specify within 24 hours, which is a fairer proposal.

In Committee, the Minister’s words on what happens to information retrospectively ruled unusable were helpful:

“The relevant information must be removed from the low/no dataset and either deleted or a Part 7 warrant sought”.—[Official Report, 11/12/23; col. 1743.]


However, additionally in Committee, various ex-services Peers confirmed what I knew, which is that once a fact is known by service personnel, it is not forgotten—it cannot be unknown. The noble Baroness, Lady Manningham- Buller, and other noble Lords were very clear on that.

This amendment is designed to limit the amount of unforgettable information that can be derived from inappropriate datasets. I will listen hard to the Minister’s words, but, unless he has found a different and more compelling argument than those already deployed, I will press Amendment 1.

I am pleased that the Government have agreed that, in the event of Amendment 1 being agreed, Amendment 7 will be treated as consequential. I beg to move.

--- Later in debate ---

[Lord Butler of Brockwell (CB)]

My Lords, as a former member of the Intelligence and Security Committee, perhaps I may say how much I endorse what has been said by the noble Lords, Lord West and Lord Murphy, and welcome many elements in the—

[Lord Fox (LD)]

We have had the speeches on this group and are moving to a vote. I am sorry to interrupt the noble Lord.

I thank the Minister for his comments and, indeed, the noble Baroness, Lady Manningham-Buller. My interpretation—perhaps I am wrong—of the nature of this Bill was that it was to introduce a new class of data and to deal with it. It was not to reach back into existing law and change it. The noble Baroness raised some important points about why I should have been concerned about the other data, which I did not reach back into. I am happy to advise my colleagues in the Commons and perhaps they can do that, too. However, taking on face value the nature of what we were seeking to achieve today, we looked at this data and came up with this conclusion. We have heard the arguments, but I am afraid that I am not persuaded by them and I would like to test the will of the House.

--- Later in debate ---

[Lord Fox (LD)]

I shall be brief. Not for the first time, your Lordships are in debt to the noble Lord, Lord Anderson, for intervening on an issue that I think all of us failed to note. His request of the Minister is helpful, and I hope the Minister will be able to respond. There is an alternative process which I could suggest to the Minister—I have not had a chance to talk to the noble Lord, Lord Coaker, about this. If the Minister wanted to withdraw this amendment and bring it back at Third Reading, which is applicable in certain circumstances. I am sure we would be very flexible in permitting that as well.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, we support the introduction of the Government’s amendments. I echo what the noble Lord, Lord Fox, said about the amendment in the name of the noble Lord, Lord Anderson, and I look forward to the Government’s response on that point.

I would also be interested to hear what the Government have to say about my noble friend Lord West’s amendments. He has taken a keen interest in this part of the Bill, and I hope the Government will be able to answer the questions, in particular on data disclosure powers, as I think they can give a more detailed response to the expansion of disclosure powers to regulatory bodies than was given in the original legislation. It is also very likely to be further analysed and looked at as the Bill moves down to the other end of the Corridor. Nevertheless, we support the amendments as they are currently.

--- Later in debate ---

Moved by

[Lord Fox]

21: Clause 16, page 34, line 29, leave out from “insert” to end of line 30 and insert ““(where the requirement or restriction applies to a person within the United Kingdom)”.”
Member's explanatory statement
This amendment specifies that enforcement of retention notices applies only to UK recipients of such notices.

[Lord Fox (LD)]

My Lords, I will move Amendment 21 and speak to the other amendments in this group in my name.

Amendment 21 specifies that the enforcement of retention notices applies only to UK recipients of such notices. It is one of a suite of amendments in this group that return to the issue of extra-territoriality— I see the Minister blow out his cheeks at the prospect. Amendments 22, 25, 28 and 31 are similarly directed and each largely seeks to limit extra-territoriality by ensuring that operators can make changes to their services for users outside UK jurisdiction.

The reason for tabling the amendments, the others of which I will not move, is that there remains a huge gulf of understanding between the tech companies and the Government when it comes to the interpretation of the Bill with respect to its territorial reach. I am again presenting the Minister with a golden opportunity to set out in clear language the territorial ambitions that the Government have for this Bill. I believe there is some element of miscommunication going on here, though I am not sure in which direction. I hope that the Minister can dispel that.

Clearly, we have international tech companies that are incorporated in another country with subsidiaries all around the world and data residing in many different domains—companies that offer services to customers all over the world. In essence, we need to understand what would happen as a result of this Bill if such a business proposed to change a global service that is used by consumers all over the world, including in the UK. How do the Government use this Bill to deal with such situations? I am looking forward to the response.

Amendments 23, 24, 29 and 30 would raise the threshold for calling in a change from “negative effect” to “substantially limit”. Again, this increases the bar before the Government can start the process. Negative effect is a very low bar which will catch almost everything. It is not in the interests of the authorities to have everything coming through. There needs to be some sense of funnel. This is an opportunity for the Minister to define what negative effect is and what it is not, because it is a very low bar. He would be wise to take our advice and look at the language there, certainly when it comes to the code coming later.

Moving on, my Amendment 27 is a retread of an amendment I tabled in Committee, and it was there as a placeholder. I am pleased to see that it is unnecessary, as government Amendments 26 and 32 very much embrace the spirit of what I was seeking to achieve in that amendment. I thank the Minister for responding, and therefore will not be speaking to or indeed moving Amendment 27.

I now turn to Amendment 35. Currently, while there is a requirement for the Secretary of State to consult the operator before giving notice, there is no requirement on the Secretary of State to consult ahead of making regulations that will specify what “relevant change” includes, and therefore what needs to be notified. My Amendment 35 therefore introduces a requirement for pre-legislative consultation on the definition of “relevant change”. The amendment specifies that the Secretary of State must consult the Technical Advisory Board. There is a precedent for consultation with this board in Section 253(6) of the 2016 Act. As your Lordships know, the Technical Advisory Board is comprised of independent and industry representatives; the amendment also specifies a wider range of consultees.

The amendment then requires the Secretary of State to have regard to the impact on users, including on their privacy and on operators’ ability to innovate. Again, there is precedent for this in the 2016 Act. Such considerations must be taken into account when a public authority is deciding whether to issue a TCN or NSN, or where a judicial commissioner approves a DRN. As such, we feel it is worth while also to consider these factors when legislating for a “relevant change”, because delaying a critical security update could negatively impact users and operators. In a sense, all we are asking for is consultation. We are not asking to change the law, and this gives the Government a power to abide by that consultation or not. But we feel that this is an important definition, and it needs to be more widely consulted on.

I hope the Minister will agree, but in the event that he declines, I will be moving Amendment 35. I beg to move Amendment 21.

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, we have had much welcome interaction from stakeholders on the issues summarised in this group, as well as some useful briefings from the Home Office and the noble Lord’s team, for which we are grateful.

As the noble Lord, Lord Fox, has just said, there appears to be a gulf in both position and understanding between the Government and the tech companies, both on the principle of the notice and its details, which is, in a sense, frustrating scrutiny of the Bill. I understand that there is a disagreement about the introduction of notification notices in general. It is right that we look at the details to ensure that the process takes place in a way that reflects the realities of international law, and the need of the intelligence services to maintain levels of data access and the necessary safeguards.

Concerns raised by stakeholders keep striking at the same places: how this notice would work with access agreements with other countries; why there is no double lock on the notification notice, despite the clear impact it would have on tech companies’ activities; and why the definition of telecoms operator is perhaps in reality wider than the Government intend.

We will not be supporting Amendment 35, in the name of the noble Lord, Lord Fox, although we understand the intent behind it. We encourage the Government to keep talking to stakeholders, and we believe that this part of the Bill will benefit from further discussion in the other place.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lords, Lord Ponsonby and Lord Fox, for their remarks in this debate. I reassure the noble Lord, Lord Fox, that any cheek-blowing he witnessed was more a reflection of the previous marathon speech than a reflection on his amendments.

Amendment 21, moved by the noble Lord, Lord Fox, would require that the enforcement of data retention notices—DRNs—would apply only to UK recipients of those notices. DRNs and technical capability notices—TCNs—can be given to a person overseas, but only TCNs are currently enforceable overseas. Clause 16 seeks to amend Sections 95 and 97 of the IPA to allow the extraterritorial enforcement of DRNs in order to strengthen operational agility when addressing emerging technology, bringing them in line with TCNs. It is vital to have this further legal lever, if needed, to maintain the capabilities that the intelligence agencies need to access the communications data they need to, in the interests of national security and to tackle serious crime.

The Government therefore oppose Amendment 21 as it goes fundamentally against what the Government are seeking to achieve through Clause 16 and would not provide any additional clarity to telecommunications operators. As DRNs are already enforceable against UK recipients, there is no need to re-emphasise that in the Bill.

I turn to the amendments to Clause 17 concerning the notice review period. This clause is vital to ensure that operators do not make changes that would negatively impact existing lawful access while a notice is being comprehensively reviewed. Maintaining lawful access is critical to safeguard public safety, enabling law enforcement and the intelligence community to continue protecting citizens during the review period.

Let me be clear: operators will not be required to make changes during the review period to specifically comply with the notice. Rather, under Clause 17 they will be required to maintain the status quo so that law enforcement and intelligence agencies do not lose access to any data that they would have been able to access previously. The review process is an important safeguard, and that right of appeal will remain available to companies.

On Amendment 27, tabled by the noble Lord, Lord Fox, the Government have noted the strength of feeling from parliamentarians and industry regarding the current uncertainty over the timeframe for conducting a review of a notice. We have therefore tabled Amendments 26, 32 and 33 to Clause 17 to address that uncertainty and provide further clarity and assurances regarding the notice review process.

The existing powers within Sections 90 and 257 of the IPA do not give the Secretary of State the power to specify in regulations the time period within which a review of a notice must be completed. The Government are therefore introducing a new regulation-making power to enable the Secretary of State to specify in regulations the length of time the Secretary of State can take to reach a decision on the review of a notice upon receipt of the report by the judicial commissioner and the Technical Advisory Board, and the overall length of time that a review can take.

The amendments will also make provision for a judicial commissioner to issue directions to the Secretary of State and the person seeking the review, as they see fit, to ensure the effective management of the review process. That will give the judicial commissioner the power to issue directions to both parties, specifying the time period for providing their evidence or making representations, and the power to disregard any submissions outside those timelines. These amendments will provide operators the certainty they require regarding how long a review of a notice can last, and therefore how long the status quo must be maintained under Clause 17. They will also provide further clarity on the process and management of that review.

Specifying timelines will require an amendment to the existing regulations concerning the review of notices. The Government commit to holding a full public consultation before the amendment of those regulations and the laying of new regulations relating to Clause 20, which provides for the introduction of the notification notices. Representations received in response will be considered and used to inform both sets of regulations, which we have clarified in the Bill are subject to the affirmative procedure.

Amendment 35, tabled by the noble Lord, Lord Fox, seeks to specify in statute who the Secretary of State must consult before laying regulations relating to Clause 20 and the introduction of notification notices, and the factors that the Secretary of State must have regard to when making those regulations. I hope the commitment that I have just made to hold a full public consultation provides the necessary reassurance to the noble Lord that all relevant persons will be consulted before making the regulations, and that he will agree that is it unnecessarily prescriptive, and potentially restrictive, to put such details in the Bill.

Amendments 22, 25, 28 and 31, also tabled by the noble Lord, Lord Fox, seek to limit the extraterritoriality of Clause 17 and ensure that operators can make changes to their services and systems for users in other jurisdictions during a review. To be clear, the Bill as currently drafted means that companies can make changes to their services during a review. They could choose to roll out new technologies and services while the review is ongoing, including in other jurisdictions, so long as lawful access is built into them as required to maintain the status quo. Furthermore, the status quo will apply only to whichever of their systems and services are covered by the notice in question. Naturally, anything outside the scope of the notice is unaffected by the requirement. I also emphasise that the control of telecommunications systems used to provide telecommunications services in the UK does not stop at borders, and it is highly likely that any such arbitrary geographical limitations would in fact be unworkable in practice.

Amendments 23, 24 and 29 seek to raise the threshold with regard to relevant changes that an operator must not make during a review period to a change that would “substantially limit” their ability to maintain lawful access. This would not make the position any clearer as “substantially” is a subjective test. Moreover, it would constrain Clause 17 in a way that would fundamentally prevent it from achieving its objectives: to ensure that the same level of lawful access available before the notice was issued is maintained during a review period.

Lawful access provides critical data to law enforcement and intelligence agencies. Constraining access to data that was previously available, in a limited capacity or substantially, may seriously undermine investigations and the ability to protect our citizens. It is therefore vital that the status quo is maintained during the review period. It would also be difficult to define “substantially limit” without referring to a “negative effect on” a capability.

Amendments 36 to 38 to Clause 20, also spoken to by the noble Lord, Lord Fox, seek to raise the threshold and provide more proportionality. As I have emphasised on every occasion we have debated the Bill, necessity and proportionality constitute a critical safeguard that underpins the IPA. Authorisations are approved by an independent body and all warrants and notices must be approved by a judicial commissioner. There is considerable oversight of authorisations, meaning that the threshold is already high. Necessity and proportionality justifications are considered for every request for a notice, warrant or authorisation and, by extension, whether it is reasonable to issue that request to the operator. Once operators are in receipt of such a request, they are required to provide assistance. The proposed amendments are therefore not required.

Finally, government Amendment 34 is a consequential amendment necessitated by the introduction of Clause 19, which amends the functions of a judicial commissioner to include whether to approve the renewal of certain notices.

I am grateful to all noble Lords who have spoken in this debate—

[Lord Fox (LD)]

Before the Minister sits down, winding back to the point about territoriality, he spoke of national boundaries as being arbitrary. It would help me to understand what kind of activity the Government envisage reaching across those boundaries, which he refers to as arbitrary; in other words, what would the Government be seeking to do extraterritorially?

[Lord Sharpe of Epsom (Con)]

If it would help, I am happy to write to the noble Lord with some sensible and practical scenarios because I do not think it is appropriate to make them up at the Dispatch Box, if that is acceptable.

I was just about to thank the noble Lord for the time he has taken to talk me through his concerns ahead of Report and at various other stages of the Bill on various other issues. However, I hope that I have provided reassurances through my comments at the Dispatch Box and the government amendments that we have tabled. I therefore invite the House to support these amendments and invite the noble Lord to withdraw Amendment 21 and not move the others he has tabled.

[Lord Fox (LD)]

I beg leave to withdraw the amendment.

Amendment 21 withdrawn.

--- Later in debate ---

Tabled by

[Lord Fox]

35: Clause 20, page 39, line 23, at end insert—
“(3A) Before making regulations under this section the Secretary of State must consult the following persons—(a) the Technical Advisory Board;(b) persons appearing to the Secretary of State to be likely to be subject to any obligations specified in the regulations;(c) persons representing persons falling within paragraph (b); and(d) persons with statutory functions in relation to persons falling under that paragraph.(3B) When making regulations under this section the Secretary of State must have regard to—(a) the public interest in the integrity and security of telecommunications systems and postal services;(b) the impact on users arising from any delay to implementing relevant changes;(c) the desirability of encouraging innovation by relevant operators; and(d) any other aspects of the public interest in the protection of privacy.”Member's explanatory statement
This amendment, together with others in the name of Lord Fox, place a duty on the Secretary of State to consult with relevant persons before making regulations that will specify what a “relevant change” will include.

[Lord Fox (LD)]

I heard what the Minister said on Amendment 35, and it is reassuring that the consultation will be occurring, so I do not intend to move Amendment 35.

Amendment 35 not moved.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, at Second Reading I raised the issue of the Prime Minister in a slightly different context, but it has taken the legal brains of the noble Lord, Lord Anderson, and the noble and learned Lord, Lord Hope, to put it into a frame. I am happy to have co-signed that, and happy to find myself back on the same side as them on this argument.

It is clear that we will not resolve this here today, but it is perhaps something that we will take to the gap between here and the Commons to try to resolve. I rely on the wisdom of noble Lords who have spoken to take this forward.

On the other point, I support the amendments of the noble Lord, Lord West, and I hope that the Government will find his persuasion conducive.

[Lord Hope of Craighead (CB)]

My Lords, I spoke in Committee about the difference between “unavailable” and “unable”. I am greatly encouraged by Amendments 39 and 43 proposed by the noble Lord, Lord West. The one point of difference between us is that he narrows the meaning of “inability”, for reasons he has explained. If it came to a vote, I think I would support his amendments—but, like the noble Lord, Lord Anderson, I think that further thought needs to be given to whether that narrowing of “inability” or “unable” is really appropriate, considering the effect that it has, particularly in situations of conflicts of interest.