Information Sharing (Disclosure by the Registrar) Regulations 2024
Lord Leong Excerpts(5 days, 12 hours ago)
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Lord Leong
That the Grand Committee do consider the Information Sharing (Disclosure by the Registrar) Regulations 2024.
Lord Leong (Lab)
My Lords, in speaking to the information-sharing regulations, I shall also speak to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. These regulations are part of a series of statutory instruments designed to implement the reforms introduced by the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act.
This Government are committed to holding accountable those who exploit our open economy. For instance, in the past few weeks, we have outlined our new anti-corruption agenda and our goal to make the UK a hostile environment for all forms of corruption. Corporate transparency is vital in tackling such corruption and economic crime. The 2023 Act enhances corporate transparency in the UK by reforming Companies House, granting it greater powers to verify information, tackle economic crime and improve the reliability of the companies register. At the same time, the Act introduces reforms to Companies House processes and increases protections for individuals at risk of fraud and other harms.
Work to implement the changes at Companies House is well under way. Since March, stronger checks on company information have allowed the organisation to cleanse the register of false and suspicious information. In parallel, Companies House is undergoing a significant organisational transformation to support the delivery of these reforms. Although considerable progress has been made, there is still much to do. We are here today to consider the next set of regulations to the Companies House reform programme. I will start with the Information Sharing (Disclosure by the Registrar) Regulations 2024.
The 2023 Act enhanced the registrar’s ability to share non-public information with enforcement agencies and other public authorities to support their functions. Additionally, the 2023 Act empowered the Secretary of State to make regulations enabling the registrar to share information with designated persons for specified purposes. For example, there may be situations where it would be advantageous for the registrar to share information with certain officeholders tasked with managing insolvency proceedings. These officeholders are typically insolvency practitioners but could also include the official receiver or, in Scotland, the Accountant in Bankruptcy.
While the Companies Act 2006 permits the registrar to share information with agencies when carrying out a public function, the work of these officeholders generally pertains to private matters. These include identifying and recovering assets during insolvency proceedings. Therefore, the registrar currently lacks the power to share information with officeholders for such purposes.
These responsibilities often extend beyond asset sales to legal actions. They could involve applying to the court to reverse transactions made before the insolvency took place that disadvantaged creditors. Where a director has allowed a company to continue trading while insolvent, this could also involve seeking an order making that director liable for the additional losses incurred by creditors. The information-sharing regulations will enable the registrar to share crucial information with insolvency officeholders, enhancing insolvency processes and helping to maximise returns for creditors.
I turn to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. It is key that individuals running companies and other entities register their details so that they can be held accountable for the entity’s affairs. However, having one’s personal information publicly displayed can increase the risk of harm, such as fraud, identity theft or cases of domestic abuse.
Currently, an individual can already apply to protect their residential address from the public register in certain cases. Protection means that the address is not publicly visible. However, the law does not allow protection of a residential address that was previously used as a company’s registered office address. Companies House regularly receives requests for protection of these residential addresses from many individuals. These include those at risk of harm because of the public availability of their residential address as a registered office address—for example, those in witness protection, judges and parliamentarians. These regulations are the first of several reforms to enhance the protection of personal information. They will allow applications to protect a residential address where it was previously used as a company’s registered office address.
The regulations also make specific provisions for the scenario of dissolved companies. There are a number of reasons why a party would want to apply to court to restore a dissolved company to the register: for instance, to claim assets or pursue legal claims. To do this, the applicant requires the company’s former registered office address. To support this, these regulations ensure that an application to protect a residential address that was a dissolved company’s last registered office address can be made only from six months after the company’s dissolution. The registrar will also be able to disclose a protected residential address to certain persons who require the dissolved company’s registered office address to make a restoration application.
Lastly, the instrument amends legislation that applies company law to limited liability partnerships, following changes to company law made by the 2023 Act and this instrument.
In conclusion, these regulations strike the right balance between privacy and transparency. Individuals will benefit from greater protection of their personal information, while protected information will be available for law enforcement, public authorities and others with a legitimate reason to access it. Together, these instruments build on the 2023 Act, strengthening our commitment to support legitimate business and tackle economic crime. I hope the regulations will be supported, and I beg to move.
Lord Sharkey (LD)
My Lords, we will support both of these instruments, and I will be brief. The first instrument is a straightforward and necessary increase in the disclosure powers of Companies House and, as the Minister has made clear, the SI extends disclosure powers to cover non-public organisations and specifies to whom information may be disclosed and under what circumstances. All this seems clear and with obvious benefits, although I confess that I am not at all clear what a “judicial factor”, mentioned in Regulation 3(g), is or does. Perhaps the Minister could enlighten us.
We are generally happy with measures that improve the utility or performance of Companies House. Appropriately increased and targeted disclosure powers are definitely a good thing, but arguably more important is the ID-checking regime at Companies House. In that context, it was good to see Companies House quoted in last Wednesday’s Times, saying:
“We take fraud seriously and all allegations are fully investigated. We are preparing to introduce compulsory identity verification checks. This will provide greater assurance about who is setting up, running, owning, and controlling companies”.
That is welcome news, if a little overdue. Can the Minister say when Parliament will see these new and obviously vital proposals?
The second SI essentially, as the Minister said, deals with the disclosure of residential addresses on the public companies register. It proposes new circumstances in which these addresses may be protected from exposure via Companies House registration details. Here, I declare a kind of interest: I have, for the past nine years, benefited from a Companies House exemption, under the existing regime, from disclosure of my residential address. The circumstances surrounding my exemption were clear and compelling enough to qualify for non-disclosure, but they would not serve to protect from exposure any address currently or formerly used as a company’s registered office.
This instrument will allow an application to protect a residential address when it was previously the registered address for the company, and this will apply, mutatis mutandis, to LLPs. There are appropriate protections against using this new power to frustrate challenges to the dissolution of a company, as the Minister mentioned. This all seems very sensible, and the EM notes in paragraph 5.8:
“Companies House has for a long time been inundated with requests for this kind of protection, as the previous law prevented many people from protecting publicly available address information that put them at risk, for example in cases of domestic abuse”.
In paragraph 6.5, the EM says:
“Further regulations will be made in due course to introduce additional measures preventing the abuse of personal information on the companies register”.
I encourage the Minister to make rapid progress on these new proposals. Companies House needs all the help it can get.
Lord Leong (Lab)
My Lords, I am very grateful for all contributions and I thank especially the noble Lord, Lord Sharpe, for supporting these regulations. As he knows, the work was undertaken by the previous Government and we have made it a legal entity and brought forward the power to implement the legislation. I am sure there is common ground here. We all want to fight economic crime and ensure that privacy and transparency are balanced.
I will respond to the questions from the noble Lord, Lord Sharpe. On the use of the judicial factor, this basically relates to Scotland. The judicial factor is an officer of the court whose role is to protect the estate itself. This applies only in Scotland. On the issue of identity verification, work is being done and we hope to see proposals at some point next year.
On the wider question of Companies House reform, let me share with noble Lords what has been done so far. From March 2024, the registrar has to be able to query a request for information, remove material from a register of their own volition or on application in a more timely way, analyse information for the purpose of crime prevention or detection, disclose information from anyone for the purpose of the exercise of the registrar’s function, and move the registered office address, service address, and principal office address to default addresses.
Companies now have to comply with the new rules about company and business names. A company must not be registered by a name that is intended to facilitate criminal purposes and Companies House has greater powers to direct a company to change its name or to change the name if the company is not compliant, to declare its lawful purpose, notify and maintain an appropriate registered office address and registered email addresses and confirm new information in annual confirmation statements.
Companies House has commenced a process to remove names and addresses used without consent. This includes the removal of officers and people with significant control, where previously those wishing to have their details removed would have had to apply to the courts. So far, Companies House has removed 50,400 registered office addresses, 39,600 office addresses and 36,700 PSC addresses, redacted 37,100 incorporation documents to remove personal data used without consent and removed 7,800 documents from the register, including 800 false mortgage satisfaction filings that would have previously required a court order. So Companies House has done a lot, but there is further to go. The reform of Companies House is ongoing and more instruments will be brought to the House, I hope, next year.
In summary, today’s debate has highlighted the importance of getting the Companies House reforms in the 2023 Act right. These regulations mark another vital step towards realising these goals and I commend them to the Committee.
Product Regulation and Metrology Bill [HL]
Lord Leong ExcerptsWednesday 11th December 2024
(1 week, 4 days ago)
Grand CommitteeRead Full debate Product Regulation and Metrology Bill [HL] 2024-26 View all Product Regulation and Metrology Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 18-IV Fourth marshalled list for Grand Committee - (9 Dec 2024)
Lord Sharpe of Epsom (Con)
My Lords, before I start on these amendments, I thank the noble Lord, Lord Leong, for the generous letters that he sent the Committee after previous sessions, which answered a number of questions. I generally commend the Government on their spirit of co-operation on these matters.
I am sincerely grateful to my noble friend Lord Holmes for introducing this critical amendment and for supplying his PIN. Like my noble friend Lord Kirkhope, it very much appeals to me too, because the principle of being inclusive by design reflects a visionary and much-needed step forward in ensuring that products in the UK are accessible and equitable for all members of society—as my noble friend so eloquently and powerfully set out.
The establishment of an inclusive-by-design standard underscores our collective commitment to creating a society where accessibility and inclusion are the norm and not the exception. Moreover, inclusive design benefits everyone, as the noble Baroness, Lady Bennett, pointed out. Features designed for accessibility, such as voice commands or larger interfaces, often enhance usability for all users. For businesses, I would have thought it an opportunity to innovate and differentiate themselves in a very competitive market. For consumers, it is a guarantee that their needs are being respected. So I have no hesitation at all in supporting Amendment 79.
I am also happy to support Amendments 52 and 53. I will not say much about them except to add that Amendment 52 also addresses pertinent and indeed poignant national security or—perhaps this is a better expression—security of supply concerns. A complete national understanding of supply chains makes unarguably good sense.
In conclusion, I wholeheartedly support Amendment 79 and am very sympathetic to Amendments 52 and 53, and I urge the Government to think seriously about them.
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.
Lord Jackson of Peterborough (Con)
My Lords, it is a pleasure to have the opportunity to contribute to your Lordships’ Committee. I apologise for not having been here throughout all the deliberations on the Bill. I was called away by the excitement of the Football Governance Bill, but I am back to speak to my Amendment 92.
This is pretty straightforward. That the Bill will be unamended is a big assumption, because I sincerely hope that the Government will see fit to bring forward their own amendments or accept opposition amendments on Report—I thank the noble Baroness, Lady Brinton, for her kind words. However, my amendment seeks to fill the gap in appropriate scrutiny and oversight of a very wide-ranging and pervasive Bill, particularly in this respect of potentially creating criminal offences arising from non-compliance.
It is vital that, if new offences are created or if other powers are exercised by Ministers in this clause, it should be subject to some form of rudimentary scrutiny by Parliament. That is why I have tabled this amendment, which says that at least 30 days before making such provisions the Secretary of State must put that rationale into the Library of both Houses in the form of an Explanatory Memorandum.
Let us just remember what this clause on enforcement of product regulations does. It allows, by regulations, the Government to appoint inspectors to
“enter, inspect and search … seize and retain products or evidence of non-compliance … require a person to retain or provide a document or information … dispose of a product or require a person to dispose of a product”.
Those are pretty draconian powers, and they have significant ramifications for civil liberties, the unwarranted interference into the lawful operation of markets, and the potential undermining of due process and norms in the criminal justice system. Most importantly, there is a lack of accountability.
It goes without saying, of course, that I strongly support the amendments from my noble friend Lord Sharpe of Epsom. In fact, I agree with all the amendments in this group, including those from the noble Baroness, Lady Brinton. I do so because—it bears repetition—this is an egregious example of skeleton legislation, as the Delegated Powers and Regulatory Reform Committee found. I also had an opportunity to look at paragraph 12 of the Guidance for Departments on the Role and Requirements of the Committee—the Delegated Powers and Regulatory Reform Committee. I give Ministers half points rather than nil points, because they have actually done half of what the memorandum asks them to do under the heading “Criminal offences”. It says:
“Where a bill creates a criminal offence with provision for the penalty to be set by delegated legislation, the Committee would expect, save in exceptional circumstances, the maximum penalty on conviction to be included on the face of the bill”.
We have seen that, so that is great. But it also says in that same paragraph—and the Government have not met this requirement—that
“where the ingredients of a criminal offence are to be set by delegated legislation, the Committee would expect a compelling justification”.
I am afraid, as with virtually all of the Bill but particularly and specifically on this issue of the creation of criminal offences, that skeleton legislation gives rise to significant risks of the creation of offences, with punishment meted out to businesspeople and others associated with commerce without proper scrutiny and oversight.
For those reasons I strongly support all the amendments in this group, and I look forward to the Minister addressing the particular issue of what are the compelling reasons that necessitate that wording in the Bill and why the Government have chosen to go in that direction. I hope he will think again on Report about perhaps amending the wording in the Bill, as we have argued for today.
Lord Leong (Lab)
My Lords, I thank noble Lords for their amendments in this group related to criminal offences. This is an important area, and I am grateful for the knowledgeable and informed contributions in this debate, demonstrating the significant expertise in this House. My response sets out the general principles relating to criminal offences, but I will try to answer many of the various questions that noble Lords asked.
As I mentioned previously, I am very aware of the concerns that noble Lords have raised on delegated powers and the importance of consultation and scrutiny more generally. In particular, I am grateful for the thoughtful and comprehensive reports of the Delegated Powers and Constitution Committees. I have mentioned this before: noble Lords will be aware that we have provided responses to both committees, and my colleague, Minister Madders, and I gave evidence to the DPRRC. I was very grateful for the opportunity to explain the Government’s approach to these issues.
I begin by stating a central point. The severity of the harm caused by breaches of regulations across different product sectors varies. To proportionately reflect harm, offences and penalties must be tailored to individual sectors and duties.
I hope noble Lords would agree that, with regard to criminal offences, the rule of law is best served by precision. Only by having criminal enforcement provisions alongside product requirements can proportionality be ensured. Take, for example, a penalty for failure to properly mark a product: the harm will be very different for a highly sensitive product within a nuclear energy installation versus a lower-risk product.
As well as creating issues of proportionality, codifying criminal offences and penalties in the Bill would likely lead to enforcement gaps later. Offences would not correspond directly to new duties created for existing supply chain actors or responsibilities placed on new actors who enter the supply chain over time.
Lord Bingham’s principles require that the law be accessible and, so far as is possible, intelligible, clear and predictable. Setting out the details of offences and penalties in the Bill would undermine those principles. It would necessitate drafting speculative penalties to fit duties yet to be created. That would leave ambiguity over to whom offences may apply in future and create statutory maximum penalties that would be disproportionate for some actors.
Lord Bingham’s principles go further to support the approach of tailoring clear, proportionate offences and penalties that correspond to supply chain actors’ duties as they arise over time. If we instead place the detail in primary legislation, we risk undermining those crucial principles by locking in terms that become ambiguous over time as business models and products evolve, and with penalties that can cater to only the most serious version of the offence. Setting the maximum penalty in primary legislation means that the penalty can be calibrated to only the most serious version of the offence, leaving a broad discretion to judges to determine the appropriate sentence for less serious cases. Legal certainty and predictability of applicable penalties are better served by specific, tailored provision being set out in secondary legislation.
Noble Lords have highlighted that the DPRRC, in its report on the Bill, recommended that elements of criminal offences are set out within primary legislation. The Government value the work of the DPRRC and the incredibly important role it plays. We have considered its recommendations carefully within the department. However, the approach taken to setting out criminal offences within regulations is not novel. Other Acts that underpin broad regulatory regimes allow for the creation of criminal offences in regulations, including the Building Safety Act 2022, the Retained EU Law (Revocation and Reform) Act 2023 and the European Union (Withdrawal) Act 2018. I also highlight some examples of existing product regulations that set out criminal offences and penalties, such as the Nagoya Protocol (Compliance) Regulations 2015 or the Simple Pressure Vessels (Safety) Regulations 2016.
Noble Lords may also be interested to note that, to ensure proportionality, the maximum criminal penalties that may be implemented by regulations are set out in the Bill and follow existing precedent, as seen in sector-specific regulations such as the Electrical Equipment (Safety) Regulations 2016. This is a key point. Our approach provides this strong safeguard that enables discretion to set lower and more proportionate penalties in secondary legislation, which will also have parliamentary oversight. We submit that secondary legislation ensures parliamentary oversight but also the flexibility required to ensure that we can implement proportionate criminal offences that comply with the vital principles underpinning the rule of law.
Baroness Brinton (LD)
My Lords, the Minister has been very helpful in explaining about the affirmative process, and he has talked about the Explanatory Memorandum, but he has not responded to my questions about the consultation with the Home Office, the Ministry of Justice and the relevant agencies. If that happens, will it form part of the Explanatory Memorandum? My concern is that this is all still led very much by the Department for Business and Trade and does not take account of the concerns and pressures faced by the Home Office, the justice system and their respective arm’s-length bodies.
Lord Leong (Lab)
I thank the noble Baroness for the question. I will need to come back to her on it because I want to be absolutely clear that I am giving her the correct information, rather than me saying something now on the fly.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who contributed to this brief discussion. The noble Lord, Lord Leong, praised our expertise. Can I just say that any expertise he thought he might have spotted in my remarks belongs not to me but to my noble friend Lord Sandhurst, who was very helpful. He cannot be here, I am afraid, and I am not a lawyer.
Unfortunately, in spite of the detailed explanation of the Government’s intentions supplied by the noble Lord, Lord Leong—I am very appreciative of it—I am only partially reassured. I still have some concerns, so I will go back to Hansard and study his remarks carefully, particularly those related to Bingham.
In answer to the noble Lord, Lord Leong, on the list of bodies, I have not seen the letter, so I apologise again if I have repeated something that he has already addressed, but it is fair enough that he agrees that the rule of law deserves provision. I totally agree—that is fair enough—but it does not really seem to explain why there should not be a list of specific enforcement authorities, as per Schedule 5 to the Consumer Rights Act 2015. That seems to give too much latitude, but perhaps the letter explains that, in which case I will cheerfully withdraw these remarks.
In relation to the question asked of me by the noble Baroness, Lady Brinton, we considered following her example, obviously, but we also felt that leaving out subsection (9) would in effect render subsections (10) and (11) null and void. But I totally accept that the noble Baroness has a point about how that could be interpreted, so I will go back, have a look at it and consider what we do next. For now, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom (Con)
My Lords, I will speak to Amendments 72 and 73, and I thank my noble friend Lord Trenchard for signing them. Clause 4 is a short clause dealing with emergencies. It allows for product regulations
“to be disapplied, or to apply with modifications, in cases of emergency”.
It also provides:
“The disapplication … may be made subject to conditions”.
That is it. I wonder what happened to the rest of the explanation that a clause of this type surely deserves. Perhaps the parliamentary drafter was using only headlines and forgot to fill in the blanks.
These amendments are designed to introduce some checks and balances. As the clause is currently written, there is no definition of what constitutes an emergency. There is no definition in Clause 10, which deals with interpretation. Who defines an emergency? How long might an emergency last? How will emergency provisions be enforced? The committees that we have talked about so much have been very clear. We have discussed this many times. The Bill is skeletal in nature and introduces a number of Henry VIII powers. I am only surprised that this clause was not added to the list of clauses that they think should be removed from the Bill in its current form.
My Amendment 72 is merely an attempt to seek answers to some of those questions and to apply a minimal level of parliamentary scrutiny. I simply do not think it is right that an undefined individual or body could introduce undefined emergency powers of an unspecified duration without a basic level of scrutiny —frankly, that way despotism lies.
My Amendment 73 expands on this and would introduce an element of ongoing scrutiny. Again, I can see no reason why the Government would disagree with this because, in their response to the Delegated Powers Committee’s report, they said that
“the Department is committed to … engage with stakeholders … including in cases of emergency”.
I have included that exact form of words in my amendment, as well as requirements to justify the continuing need for these powers, to assess their impact and to introduce some time limits. I cannot see any reason at all why the Government would not accept this amendment, given that, in effect, they have already committed to doing pretty much what it says. I beg to move.
Lord Leong (Lab)
My Lords, once again I thank the noble Lord, Lord Sharpe, for his amendment. I begin by reaffirming that this Government take their responsibility to parliamentary scrutiny very seriously. We have listened carefully to the views expressed and we will reflect on them as we move forward. It is always our aim to strike the right balance between thorough oversight and addressing the technical and practical demands of product regulation.
Amendments 72 and 73 seek to ensure that the use of emergency powers is transparent and proportionate. I fully appreciate the intentions behind these amendments, and I reassure the noble Lord, Lord Sharpe, that we believe that the Bill already provides robust mechanisms for oversight.
Clause 4 is intended to be used in rare emergency situations. It is introduced in this Bill following the recent example of the Covid-19 pandemic, when there was a shortage of personal protective equipment. To be clear, this clause is not about quickly implementing regulations on new products; it is about emergency situations where there could be a need to temporarily disapply or modify existing regulations to allow current products to be brought to market much more quickly. Any regulations made under Clause 4 are subject to the draft affirmative legislative procedure, ensuring that both Houses can scrutinise and approve them. We believe this process provides a balanced and proportionate mechanism for oversight and accountability, ensuring thorough scrutiny.
The Government are also committed to developing a clear framework of how the policy will work in practice, and this will be done in consultation with stakeholders. However, we do not believe it will be necessary to formally lay this framework before Parliament, as the oversight arrangements provided by the draft affirmative procedure for any secondary legislation under Clause 4 are believed to be sufficient.
The Office for Product Safety & Standards will take the lead in developing the framework and will publish guidance on the conditions and procedures for using these emergency powers. The guidance will then be made publicly available to Members of this House and relevant committees on the GOV.UK website which, if needed, can be used to supplement any future scrutiny on emergency measures. In addition, Clause 4 is intended to provide a proportionate response to emergencies, and conditions can be applied which will be context specific. Therefore, any disapplication or modification of regulations will be targeted, with safeguards in place to ensure public safety remains paramount.
As the House can appreciate, emergencies can be unpredictable and cannot always be anticipated in advance. Imposing an initial fixed three-month sunset period and review process for extensions risks reducing the Government’s ability to respond effectively to emergencies that may evolve over time. Instead of applying a fixed three-month sunset period to all regulations, we believe that each regulation in response to an emergency should be targeted and tailored to its unique circumstances. This approach ensures that the measures remain both proportionate and effective, addressing the specific challenges of the emergency and the product or situation involved while avoiding unnecessary constraints.
Lord Jackson of Peterborough (Con)
The Minister is making a powerful argument, but he raised the issue of Covid. He is aware, of course, that it is quite possibly the case that you can expedite fast-track legislation in extremis. He will no doubt know that between 1989 and 2009, 15 Northern Ireland Bills that were terrorism and security-related were fast-tracked through both Houses. So, in a fundamentally very serious emergency situation, you can expedite fast-track primary legislation. I offer that as a suggestion to the Minister.
Lord Leong (Lab)
I thank the noble Lord for that, and I am sure the officials will have taken notice as well.
I must also highlight that, in line with the Government’s commitment to transparency and informed decision-making, proportionate impact analysis will accompany future secondary legislation. This will be prepared in accordance with the Better Regulation Framework, ensuring that Parliament has access to evidence-based assessments that support effective scrutiny.
I hope that I have been able to provide reassurance on all these matters and assure the noble Lord, Lord Sharpe, that the Government have carefully considered the importance of parliamentary scrutiny and sought to strike a careful balance in relation to emergencies. I am happy, as always, to meet the noble Lord or, for that matter, any other noble Lords to discuss with them further our approach in this area. On that basis, I ask for the amendment to be withdrawn and for the other amendments in this group not to be moved.
Baroness Brinton (LD)
I am grateful to the noble Lord, Lord Jackson, for his question because it reminded me that when all the primary and secondary legislation on Covid was going through, most of the references to “emergency” were the definition in the Civil Contingencies Act. That Act is not defined in this Bill, and “emergency” is used loosely on its own. I wonder whether there is a bear trap there. If the department means to use “emergency” in the sense of the Civil Contingencies Act, it may be better and more helpful to name it. If not, will the Minister explain why the use of the definitions in the Civil Contingencies Act are inappropriate?
Lord Leong (Lab)
My Lords, I really do not know the answer to that. Obviously I will find out and write to the noble Baroness.
Lord Leong (Lab)
I am told that we were advised by counsel that this word is more flexible to use. I do not know whether that is sufficient but perhaps we can explore that further.
Lord Sharpe of Epsom (Con)
I again thank the noble Lord, Lord Leong, for his detailed explanation. However, the fact is that that explanation and the recent comment about flexibility rather illustrate again, I am afraid, the point about the Bill. Let us go back to the DPRRC report, Democracy Denied. It states:
“Skeleton legislation signifies an exceptional shift in power from Parliament to the executive and entails the Government, in effect, asking Parliament to pass primary legislation which is so insubstantial that it leaves the real operation of the legislation to be decided by ministers”.
I am afraid that in spite of the noble Lord’s reassurances, that is still very much where we are.
I accept that emergencies are unpredictable. Of course they are, by their very nature: they are rare and emerging situations. But I do not accept the three months argument made by the noble Lord, which strikes me as inconsistent. Surely three months is enough to define and decide on the relative importance, scale or urgency of an emergency. I can see no reason at all why any emergency cannot be defined over the course of 12 weeks, and that would have gone for Covid as much as anything else.
There is some inconsistent logic in the Minister’s replies. I am partially reassured, and obviously some considerable thinking has gone into his replies, which I appreciate, but we will reserve the right to revisit this situation. I beg leave to withdraw the amendment.
Lord Leong (Lab)
My Lords, I thank all noble Lords and noble Baronesses for their contributions in the debate on this grouping of amendments; in particular, I thank the noble Lords, Lord Fox and Lord Sharpe, for their amendments. This Government are committed to supporting businesses as we get the UK economy growing.
I begin with Amendment 82 in the name of the noble Lord, Lord Fox, which was moved by the noble Baroness, Lady Brinton. He specifies that regulations made under Clause 5 of the Bill
“must have regard for the impact of metrology regulations on small and medium sized enterprises”.
The noble Lord has also proposed the publishing of impact assessments of affirmative regulations, to be laid every six months after the Bill’s implementation.
Similarly, Amendments 103 and 104 in the name of the noble Lord, Lord Sharpe, propose publishing a report assessing the Bill’s impact on consumer choice 12 months after the Bill is passed, as well as another report every two years on the economic impacts of the Bill. The noble Lord’s Amendment 104B would further require the Secretary of State to present a report to Parliament detailing the impact of regulations made under the Bill’s powers on SMEs.
I am happy to confirm that the impact of any new regulations will be fully considered through the development of proportionate impact analysis. As I said before, the Better Regulation Framework is the system that government uses to manage the flow of regulation and understand its impacts, including on SMEs and micro-businesses. On 7 December, the Government launched their new Business Growth Service to ensure that it is easier for SMEs to find government advice and support, giving them more time and money.
In line with the Better Regulation Framework, for regulations where significant impacts—above £10 million per year—are anticipated, full impact assessments will be published. For regulations with lower anticipated impacts, a proportionate assessment impact analysis will be completed. These assessments will, as a matter of course, consider the impacts of regulations on SMEs. Furthermore, officials currently routinely engage with SMEs and stakeholders to shape policy, including in the light of emerging technological and industry developments, and to identify and address any disproportionate burdens. The OPSS regularly engages with a small business panel as part of policy development.
I hope that this confirmation provides reassurance to the noble Baroness, Lady Brinton, and the noble Lord, Lord Sharpe, on this important area, and I am grateful to them for raising it today. The Government remain committed to supporting SMEs and recognise the vital role they play in the UK economy. As such, the Bill will allow the Government to update product and metrology regulation to avoid extra cost to business and provide continued regulatory stability. It will also allow the Government to end recognition of EU requirements where this is in the interests of businesses and consumers. The Bill will enable the Government to introduce proportionate product safety requirements that protect consumers and create a fairer playing field for law-abiding businesses.
As some noble Lords will know, before I came to this place I was a serial entrepreneur all my working life. I understand how micro-businesses and SMEs work. SMEs spend most of their time creating and growing the business. They do not want additional costs or regulations impacting their business. Having said that, all that businesses want is a level playing field where they know the rules of the game and what regulations are in place. Imposing additional regulation is not the intention of this Government. We are constantly consulting SMEs to ensure that, whatever regulation is in place, it does not impact SMEs and micro-businesses.
As I said, growth is the Government’s number one priority. On 14 October, we published a Green Paper, Invest 2035, setting out a credible 10-year plan to deliver the certainty and stability that businesses need to invest in the high-growth sectors that will drive our growth mission. This industrial strategy will create a pro-business environment and support high-potential sectors and clusters across the country. By giving the UK the flexibility to adapt its own regulatory framework to keep pace with international regulatory developments and respond to global trends, the Bill supports economic growth and innovation.
This flexibility ensures that the Bill supports economic growth—as I mentioned—reduces unnecessary regulatory burdens and ultimately benefits businesses, including micro-businesses and SMEs. However, introducing a statutory reporting obligation would risk duplicating existing processes, diverting resources and delaying the implementation of timely and effective regulations that provide businesses and consumers with the certainty they need.
I am sure that many noble Lords know that the EU’s general product safety regulation comes into force this Friday 13 December. Under the terms of the Windsor Framework between the UK and the EU, we have to apply it in Northern Ireland, so we will publish on the Government’s website clear guidance to SMEs that want to export to Northern Ireland and the EU. We will prepare a statutory instrument to implement a new enforcement regime in Northern Ireland to allow this GPSR to be enforced. This is a requirement of the Windsor Framework.
I mention this to show that there are regulations that SMEs have to abide by—this is one of them—that will impose a certain amount of burden on SMEs, especially in the run-up to Christmas. Many small businesses will now find it very difficult to export to Northern Ireland and Europe if they do not have a legal representative in the country to verify their goods.
As I have outlined, I believe that the very laudable sentiment behind these amendments is already covered by existing practice, so I ask noble Lords not to press them.
Baroness Brinton (LD)
I am grateful to the speakers in this debate and to the noble Lord, Lord Sharpe, for his Amendments 103, 104 and 104B. They aim, I think, to achieve the same objective as Amendment 82 in the name of the noble Lord, Lord Fox, but in more detail.
I am with the Minister—I thank him for his response —in saying that more paperwork and more regulation is not what we on these Benches wanted to achieve in Amendment 82, which is why it says that any regulations “must have regard for”. I hope that the Minister will take that on board. I want to ask him something; perhaps he might write to me, if he intends to write anyway. He kindly talked about the different types of impact assessment, including whether they would be full or proportionate. We completely understand that those would happen, but will those impact assessments specifically highlight SMEs? In other words, will an untutored eye flicking through see “effect on SMEs” in bold, and then something underneath it? I am seeing nods from the Minister, and I look forward to his letter.
I am glad that the Minister raised the extra burdens on firms either selling into Northern Ireland or the reverse. It is not just about that: over the last few years, we have seen very small businesses having sometimes to double the number of their administrative staff to cope with, for example, things such as music groups touring across Europe. The objective has to be keep that paperwork down as much as possible. Obviously, I will confer with my noble friend Lord Fox, and I look forward to the Minister’s letter. We may return with this later.
Lord Leong (Lab)
Before the noble Baroness withdraws, I can confirm that, when we do the impact assessment, we take SMEs into consideration as well.
Lord Leong (Lab)
My Lords, I thank my noble friend Lord Liddle for his amendment in this final group in the Committee on this Bill. He raises a very interesting point. I will start by briefly explaining the operation of the Schedule of the Bill. Noble Lords will appreciate that the Bill’s definitions have been drafted to capture the range of products covered by existing regulations. This means that the Bill needs to cover products as diverse as toys, cosmetics, fireworks, lifts and pieces of heavy engineering. The Bill therefore defines a product as
“a tangible item that results from a method of production”.
To place some limitation on this scope, the Schedule lists some exclusions. These refer to certain products that do not require coverage by this Bill because, for example, they are regulated by separate legislation. The Schedule includes an exclusion for aircraft. The noble Lord’s amendment would widen this exclusion to include all products and equipment intended for use in civil aviation.
As my noble friend has said, product regulation is not always as clear-cut as that. Many sectors have products feeding into them that span other sectors. Aviation is an important and complicated field when it comes to safety. It is right that there is an extensive suite of existing legislation, overseen by the Department for Transport, that covers that. It is not the Government’s intention to create any confusing parallel structure of regulation.
However, we need to ensure that, by excluding a wider range of products that can be used in aviation, we do not accidentally exclude dual-use products that might also need to be captured by this Bill. It cannot be the case that a manufacturer or other supplier can evade regulation on the grounds that, as well as supplying consumers, they also supply the aviation industry. My noble friend has raised an important and nuanced issue. Aviation safety is a serious matter. The Government will definitely reflect on this matter, and I am happy to have discussions with my noble friend before Report.
As this is the last group in our consideration of the Bill in Committee, I would like to express my thanks to all noble Lords for their thoughtful and constructive contribution during this stage of the scrutiny of the Bill. I would also like to thank my officials and all the staff here in the House, including the clerks, Hansard and the doorkeepers, for ensuring that the Committee has run as seamlessly as possible.
As I have said many times during today’s debate, the Government have valued the debates we have had, and the issues raised by all noble Lords. We have heard, clearly and loudly, the mood of the Committee on a number of areas. I can assure noble Lords that the Government will carefully reflect on all concerns. I give an undertaking that I will come back to noble Lords on these issues.
I look forward to continuing my constructive conversations with noble Lords as we approach Report to ensure that this important Bill is suitable to deliver the policy objectives that many in the debates have outlined their support of. With that said—and to ensure that noble Lords are not totally surprised—I would like to end on a familiar note and ask that Amendment 134 be withdrawn.
Lord Liddle (Lab)
My Lords, I am happy for Amendment 134 to be withdrawn. I am very grateful for the assurances the Minister has given me that this will be a matter subject to further consideration.
Product Regulation and Metrology Bill [HL]
Lord Leong ExcerptsWednesday 27th November 2024
(3 weeks, 4 days ago)
Grand CommitteeRead Full debate Product Regulation and Metrology Bill [HL] 2024-26 View all Product Regulation and Metrology Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 18-III Third marshalled list for Grand Committee - (26 Nov 2024)
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.
Lord Lansley (Con)
I apologise for interrupting the Minister, but Amendment 60 asks who the relevant authorities are. Paragraph 3 of Schedule 5 to the Consumer Rights Act 2015 tell us in statute, as things stand, who the domestic enforcement authorities are. That is not in subordinate legislation—it is in primary legislation. The Minister appears to be taking a list that is in primary legislation, which is amendable by regulation, and turning it into something that is a power to specify by subordinate legislation. What was wrong with retaining the enforcement authority list in Schedule 5 to the Consumer Rights Act and adding to or subtracting from it as necessary?
Lord Leong (Lab)
I thank the noble Lord for that point. As I said earlier, as it stands the relevant authorities are exercising public functions—that is, the Secretary of State or the Health and Safety Executive, in the examples that I gave earlier. However, because of the evolving and changing nature of the new products on the market, we may need more people with specific technical knowledge. We do not want this Bill to straitjacket us so that, every time we need to appoint somebody, we have to come back with new primary legislation.
Lord Lansley (Con)
But can the Minister tell us why the list in primary legislation under Schedule 5 of that Act, which has been amended from time to time since 2015 by regulation, is not a suitable basis for proceeding in future? What is wrong with using that list?
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?
Lord Leong (Lab)
I thank the noble Lord for that. We would expect regulators and authorities to carry out enforcement in line with the regulators’ code, which I am happy to share with noble Lords.
Lord Lucas (Con)
My Lords, the debate ranged a long way beyond my amendment, and I shall not attempt to summarise it. I suspect that I shall be listening to many of the arguments again at Report, specifically those from my noble friend Lord Sharpe of Epsom and perhaps the noble Baroness, Lady Crawley, too. In his reply to my amendment, I felt that the Minister rather missed the point, which is that, no, they do not have the powers at the moment. That is why this amendment has been tabled, because they are saying that they do not have the powers. Yes, you can name a product and have it taken off, but if it appears in 100-plus different guises, which all claim to be different but are actually the same, you are stuffed. That is what I am trying to get at. I shall come back to this at Report, after taking further advice.
I am also grateful to the noble Lord for reminding us of how overregulated our nuclear industry has become and that allowing it to continue to be the subject of such a ridiculous free for all—resulting in us paying five times more than it costs the Koreans to build a nuclear power plant—is not something that should be waved away in the breadth of the powers that we have in this Bill. I beg leave to withdraw my amendment.
Lord Sharpe of Epsom (Con)
My Lords, I will be very brief indeed. I have learned a lot from this brief debate and thank both noble Lords for their expert explanations. As a novice in this subject, I cannot think of a single possible objection, frankly, to either of the amendments from the noble Lord, Lord Fox, and my noble friend Lord Lansley. I hope the Government will welcome these as an example of well-informed common sense and give due consideration to some sort of amendment along these lines. I believe the Government to be sincere in their intention to promote growth and innovation, and it seems to me that both these amendments would, in some form or another, help to deliver that. If the Government do that, we will be supportive.
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.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lord Lansley for introducing his amendments so incredibly clearly and expertly. It is obvious that international standards are vital for facilitating global trade. Products that adhere to international standards are more easily accepted across borders. They reduce trade barriers, open new markets for UK business and so on. They ensure that UK products can continue to compete internationally and maintain their high reputation for quality and reliability.
Aligning product requirements with international standards ensures that UK consumers also benefit from high levels of safety. This alignment builds consumer trust, as consumers know that the products they are buying meet rigorous global benchmarks. Amendment 43 specifies that this requires consultation. It is vital that consultation takes place with experts. In principle, we absolutely support the spirit and intent of these amendments.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Lansley, for tabling Amendments 38 and 43. I know from when I was on the Opposition Benches that he brings great expertise to this House, debating legislation as varied as the Trade Act 2021, the Procurement Act 2023 and the Bill before us today. His amendments raise important points about the role that international standards can play in domestic product regulation and in ensuring a strategic approach to their delivery and implementation.
Regarding Amendment 38, I reassure the noble Lord that Clause 2(6) enables product regulations to continue to reference international standards to support regulatory compliance, as is the case for medical devices. Provision is already made in current product regulations for the ability to designate a standard adopted by an international standardising body.
We work closely with all departments, including the Medicines and Healthcare products Regulatory Agency, and will continue to work with them to ensure the supply of safe and compliant products. However, each responsible department must individually consider the best approach for its own area.
Before the Secretary of State designates the standard for products regulated under the Bill it is assessed by government. The standard may be designated fully, with restrictions or not at all, depending on how far the standard ensures the relevant product requirements. Therefore Clause 2(6) sufficiently addresses the noble Lord’s concern. There is also no need to specifically reference the ability to designate international standards because that provision is already covered in product safety sector-specific legislation already on the statute book.
Lord Lansley (Con)
Which legislation is the Minister referring to? Is it not Part 2 of the Consumer Protection Act, which is able to be repealed by this legislation?
Lord Leong (Lab)
I have been told by officials that it is a specific product regulation.
Lord Lansley (Con)
Where is the power? Is it in the Consumer Protection Act?
Lord Leong (Lab)
I will write to the noble Lord on that.
On Amendment 43, the Government published a memorandum of understanding with the British Standards Institution on 16 September, of which there are copies here available to noble Lords. This sets out in respect of its activities as the UK’s national standards body its role in supporting government policy and acting in the UK’s national interest in the international standards-setting arena. This includes supporting UK policy to strengthen the global approach to standardisation and maximise UK influence.
Within the international standards system the UK already occupies a strong leadership position through the BSI’s membership of international and non-EU private sector European regional standards organisations. The BSI also manages a significant number of important committees in those organisations. In its role, the BSI systematically adopts international and European standards that representatives of UK stakeholders have influenced and withdraws standards that are no longer relevant. This includes internationally agreed standards designed to support regulatory compliance to UK product legislation.
In Articles 2 and 3 of the memorandum of understanding, the Government and BSI agree on the primacy of international consensus and that the two parties will co-operate with each other on international standards policy, while Article 4 ensures that the BSI provides the necessary standards the Government require for UK regulations. The Government are in the process of finalising a document entitled “The UK Government’s Public Policy Interest in Standardisation”, which is referenced in the MoU with the BSI, that explains why standards are a key factor in support of a number of government policies. It also reinforces the policy of influencing international standards and the importance of maintaining a constructive relationship with the BSI.
Given the close collaboration and the mechanisms in place, I believe that the objectives of Amendment 43 are already being met on the points I have just outlined. I hope that I have been able to provide sufficient reassurance to the noble Lord that what he seeks to achieve is not only already possible through the Bill, but also common practice across a range of sectors. If helpful, I will ask my officials, following Committee, to provide further information on the important role that international standards play in the UK system. With that in mind, I respectfully ask the noble Lord to withdraw his amendment .
Lord Sharpe of Epsom (Con)
Again, I think that my ignorance probably suggests that the public ought to be slightly better informed about that. Maybe they are; maybe it is solely me being ignorant. I do not know.
The other thing that struck me, while I again say to the noble Lord, Lord Redesdale, that I like his Amendment 56, is that surely we need to be a little bit careful about exploding Amazon trucks if they are this unstable. I will leave that thought with him.
There is, finally, a third subset of safety issues that I thought about when the noble Lord was talking about bikes. It is about those, Lime bikes in particular, that are left lying in the middle of the road unexpectedly as you go round a corner—he said, speaking from personal experience.
All these amendments have considerable merit. I am very interested to follow them and will consider supporting them.
Lord Leong (Lab)
My Lords, I thank the noble Lords who have spoken, in particular the noble Lord, Lord Foster, for speaking on behalf of the noble Baroness, Lady Brinton. The issue of lithium-ion battery safety is rightly getting a lot of attention and I am grateful for the opportunity to discuss it. I also mention the work of the noble Lord, Lord Redesdale, who has tabled a Private Member’s Bill on this same topic and with whom I have had valuable discussions during the passage of this legislation.
The Government have already taken significant steps to protect people from the dangers posed by products containing lithium-ion batteries. The Office for Product Safety and Standards has been working with colleagues across government and industry to identify the root causes of safety issues associated with lithium-ion batteries and to ensure that steps are taken to protect consumers and remove dangerous products from the market. We are also working with UK businesses to ensure that they comply with regulations. In addition, we have collaborated with fire and rescue services to identify products involved in incidents and have taken the appropriate action when unsafe products are identified.
Since 2022, efforts have resulted in 20 separate product recalls and 22 other enforcement actions for unsafe or non-compliant e-bikes or e-scooters. The OPSS has issued 26 withdrawal notices to eight online marketplaces, two manufacturers and 16 separate sellers to halt the sale of two dangerous e-bike battery models manufactured overseas by Unit Pack Power—UPP—that were discovered during fire and rescue investigations.
In terms of regulatory change, we need to ensure that any regulation is effective at stopping harmful products reaching the market. We also need to make sure that good businesses, which are in the majority, are not undercut by these unscrupulous traders.
The Bill is designed to provide powers across a broad range of products, including lithium-ion batteries. It does not highlight particular sectors that are in need of regulation. Noble Lords will appreciate that a very large range of products are covered by the Bill; therefore I would be hesitant to draw out lithium-ion batteries or specific measures in it. That would also limit our flexibility to work with all interested groups to identify the most effective way to tackle this issue. Today it may be lithium-ion batteries, while tomorrow it may be magnesium batteries, sodium batteries, salt or seawater—all of which may pose some safety features. So we need the flexibility to identify those new products on the marketplace.
Indeed, during Second Reading of the Bill in the name of the noble Lord, Lord Redesdale, a number of Peers highlighted that battery technology is changing. That is part of the reason why the Product Regulation and Metrology Bill works in this flexible way, as I stated earlier. It is to ensure that future regulations are able to take account of developing technologies.
We are, none the less, considering what change will make a meaningful difference to lithium-ion battery safety. My department has commissioned extensive research from the Warwick Manufacturing Group to better understand battery safety, including compatibility issues. This research is being finalised and we expect to publish it in due course. This will help us identify the root causes of battery risks and options to better protect consumers.
We want to take action about these unsafe products. We cannot commit to a timescale as we want to take the right action—but we do want to take action. One area where we have been very clear about the need for action is products sold via online marketplaces. I thank the noble Lord, Lord Foster of Bath, for his Amendment 49—and his well-informed advocacy in this area—that would require online marketplaces to take reasonable steps to ensure that products containing lithium-ion batteries sold on their platform are compliant.
In addition to the action I just mentioned, the OPSS wrote to major online marketplaces earlier this year, expressing concerns about the availability of unsafe products online. The OPSS has issued online marketplaces with legal notices that prohibit the supply of unsafe products. However, while much has already been done to keep people safe, our product safety regulations could go further.
As mentioned at Second Reading, we will use the Bill to clarify and modernise the responsibilities of online marketplaces in secondary legislation. These requirements will build on best practice to create a proportionate regulatory framework where online marketplaces take steps to prevent unsafe products from being made available to consumers. This will help prevent unsafe goods, including unsafe lithium-ion batteries, from reaching UK consumers.
The enforcement provisions in Clause 3 enable the introduction of enforcement powers for the purposes of monitoring and investigating, and securing compliance with product regulations. A requirement for the production of safety certificates that the noble Lord, Lord Foster, seeks as part of Amendment 49 could be implemented using the Bill’s powers as drafted. As I said, we are keen to continue working with noble Lords and others to identify the regulatory work that would be most effective.
Specifically on Amendments 55 and 56 on bikes, e-bikes and lithium-ion battery products sold on online marketplaces, we agree that online marketplaces should take steps to provide relevant information to consumers so that they can make well-informed purchasing decisions. This is also important to bridge the gap between the information consumers see before a purchase online, compared to the high street, where they can see the product and packaging.
In general terms, the Bill would enable us to introduce requirements on online marketplaces, including the provision of specific information, for the purpose of reducing or mitigating risks presented by products or ensuring that products operate effectively.
I thank the noble Lord for raising another important issue where consumer information can be beneficial to provide product traceability. As he discussed with me previously, this might help to deter the sale and assist the recovery of stolen bikes. The Home Office works closely with policing and academic leads to examine what more can be done to tackle the disposal market for stolen goods. We will therefore engage with the Home Office on this topic to explore whether product regulations could contribute to crime prevention. I will ask my officials to organise a meeting with the noble Lord and officials from the Home Office and other relevant authorities.
I also thank the noble Lord for his Amendment 56, which seeks to require online marketplaces to put in place a return policy for products containing lithium-ion batteries for the purpose of appropriate battery disposal. The Environment Act 2021 provides powers for the Government to introduce new requirements on online marketplaces with respect to the take-back of lithium-ion batteries and products containing lithium-ion batteries. Under the existing producer responsibility legislation, producers of industrial batteries, which include e-bike and e-scooter batteries, must take back waste products free of charge on request. Ministers are currently reviewing proposals to consult on reforms to UK batteries regulation before setting out next steps on battery disposal.
At this point, I wish to mention that I have spoken to my noble friend Lady Hayman of Ullock, Parliamentary Under-Secretary of State at Defra. It is clear to me that noble Lords will discuss the issue of disposal of lithium-ion batteries.
I hope this assures noble Lords that the Government take the issue of lithium-ion battery safety extremely seriously. We have already taken enforcement action and are keen to work with all interested groups to ensure that further regulatory change is effective. Consequently, I ask the noble Lord, Lord Foster, to withdraw his amendment.
Before I sit down, I wish to say that my private office has sent an invitation to noble Lords who have expressed an interest in visiting the OPSS. I very much hope they will take up that offer.
Lord Foster of Bath (LD)
My Lords, on behalf of my noble friend Lord Redesdale, I thank the Minister for his kind offer to him. I am sure the Minister will understand that I will want to go and put a wet towel over my head and read very carefully what he has just said in response to this group of amendments. However, I say to him that reading a list of successful examples of unsafe products coming into the UK by the OPSS is something I did myself in a previous debate. It does not indicate that we have got it right. The figures on the number of fires from lithium-ion batteries, for instance, are going up dramatically, so something is not quite right.
The problem, which the Minister touched on both in this answer and the answer he gave to a previous group when I raised the issue of high-risk products, is that the current arrangements are somewhat discretionary, and not at all clear so that we know what they are. For animal products, there is a very clear procedure: everything has to be checked for whether it is low risk, medium risk or high risk. Earlier, I proposed that we do exactly the same for all products. I am grateful to the Minister for agreeing to meet me and other people about that.
In the light of that and the discussions we will have, for the time being I beg leave to withdraw my amendment. However, I assure the Minister that we will come back to these issues at a future stage.
Product Regulation and Metrology Bill [HL]
Lord Leong ExcerptsMonday 25th November 2024
(3 weeks, 6 days ago)
Grand CommitteeRead Full debate Product Regulation and Metrology Bill [HL] 2024-26 View all Product Regulation and Metrology Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 18-II Second marshalled list for Grand Committee - (21 Nov 2024)
Lord Lansley (Con)
My Lords, I apologise that I was not able to be with the Committee on its first day, nor will I for much of this afternoon, but I look forward to returning for my amendments on Wednesday. I support my noble friend Lord Sharpe’s amendment.
When we debated the regulation of medical devices in the Medicines and Medical Devices Act 2021, we established that safety and safeguarding public health was its overriding objective. However, we went on to say in what is now Section 15(3) of that Act that in considering whether regulations should be made, and whether they would contribute to the objective of safeguarding public health,
“the Secretary of State must have regard to”—
I commend that language to my noble friend, rather than “must support”, which I think takes it a bit far and creates conflicting duties—
“the safety of medical devices … the availability of medical devices … the likelihood of the United Kingdom being seen as a favourable place in which to … carry out research relating to medical devices … develop medical devices, or … manufacture or supply medical devices”.
I draw attention to the third of those. The structure of the existing legislation on the product requirements for medical devices already incorporates an expectation that we consider economic activity, economic growth and our comparative position in the manufacture or supply of such products. I say to my noble friend that that is an alternative formulation which thoroughly supports, through the precedent of a very closely related area of regulation, the idea that economic activity of that form should be part of the consideration of whether and how regulations should be made.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, and the noble Baroness, Lady Lawlor, for their contributions on Amendments 11 and 11A, which specify that regulations made under the Bill should promote investment, foster innovation and encourage economic growth and investment. This Government are committed to attracting investment, as illustrated by the £63 billion pledged at the recent international investment summit. Britain is open for business.
I assure noble Lords that growth is the number one mission of this Government and our new industrial strategy, to be published in the spring, is central to it. The strategy will focus on tackling sector-specific and cross-cutting barriers to growth for our highest-potential growth-driving sectors and places, creating the right conditions for increased investment and high-quality jobs and ensuring a tangible impact in communities right across this country.
I also thank the noble Lord, Lord Sharpe, for his Amendments 104A and 124A, which seek to create regulatory sandboxes where new products could be trialled under regulatory supervision, as indicated by the noble Lord, Lord Kirkhope. I recognise and welcome the intention behind the amendments, which seek to encourage innovation. The Office for Product Safety and Standards within my department already works to provide businesses with guidance and support as they develop and market products. We also support local authorities in their work as primary authorities. This allows businesses to receive assured and tailored advice on meeting environmental health, trading standards or fire safety regulations from a single local authority, then applying this advice nationally. The underpinnings of our product safety regime are based on extensive engagement with businesses. Whether it is on regulatory change, the development of standards or the work of the OPSS as a regulator, the relevant bodies consult extensively across industry.
I am always open to new ideas on how to support businesses to innovate. I understand that in 2022 the Office for Product Safety and Standards supported the Home Office in a regulatory sandbox trialling electronic ID for alcohol sales. However, I am concerned about mandating regulatory sandboxes in the Bill. Product safety is, after all, about avoiding potentially serious risks to people and their property, and anything that would relax regulations in this way, even as a trial, would need careful consideration. It could also commit local responsible authorities to run trials in their areas without sufficient consultation or preparation. This could place an undue burden on local authorities, diverting resources and capacity from their primary responsibilities.
This Government are committed to ensuring that any regulations made under this Bill will support the interests of UK businesses and consumers, providing regulatory certainty and creating the conditions for investment, innovation and economic growth. The Government are always open to debate to ensure that we can support businesses to deliver safe and effective products. I hope I have demonstrated to the noble Lord the extent to which regulators already work closely with businesses to achieve this.
In response to the point from the noble Lord, Lord Sharpe, about SMEs, I was an SME once; we do not want to burden SMEs with additional regulatory or financial cost, if possible. This Government are pro-business and pro-worker and have provided certainty, consistency and confidence—for which investors have been looking for a very long time. Massive tax reliefs are available to investors through the EIS, the SEIS, VCTs and all kinds of grants, including patent grants for any new industries. The Government have shown that we are committed to investment and growth.
I hope that I have been able to reassure noble Lords that the Government are committed to fostering growth through all our policies. This will be set out in more detail in the forthcoming industrial strategy, which we will publish in the spring. I therefore ask the noble Lord to withdraw his amendment.
Lord Sharpe of Epsom (Con)
My Lords, I thank all speakers, in particular my noble friend Lady Lawlor for so eloquently introducing her amendment. I say to my noble friend Lord Kirkhope that my remarks are in no way meant to diminish any of our trading relationships; the point is that these amendments are designed to look after our national interest. It may well be that aligning with the EU is in our national interest, in which case we absolutely should, but if it is not, then we should not, and any reference to relative economic growth is merely factual. I thank my noble friend very much indeed for his supportive remarks on Amendments 104A and 124A.
I also thank my noble friend Lord Lansley for his perspective, which will be very helpful when we come to later stages of the Bill. I also thank the Minister for his remarks, which provided helpful clarity. I take comfort from the fact that he remains open to new ideas. We will consider his remarks carefully but are very pleased to hear his reassurances regarding SMEs. For now, I beg leave to withdraw my amendment.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Baroness, Lady Crawley, for her remarks. Obviously, defining “products” is a key consideration in much of what we have to discuss in this Bill. It is a subject to which we will return later today. I thank the noble Lords for introducing their amendments. It was very eloquently done. They certainly deserve consideration and comprehensive answers from the Government.
I will speak to Amendments 18 and 19 standing in my name. The Bill as it stands—and I am afraid this is going to be rather labouring a point that we discussed a lot last week—has been widely criticised for being skeleton legislation with much of the substance being delegated to Ministers through statutory instruments. The Delegated Powers and Regulatory Reform Committee has rightly pointed out that this leaves “almost no substance” or perhaps, as the noble Baroness, Lady Crawley, described it, no clear markers in the Bill, giving Ministers excessive and unaccountable discretion to regulate in important areas, such as product marketing and safety, without sufficient parliamentary scrutiny or oversight.
Clause 2 is a prime example of this, because it grants wide powers to Ministers to make regulations on a wide range of product characteristics—but without any clear or substantive detail. By keeping paragraph (a), the Bill opens the door to the possibility of Ministers creating regulations that lack transparency or specificity. I find the wording concerning and unnecessarily vague. For example, the phrase “other characteristics of products”—or, as the noble Lord, Lord Foster of Bath, described it, “just things”—is far too broad and could allow the Government to regulate anything under this clause, with little or no clear limit or definition.
The lack of clarity here is a significant issue, not least because businesses and producers rely on clear, specific regulations to know what is expected of them and to ensure that they remain compliant. Under this clause, they are left in the dark. What exactly are we talking about when we refer to “other characteristics”? Are we talking about the design of products, marketing methods or even the raw materials that are used in manufacturing? Small businesses and start-ups are especially vulnerable to such unclear regulations, as they may struggle to interpret or comply with such an open-ended provision.
This provision, in effect, gives Ministers the power to define and change the scope of regulations without sufficient clarity or transparency. Ministers could, under this clause, make regulations to cover an incredibly wide range of product characteristics, creating significant uncertainty for the market. We believe that this is an unacceptable level of ministerial discretion. With such a clause, the Government could, in effect, regulate anything and everything related to products. We do not think that we can afford to pass a Bill that leaves businesses and consumers in the dark and subject to the whims of ministerial power. This clause should be completely rewritten or removed. If the Government cannot provide a more specific targeted framework for these regulations, we must consider removing it entirely on Report.
With Amendment 19, there are the same issues. At present, there is no clear definition of what constitutes the “use of products”, nor any explanation as to how the Government intend to regulate it. This lack of clarity presents a significant issue, as it allows Ministers broad and undefined discretion to determine how products should be used and how they are to be regulated. This could easily lead to overreach, and, given how the Government have argued so far in some areas, regulations could be imposed with little or no accountability or scrutiny, leaving businesses uncertain about the future of their operations.
I am very pleased that the Minister has talked repeatedly about giving businesses certainty, particularly in aligning with EU regulations. However, we need more in the Bill to suggest certainty in the areas that I have just described, and I hope that he will be able to provide some reassurance.
Lord Leong (Lab)
My Lords, as technology and regulation continue to develop, we need new powers to address future threats and hazards and to ensure a continued supply of safe, accurate and compliant goods.
I thank my noble friend Lady Crawley and the noble Lord, Lord Fox, for their Amendments 12 and 13, and the noble Lord, Lord Foster, who introduced the latter. I agree that we need a robust product safety framework that can reflect the latest risks and hazards and keep consumers safe and protected. The Government have worked hard to ensure that the powers in the Bill capture the multitude of products that fall within our product safety framework, as well as new products that might be placed on the market and present risks to consumers in future.
For the purposes of the Bill, products are defined as
“tangible items that … result from”
a “method of production”. This definition ensures that we can capture a wide range of manufactured products marketed or used in the UK, from cosmetics to complex machinery. There are a number of instances where our current regulation and product safety work covers software: for example, where certain products are reliant on software, or our work to enforce certain software security requirements under telecommunications legislation. Following my noble friend Lady Crawley’s comments on smart doorbells, I confirm that an app connected to a smart doorbell would be covered by the Bill where it affects the physical safety of the product. The Product Regulation and Metrology Bill would ensure that our general ability to regulate the safety of all products can take account of software, as well as the impact of software on the performance of any particular product.
Let me assure noble Lords that we have carefully considered the scope of products that we seek to cover, and we are future-proofing as much as we can by allowing regulations to also cover intangible components of physical products. This includes things such as software, as I mentioned, where they form part of a tangible product. As such, the Bill will allow us to regulate interconnected products in so far as the safety of the physical product is affected. In this way, we can ensure that we are able to regulate the role of these intangible components in the risk that physical products may present.
Lord Foster of Bath (LD)
I am grateful, because this takes this back in a sense to an earlier group. The Minister has again referred to the issue of installation. Can he say categorically, on the issue of use, whether use will always include installation—or is it that it “may” include installation, as he said? Is it “will” or “may”?
Baroness Crawley (Lab)
My Lords, I thank my noble friend the Minister and the noble Lords, Lord Sharpe and Lord Foster, who have contributed to this short but useful debate.
I will not repeat the valid and important points that have been made, but I ask the Minister to have another look at the Bill’s definition of “product” in the light of our discussion this afternoon. However, I accept his explanation of software regulation going forward: that was an important point he made. For now, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lord Holmes for his superb introduction to this group. I also thank the noble Baroness, Lady Brinton, for confirming my suspicion of dentists.
I shall speak in general terms because I cannot improve on the eloquence with which my noble friend Lord Holmes put his arguments. To return to the point, these amendments illustrate the limitations of Clauses 1 and 2, I am afraid. These amendments have considerable merit on a stand-alone basis but, in aggregate, they—Amendments 75 to 78 in particular—would in effect seek to define artificial intelligence. This is obviously a fast-moving and rapidly evolving subject; frankly, it deserves a national, never mind parliamentary, debate, as my noble friend Lord Holmes eloquently argued. AI will clearly demand definition and regulation, as the noble Lord, Lord Foster, rightly pointed out. Philosophically, I am not even sure that it qualifies as a product in the traditional sense; frankly, what is in this Bill suggests that we do not really know.
I cannot help thinking that some of the arguments made by the noble Lord, Lord Leong, in our debate on the previous group reinforce this point to some extent. AI can be benign, obviously, but the same application might not be. So, how do we define risk in these terms, even if it regards only the temperature of cheese? I therefore question whether this Bill is the right vehicle for these amendments or whether AI deserves a stand-alone debate and argument. The fact that they are in scope again illustrates, as I said earlier, the inherent weaknesses of Clauses 1 and 2. They are too broad and lack definitions. Ideally, they should be removed; at the very least, they should be extensively rewritten and tightened. I hope that the Government will listen but, if they do not, I will certainly have conversations with my noble friend Lord Holmes about what we shall do next.
Lord Leong (Lab)
My Lords, I thank all noble Lords and noble Baronesses who have spoken. The use of software and AI in physical products covered by our product regulation regime is still in its early days. It is important to take the opportunity of this Bill to ensure that future regulation can keep pace with technological change.
The amendment tabled by the noble Lord, Lord Holmes, would require a review of all product regulations in terms of how AI may impact them and a specific labelling requirement for AI. The Bill gives powers to ensure that product regulation can be updated or new regulations can be passed to cover emerging risks. They include measures such as labelling and verification requirements. However, mandating specific measures in the Bill would limit our ability to determine the most effective ways to protect consumers. A more flexible approach will allow us to adapt as this technology evolves and to ensure that protections remain robust and relevant.
To be clear, this Bill does not seek to regulate digital products or artificial intelligence in and of themselves; it is focused on the regulation of physical products and future-proofs our ability to keep product and metrology regulation up to date with emerging technologies. The Government have a wider programme of work on the regulation of artificial intelligence, where, in most cases, the UK’s expert regulators are responsible for enforcing the rules on AI in their domains; we are working with regulators to ensure that they have the resources and expertise to do this effectively.
Additionally, as set out in the King’s Speech, the Government will bring forward separate legislation to ensure the safe development of AI models by introducing targeted requirements on companies developing the most powerful AI systems. We will undertake a full public consultation to hone these proposals before presenting them to Parliament in due course.
The noble Lord, Lord Holmes, raised the issues of data protection and intellectual property. As we know, UK GDPR and the Data Protection Act 2018 form the legal framework for protecting personal data in the UK; this already covers things such as personal data, photographs and voice recordings.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords for introducing their amendments in this group. I shall briefly speak in favour of Amendments 48 and 71. I thank the noble Baroness, Lady Crawley, for bringing attention to the critical issue that addresses the responsibilities of online marketplaces and also, if I may, pay tribute to her wider work in this area as well as that of my noble friend Lord Lindsay, who is not in this place but whose exemplary work as president of the Chartered Trading Standards Institute deserves a mention.
This sector has grown exponentially in recent years and plays a dominant role in modern commerce. This amendment, therefore, highlights essential duties for online marketplaces. For example, a 2023 TSB study found that Facebook Marketplace accounted for 73% of purchase fraud cases. If you think about fraud and its growth in terms of the British crime statistics, that is a significant percentage of British crime, not just online crime. Over one-third of adverts on Facebook Marketplace are scams, we are told, so this amendment would help to level the playing field by ensuring that online marketplaces meet the same safety standards as physical retailers. This would foster fair competition and ensure that businesses prioritising consumer safety are not undermined by unscrupulous practices.
It is vital that we ensure online marketplaces, which facilitate the sale of billions of products, do not become conduits for unsafe goods or fraudulent activity, as all noble Lords have rightly highlighted. Without robust regulations, consumer trust and market integrity are at significant risk. We ask noble Lords to take seriously this amendment to uphold consumer protection, market fairness and safety standards, and think that the Government ought to recognise the urgency of addressing these concerns and act decisively.
On Amendment 71, I support it as a necessary step to protect consumers in the rapidly growing online marketplace sector. The extension of liability to online marketplaces and others under Section 2(3) ensures that those who facilitate the sale of unsafe or defective products are held responsible. Such measures are crucial to maintaining consumer confidence, especially as online shopping becomes so dominant.
We think it is essential that the Government protect consumer rights in all the marketplaces, especially online. We urge the Government to listen to those two amendments in particular but, frankly, there is merit in all the amendments we are debating in this group, and I hope to hear some positive news from the Minister.
Lord Leong (Lab)
My Lords, before I respond to this group, I say to the noble Lord, Lord Sharpe, that I will write to him in respect of the points he has raised.
I thank all noble Lords for their contributions to this debate and for Amendments 21, 22, 32, 45, 48, 71 and 117 to 124. These amendments have raised important points on the scope and application of the Bill’s powers, and I hope to provide clarity and reassurance. Around one-third of UK retail sales are now conducted online, but our product safety legislation has not kept pace with changes in shopping habits, in particular the development of online marketplaces and other platforms.
Online platforms may sell goods themselves and/or provide a platform for third-party sellers—in the UK or aboard—including consumers, to sell goods. The most well-known online marketplaces in the UK are probably Amazon, eBay, ASOS and Etsy, and others are widely used. The online marketplace industry in the UK is booming. In 2023, the UK e-commence market was valued at close to £137 billion and is projected to grow to £152 billion this year. I thank the noble Lord, Lord Sharpe, for setting out the landscape of online fraud and scams on online marketplaces; we really need to take note of that.
Baroness Brinton (LD)
I thank the Minister very much for the detail he has gone into in his answer, but there are two types of regulation. The one he has described is the one that you would expect the Government, trading standards and other bodies to take. But, in litigation terms, if somebody bought an electric bike in good faith, who would they sue? Paragraph (h) does not make it clear. This is not purely about the parameters of the products and the Bill; it is about the consequences of having something that is very general. I think platforms will say, “It’s nothing to do with us”, and the individuals will say, “But I’m not part of the chain, as described”. I am genuinely struggling to understand and I wonder whether the Minister can help me.
Lord Leong (Lab)
I thank the noble Baroness for that; I will come to it. We are talking about product liability to some extent; I have a paragraph on it in my brief, if she will bear with me for a moment.
Amendments 32 and 45 highlight some of the different actors in online supply chains that may need to be captured appropriately in these new requirements. The Bill gives powers to introduce requirements on online marketplaces to improve the safety of products sold online. These requirements can be tailored and updated appropriately to reflect the wide range of online marketplace models, and other relevant supply chain actors and their activities, now and in the future. Clause 2(3) is therefore sufficiently broad to enable requirements to be introduced on any persons carrying out activities in relation to a product. This could include, where appropriate, private individuals selling products via online marketplaces, whether in return for payment or free of charge.
I will now focus on Amendments 117 to 124, which seek to broaden the definition of online marketplaces. The definition of online marketplaces in the Bill has been created in a way that is broad enough to capture the full range of online marketplace business models, including social media platforms such as TikTok Shop, which was mentioned earlier. I assure the Committee that all the changes proposed in the amendments are captured within the existing definition. For example—and of relevance to Amendment 123—the expansion of the term “marketing” within the definition of an online marketplace is not required due to the definition of “marketing” within the Bill, meaning the “making available” of products. This in turn is defined as goods
“supplied or advertised for distribution or use on the market, whether in return for payment or free of charge”.
Amendments 117 and 122 in the name of the noble Lord, Lord Foster, seek to change the definition of an online marketplace, replacing “internet” with “internet service”, as defined in the Online Safety Act 2023. The definition we have used in the Bill includes a service on any other platform by means of which information is made available over the internet. We are therefore confident that the issue the noble Lord raises in his amendments is covered by the Bill as drafted.
I also thank the noble Lord, Lord Foster, for his clarification about data and GDPR being captured by the Data (Use and Access) Bill. I shall read Hansard and confirm accordingly. I totally agree with him that all unsafe products should never be allowed to be offered for sale on any online marketplaces, whether original or second-hand. We have to address his point about accountability. Who is accountable to be held responsible for some of these unsafe products?
The Bill also includes a power in Clause 10(2) that allows for the definition to be amended later by regulations, if this were necessary to capture any future models not captured by the current definition. I will come back to the issue of product liability.
Amendment 71, tabled by my noble friend Lady Crawley and spoken to by the noble Baroness, Lady Brinton, would allow the Secretary of State to make provisions to ensure that online marketplaces can be held liable for products purchased via their platforms. The primary route to seek damages for harm caused by defective products is through the Consumer Protection Act 1987. Depending on the specific facts, an online marketplace may have responsibility under this legislation. The Government are currently reviewing this legislation and we will consider the UK’s product liability regime holistically, including the question of how it should apply to online marketplaces. This is not a change that we would seek to make without considering all the evidence, so we do not want to pre-empt this important work by adding to the scope of the Bill.
Product liability also covers products that extend beyond the scope of the Bill, including, for example, food and medical devices. A considered review of this area would be the most appropriate way to ensure that our product liability laws are up to date and fit for the future and to take account of the broad-ranging interests in this body of law. I will keep the Grand Committee updated on the Government’s progress with this review and plans for wider engagement.
I say to the noble Lord, Lord Jackson, and other noble Lords: we have listened to the debate and reflected on all the points made. We are aware of the Grand Committee’s strength of feeling on a number of points, including the scrutiny of secondary legislation. With that, I hope that I have been able to reassure noble Lords that these amendments are therefore not required to achieve their laudable aims. Consequently, I would ask for the amendments in this group not to be pressed.
Baroness Brinton (LD)
Clause 1(5) says that
“‘marketing’ means making available on the market”,
which is a much shorter definition than the one that the Minister just read out at the Dispatch Box. Is he telling me that I am not correct in saying that I market a product on eBay when I put it up on eBay?
Baroness Brinton (LD)
This is very important, because this is partly about liability and partly about the clarity in the Bill about who has responsibility. Whether it is a buyer or, as I think the Minister argued, an individual seller, someone has to tell them that they have to follow the regulations, and they need to know how to do that. When he read out the definition of marketing in his speech, he gave a whole sentence more than is included in the definition in the Bill, which very simply says,
“‘marketing’ means making available on the market”.
It goes on to discuss “related terms”, but they are not relevant to my problem. While he ponders between Committee and Report, can he look at that? More than one of us is likely to come back with amendments on Report on this issue.
Lord Leong (Lab)
I thank the noble Baroness. We are trying not to be too prescriptive because it is constantly changing. I am sorry about this, but the Bill defines “marketing” as
“making available on the market”.
Clause 10, line 8, states,
“a product or goods … supplied or advertised for distribution or use on the market”—
Baroness Brinton (LD)
That is exactly what happens with a private individual. They will advertise an item on eBay. The language the Minister is using is what I would describe as the old-style manufacturing and business model. It does not take into account all the comments that people have made about where online marketing is in the 21st century. Therein lies the problem, and I would be very grateful if the noble Lord would look at that.
Lord Leong (Lab)
I thank the noble Baroness for that as well. Online marketplaces are changing overnight. I have just learned over the weekend of dropshipping. Dropshipping means that if someone orders a product on eBay, the person supplying it is not eBay or whoever claims to be on eBay. It is dropshipped by AliExpress straight to that buyer’s home. How are we going to control that? How are we going to capture that? That is why we cannot be too prescriptive. We need to have the flexibility to address ever-changing marketplaces. That is what this Bill is trying to do. If the noble Baroness is still unclear or unsure about this, perhaps we can have another follow-up meeting so we can discuss this in depth.
Baroness Brinton (LD)
I think a number of noble Lords who have participated in this debate might be interested in a meeting, if that is okay. I shall very briefly respond to the Minister to say that flexibility is fine, until the point at which there is nobody to hold accountable. That is the problem.
Lord Leong (Lab)
The Bill is drafted in this way to address who is going to be accountable. My invitation to all noble Lords to a meeting stands, and I welcome each and every one of them. I hope this amendment can be withdrawn.
Lord Lucas (Con)
My Lords, I am very grateful for the long and detailed reply given by the noble Lord, Lord Leong. I recommend a meeting with him to anybody. He is a most welcoming and courteous Minister, and you get good results out of a meeting with him. If, on rereading what he has said, I have any further questions, I shall attend the meeting. For now, I beg leave to withdraw the amendment.
Asylum Seekers
Lord Leong Excerpts(1 year, 11 months ago)
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Lord Leong (Lab)
My Lords, on 13 December 2022, I asked the Minister about the post-traumatic stress disorder suffered by Hong Kongers who fled the crackdown by the ruling Communist Party and are currently seeking asylum here. I asked him:
“What assessment have the Government made to identify those suffering from PTSD?”
He replied:
“On the BNO Hong Kong cohort, I do not have the answer, and I will write to the noble Lord in relation to it.”—[Official Report, 13/12/22; col. 551.]
I am still waiting for that answer.
Lord Murray of Blidworth (Con)
I am sorry to hear that the noble Lord has yet to receive an answer. I will chase it and endeavour to get a response to him as soon as I can.
Albanian Asylum Seekers
Lord Leong Excerpts(2 years ago)
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Lord Murray of Blidworth (Con)
As of the end of September, there were 117,400 cases, which related to 143,377 people awaiting an initial decision. On enforcement and the penalisation of those engaging in people smuggling, as the noble Lord will know, it is a criminal offence to be the criminal mastermind—if you like—behind a smuggling operation, and the maximum penalty for those types of offences is life. I have no doubt that a sentencing court would bear in mind, as the noble Lord anticipates, that it is an aggravating factor if women and children are involved.
Lord Leong (Lab)
My Lords, asylum seekers coming here from Hong Kong have a very different experience from British national (overseas) visa arrivals. They are not given the same freedom as BNO holders to study, work or live, and that is very impactful on their mental health. Nearly one in four Hong Kongers who fled the crackdown of the ruling Chinese Communist Party says that they still suffer from post-traumatic stress disorder, linked to the violent crackdown on the 2019 protests and the subsequent fear engendered by the national security law. What assessment have the Government made to identify those suffering from PTSD?
Lord Murray of Blidworth (Con)
On the BNO Hong Kong cohort, I do not have the answer, and I will write to the noble Lord in relation to it.