Product Regulation and Metrology Bill [HL]

Baroness Lawlor Excerpts

Committee stage
Monday 25th November 2024 Grand Committee

[Lord Sharpe of Epsom (Con)]

My Lords, in moving Amendment 11, I shall speak also to Amendments 104A and 124A in my name.

As highlighted by the Delegated Powers and Regulatory Reform Committee, Clause 1 in its current form should be removed—a theme that we have explored already and to which we will no doubt return. This amendment, however, directly addresses a critical gap in the current Bill by ensuring that regulations do not focus merely on product safety, environmental concerns and operational efficiency but actively promote investment and foster innovation.

The news coming from today’s CBI conference makes sobering reading. The chief executive of the CBI has said that employers have been forced into “damage control mode”. The head of the company that makes McVitie’s digestive biscuits said that

“it’s becoming harder to understand what the case for investment is … to make a difference in the growth rate of the economy”.

Again, the chief exec has said that CFOs are asking, “Can we afford to invest?”

I have no wish to talk down the economy or try to score cheap party-political points, but the fact is that life has got harder for big business recently. No doubt noble Lords opposite will say, “Well, they would say that, wouldn’t they?” But they are also committed to providing an environment that fosters growth and I know them to be sincere in that ambition, so we should all take these comments seriously.

It is not just big business. Last week, analysis by the Altus Group said that the planned reduction in business rates relief would lead to a more than doubling of rates for shops, pubs and restaurants next year. Coupled with rises in national insurance contributions and other operational pressures, SMEs are facing difficult times. But they represent the heartbeat of our economy and some of them will hopefully go on to become big businesses.

In today’s competitive global economy, economic growth cannot be secondary. The Bill should prioritise creating an environment where businesses can thrive, develop new technologies and compete internationally. It is vital that our regulations should be aligned with the strategic aim of positioning the United Kingdom as a global leader in innovation. In the post-Brexit world, the UK’s economic success is intrinsically tied to its ability to lead in innovation, which is why my Amendment 11 is critical. It ensures that product regulation supports the creation of an environment conducive to technological advancement and cutting-edge industrial leadership. It strengthens the Bill by ensuring that it is not about just managing risks or regulating product use but about creating a dynamic, forward-thinking market where businesses have the tools, resources and incentives to innovate and expand. Without these provisions, there is a risk that the UK could fall behind in the global race for innovation and business growth. If we do not explicitly ensure that our regulations align with our growth objectives, we could inadvertently stifle entrepreneurship and technological progress.

So how are we to become a global leader? The answer surely lies in aligning ourselves with the strongest global partners in the world today. If we are to maintain and enhance our position as a leading economy, we must look beyond a single trading bloc, particularly one whose economic influence is shrinking on the global stage—a theme we explored in debate last Wednesday. For example, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP, represents some of the fastest-growing economies in the world. Countries such as Japan, Australia, Canada and New Zealand, as well as emerging markets in Asia, are showing much more significant economic growth potential than others.

To lead the world, the UK must be flexible in its approach to trade and regulation. We need to reduce barriers and align ourselves with the economies that will drive future growth and innovation, rather than being tethered to a bloc that is not growing as fast as others. Amendment 11 in my name will enable us to do just that: focus on fostering global partnerships with the most dynamic economies.

Regarding Amendment 104A, a regulatory sandbox means an environment that allows businesses to explore and experiment with new, innovative products under regulatory supervision. This amendment is important for the development of innovative products affected by the Bill. It is an important step forward in fostering a regulatory environment that encourages creativity and innovation while ensuring safety and compliance. Regulatory sandboxes are an effective and proven model used to support businesses in testing innovative ideas. By introducing the importance of regulatory sandboxes in the Bill, we are not just helping businesses to navigate regulatory hurdles but promoting innovation by giving businesses the space to trial and refine their ideas.

Regulatory sandboxes will create a framework in which businesses can develop and test new products, contributing to the growth of the economy and the success of British businesses in the global marketplace. I urge noble Lords to support this amendment to pave the way for more innovation, more competitive businesses and, ultimately, a stronger economy.

I thank my noble friend Lady Lawlor for bringing forward Amendment 11A. The amendment is a clear and strong signal that we are committed to ensuring that our regulations actively foster economic growth, innovation and the global competitiveness of UK businesses. By encouraging the marketing and use of products in domestic and foreign markets, we are helping to open doors for UK businesses to grow their customer base, create jobs and increase exports. I commend my noble friend for this amendment. I look forward to a positive reception for all these amendments from the Government. I particularly look forward to the positive impact that they will have on businesses across the United Kingdom. I beg to move.

[Baroness Lawlor (Con)]

My Lords, I shall speak to my Amendment 11A, which would insert a new subsection to the effect that regulations

“must promote growth and effective production, foster innovation and encourage the use and marketing of products in the UK’s domestic and foreign markets”.

I declare an interest in that I have commissioned a number of studies and analyses at Politeia, the think tank where I am research director, which aim to examine and promote UK international trade and the UK economy. I support the aims of safety, containing costs and compliance with safety regulations, but I urge that we think about products having to operate efficiently and effectively. The problem we face is how best to do this consistent with promoting the entrepreneurial and innovative instincts of those bringing new products to the market, who my noble friend Lord Sharpe mentioned, and the growth this allows. I support my noble friend’s amendment to put growth at the heart of this measure.

During the consultation process for a product regulatory framework since 2021, of which this Bill is the outcome, producers and their representatives stressed their priorities for regulation. I am grateful to the Government for their response to this long consultation process. Producers stressed that it should be outcomes-focused and risk-based, should have greater simplicity, proportionality and consistency across legislation and powers and should deal with the serious challenges and opportunities that this country now faces. A further consultation to develop the product safety regime took place in August 2023, with businesspeople and business representatives that are listed in the Government’s helpful response. It found broad agreement on the need for a regulatory approach that promotes a regime ready to respond to hazards but that allows temporary derogation during emergencies for supplying essential products—in other words, it is dynamic—and makes for safer online shopping and promotes digital labelling and an enhanced national regime.

The Minister said at Second Reading and has reiterated to this Committee that the Government have listened to business. Their priorities are summarised in the Government’s consultation document. They are designed to allow for effective operations and to promote growth as a priority, which I and my noble friend Lord Sharpe are urging we need. The rules should be demand-led and reflect the capacity of our businesses to innovate, be entrepreneurial and grow their workforces and their range of products along with the high standards and competitive costs that consumers want.

Nowhere in the Government’s response document do we find businesses wanting a regulatory regime that brings greater rigidity in process rather than being outcomes-led, one that is risk-averse rather than equipped to deal with the real level of risk posed by products or processes, one that treats every product as bearing the same risk or being under a one-size-fits-all rule, or a regime that is disproportionate, untargeted and unduly complex. Yet that scenario, rejected by business, is inherent in the EU legal arrangements that the Government wish to be able to adopt for our businesses under Clause 1(2), to which my amendment is addressed. That can only stymie growth, contrary to the express wishes of the Government. For those reasons, I propose that growth should take priority over the arbitrary exercise of power to introduce the rigidity and complexity of an EU system which is not outcomes-focused or risk-based; nor is it proportionate or known for simplicity.

I will give your Lordships an illustration, for which I owe thanks to Professor David Collins, who holds the chair of international economic and trade law at City, University of London. He draws attention to the unnecessarily burdensome EU REACH regulation—on the registration, evaluation, authorisation and restriction of chemicals. Collins explains that it has extensive requirements for registering very low-risk substances. For example, certain food-grade natural substances that have been used safely for centuries will require expensive registration. Under the EU’s REACH, if a company uses more than one tonne per year of natural fruit extracts or oils, and products such as soaps or cosmetics, it needs full registration, including extensive safety data packages, even when these substances have been safely used in food for ages. This can cost tens of thousands of euros per substance. The relevant EU legislation is Regulation (EC) 1907/2006 REACH, and the key sections on registration requirements are primarily in Title II, Articles 5/24.

The EU’s post-Brexit UK REACH maintains similar core principles but has proposed a more proportionate approach for these well-established natural substances, with simplified registration requirements planned for ingredients with long histories of safe use. Although the overall goal of chemical safety is vital, requiring extensive registration for substances such as olive oil or lemon extract when used in non-food products adds to cost without proportionate safety benefit, and it is not needed. The safety of these materials could be adequately assured through simpler mechanisms. The UK REACH regulation, created through the REACH etc. (Amendment etc.) (EU Exit) Regulations 2019, Statutory Instrument 2019/758, aims to do this and does it very effectively.

Moreover—I refer to my noble friend Lord Sharpe urging that we align the UK economy with the strongest, most dynamic economies in the world—by relying on our own laws it will not only help our businesses but will allow us to do exactly that. My noble friend Lord Sharpe mentioned the CPTPP agreement; as Professor Collins says, it

“does not mandate blanket mutual recognition of conformity assessments for food safety among its members”

but it does

“include provisions that encourage members to accept other members’ conformity assessment results. It also facilitates acceptance of conformity assessment results through mechanisms like technical discussions and explanations of requirements. It also allows for sector-specific mutual recognition arrangements to be negotiated between members”—

which are very important. Professor Collins continues:

“So the CPTPP promotes regulatory cooperation and transparency but preserves each member’s right to maintain their own food safety standards and assessment procedures. Members must ensure their requirements are based on science and international standards where they exist, but aren’t required to automatically accept other members’ assessments. This is similar to what the WTO TBT Agreement does, but it goes further in terms of cooperation”.

--- Later in debate ---

[Baroness Lawlor (Con)]

My Lords, I will make a very brief intervention because I want to repeat my illustration from the first group about the REACH regulations. I have concerns about including this amendment to Clause 1 at line 13 of page 2 of the Bill as I do not agree that the EU REACH regulations are necessarily better equipped to target sectors and individual products than UK regulations. I will not go through the reasons I gave earlier. The noble Baroness, Lady Brinton, whose introduction I learned a great deal from and am very grateful for, mentioned cosmetics. In my earlier intervention I pointed to the use of olive oil and lemon in some soaps and said that UK REACH regulations recognise that these products can be eaten safely and, indeed, have been used for a long time. Requiring, as EU REACH does, that they go through stringent chemical REACH processes and labelling is a bit over the top and would put expense on our producers. I urge us to think of the wider implications of unsensitive or disproportion regulation where we can.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank noble Lords who have spoken in this debate. I will speak to Amendment 16 in the name of the noble Lord, Lord Fox, which was introduced by the noble Baroness, Lady Brinton.

Regarding the EU’s REACH scheme, I shall refer to a specific example which relates to my time at the Home Office in the previous Government. It relates to cosmetics, as outlined by the noble Baroness, Lady Brinton, and my noble friend Lady Lawlor. In 2019, the Home Office aligned UK policy with two decisions by the European Chemicals Agency board of appeal which related to the testing on animals for the registration of cosmetics-only substances—specifically homosalate and 2-ethylhexyl salicylate. The marketing of cosmetics tested on animals is banned in the EU under cosmetics products regulation, but the ECHA—the European Chemicals Agency—confirmed that under REACH substances used solely in cosmetics may sometimes be tested on animals, as a last resort, to prove their safety for workers or the environment.

An NGO called Cruelty Free International, quite rightly, in my view, took the Government to court arguing that the UK’s alignment in effect led to the weakening of the long-standing—I think it was a 25-year—ban on animal testing of cosmetics and cosmetic ingredients. The UK court found in the Government’s favour but as the then Minister for Animals in Science, which somewhat surprisingly sits with the Home Office, the Home Secretary and I were firmly of the opinion that this was unjustified, so as of May 2023 we decided that no new licences should be issued to carry out this function. A small number of licences had been issued between 2019 and 2022.

The noble Baroness, Lady Brinton, and the noble Lord, Lord Browne, made persuasive arguments about why it might be in this country’s interest to align with the EU but, equally, it might not be, and this is a very nuanced subject. Failings of the domestic chemicals regulator—real or imagined—are an entirely separate subject. Alignment with, or invention of, our own rules that suit our national and public interest most definitely is in our interest. When I say public interest, in this case 76% of the public are against animal testing according to the RSPCA. So can I ask the Minister to guarantee that this ban on new licences in these cases will be maintained? I am disappointed that the noble Lord, Lord Fox, is not here because I was going to ask him if, in the spirit of nominative determinism, he would withdraw his Amendment 16. However, I say to the noble Baroness, Lady Brinton, that it certainly raised hackles, not necessarily human ones.

On the subject of dynamic alignment, I have two questions for the Minister about an apparent contradiction in our debates last Wednesday. I pored over Hansard, and I found that he said:

“If the UK makes a sovereign decision to mirror EU provisions, the Bill provides the mechanism and flexibility, on a case-by-case basis, to do so. This would avoid primary legislation each time technical changes are needed and would increase the certainty that businesses are crying out for”.—[Official Report, 20/11/24; col. GC 74.]


However, he went on to say:

“The powers in the Bill do not allow regulations to make automatic or ambulatory references to changing EU law. I reassure noble Lords that the Government will return to Parliament to make any changes to references to EU law within our regulations”.—[Official Report, 20/11/24; cols. GC 74-5.]


On careful reading, these statements seem a bit contradictory. So, although I am totally willing to be persuaded otherwise, perhaps the Minister could write to explain to the Committee exactly what is proposed and what was meant. If I am being particularly thick, I would be very happy for him to explain why.