Product Regulation and Metrology Bill [HL]

Lord Kirkhope of Harrogate Excerpts

Committee stage
Wednesday 20th November 2024 Grand Committee

Sixthly, and finally, it would be enormously helpful to business to understand how the selection process will work in terms of deciding whether we should align with EU and CE, and to be given some examples of how this would operate and the decision mechanism that one goes through. At the moment, everybody is slightly in the dark about how it is going to operate.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I rise with no emotion in my voice—because, as noble Lords will appreciate, to be a Government Whip under Margaret Thatcher and John Major one had to leave emotion aside—to support Amendments 17 and 127, which bear my name. In doing so, I first want to speak to Amendments 6, 9, 15, 36, 37, 39 and 42. Obviously, I am against those amendments because they would fundamentally alter the purpose and practical operation of the Bill. If the aim of these amendments is to damage British businesses and our competitiveness on the world stage, noble Lords promoting them should say so. They should also be open with this Committee. If these amendments are simply a product of opposition to the EU or anything associated with the word “Europe”, they should make that absolutely clear.

This raises a critical question: who benefits from this approach? It is not British businesses. Our industries require clarity, predictability and coherence to thrive in competitive global markets. These amendments risk creating a fragmented system where businesses face the burden of navigating multiple and potentially conflicting regulatory frameworks. The UK has a proud history of robust safety and environmental protections. These amendments focus on what are termed “foreign laws”, without any clear guiding principle, and risk creating uncertainty about the quality and safety of products in the UK market. The outcome would be confusion for manufacturers, exporters and regulators alike. These amendments also prohibit the use of some dynamic alignment, a valuable tool for ensuring that our regulations remain relevant and competitive in an ever-evolving global market.

The European Union remains our largest trading partner. Its product regulations set a widely recognised global benchmark. Dynamic alignment allows us to align with the EU when it is in our interest to do so, ensuring that our businesses can access those markets while reducing additional costs or barriers. Denying this flexibility would leave the UK with an outdated and rigid regulatory framework to the detriment of businesses, workers and consumers alike. This introduces a potential free-for-all of standards with little clarity on how decisions would be made or who would be consulted. It is not the framework we need to build confidence in our regulatory system at home or abroad. These amendments represent a step backwards. They prioritise an abstract notion of flexibility over the real-world needs of businesses, consumers and our economy. They threaten to create a chaotic, fragmented regulatory environment that would disadvantage British industry and weaken our position in global trade.

I support the amendments I referred to that bear my name. I believe they offer a practical and balanced approach to regulating products in the United Kingdom. They would provide clarity for businesses by establishing alignment with EU product standards as the default position while, of course, maintaining the flexibility to diverge where clear benefits can be demonstrated. The EU remains our largest trading partner, as I have said, and its regulatory standards often set the tone for international markets. Aligning with those standards simplifies trade not only within Europe but globally; many third countries recognise those rules, and British businesses benefit from this de facto international benchmark. Diverging from EU standards risks isolating our industries, as I have said, and placing UK businesses at a competitive disadvantage.

The financial case for these amendments is equally clear. Without regulatory alignment, businesses face the double burden of not only having to navigate two distinct sets of standards but it not being bureaucratic. It is expensive: the Government’s impact assessment has shown that duplicating conformity assessments alone could cost businesses up to £1.6 billion over the next decade. There are many small and medium-sized enterprises that we should be particularly concerned about. These costs are insurmountable and may even deter them from exporting altogether. Our amendments would mitigate those risks by creating a framework of consistency and certainty.

I welcome the decision by the previous Government— my Government—to extend the recognition of CE marking indefinitely. This amendment would build on that precedent, turning an ad hoc decision into clear, predictable policy.

It has already been referred to but I draw your Lordships’ attention to the situation in Northern Ireland, where alignment with EU product standards is already a reality under the Windsor Framework. This approach would complement the Windsor Framework, ensuring that businesses operating across Great Britain and Northern Ireland have a consistent regulatory environment; reducing friction and confusion; and avoiding separate rules governing different parts of our country. I am sure noble Lords agree that that is desirable.

Our amendments are pro-business, pro-trade and pro-consumer. They reflect the realities of our interconnected world and would ensure that the UK remains an attractive place to invest, trade and innovate.

[Lord Browne of Ladyton (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Kirkhope. Tempted as I am to follow his lead and comment on some of the other amendments in this group—other than the ones I put my name to, that is—I shall resist that temptation. My intention is to speak to Amendment 17 only and, even then, in a restricted way.

Before I do so, I join others in congratulating the noble Lord, Lord Sharpe, on his new appointment. He and I have debated consistently and for a period a number of issues; I will miss those opportunities because it is unlikely that I will be back in this space, in policy terms, in future.

I do not intend to rehearse in any detail the arguments that have already been made. I just want to emphasise why this amendment is squarely consonant with the aims of this Bill and will increase our agility in providing British businesses with a greater degree of certainty. As my noble friend the Minister outlined at Second Reading, the Bill aims to underpin the UK’s position at the forefront of international trade and enable the recognition of EU product requirements where it is in the UK’s interests to do so. It is precisely in that spirit that I added my name to Amendment 17; in the short time I will detain the Committee for, I shall attempt to explain why I believe that this provision will smooth our path to accomplishing these goals. Perhaps most importantly, the Bill in general—and Amendment 17 in particular—aims to move beyond the wrangling consequent upon Brexit and to provide our businesses and industrial sector with the certainty they need and crave.

I have had occasion in other contexts to make the case that regulatory certainty does not diminish our economic strength but is a prerequisite for those businesses on which our economic strength depends. The certainty that Amendment 17 would provide will not inhibit economic animal spirits but will allow businesses to plan and co-ordinate their commercial activity with the same confidence that their competitors in the EU and elsewhere currently enjoy. It is for that reason that the 50,000 businesses represented by the British Chambers of Commerce, and those businesses belonging to the Engineering and Machinery Alliance, support the policy of dynamic alignment, which would be instituted by the adoption of this amendment. We have tried the inverse of this approach and ought to have learned the lessons.

The brave new world of a UK-only system for the regulation of goods and products was widely disregarded by domestic businesses, who overwhelmingly chose to continue to conform with the CE mark because it allowed them access to an exponentially larger market. Indeed, the previous Government’s own regulatory impact assessment in this area showed that some overseas suppliers stated their intention to limit product supply to GB if CE was no longer recognised. Overall, the then Government’s best estimate was that around 18,500 UK manufacturers were involved in affected industries and that the average annual value of all manufactured goods imported into the UK subject to UKCA or CE requirements was £110 billion, with around half of these imports from the EU. In 2019, products that were subject to UK or CE requirements represented around a quarter of all UK-imported goods. As we have heard, the previous Government’s own impact assessments of duplicative conformity and labour time, to which the noble Lord, Lord Kirkwood, drew our attention, estimated total costs of up to £1.6 billion over the next decade. As your Lordships’ Committee is aware, in May 2024, after repeatedly extending the deadline to transition to the UKCA, the UK Government admitted defeat and indefinitely extended the recognition of CE goods in GB markets.

As I said at Second Reading, I have lost track of the number of Conservative Ministers I have seen in my 27 years in Parliament announcing their determination to kindle a bonfire of regulations, to take an axe to red tape, or some similarly strenuous deregulation measure. If that really is their desire, there are few things better calculated than this amendment to obviate the need for business to undertake rigorous conformity assessments and, consequently, smooth the path for frictionless trade. As such, this amendment preserves the intentions of the Bill to update our regulations according to a calculus of national self-interest, giving our businesses regulatory certainty while still allowing us to diverge from EU regulations when it is to our advantage.

At the risk of repeating an element of my remarks from Second Reading, we have seen a parallel scenario emerge in respect of our chemical regulations. The last Government decided to leave REACH, the EU’s body dictating the registration, evaluation, authorisation and restriction of chemicals regulations, to set up a parallel organisation. Since then, we have not adopted a single registered restriction on a harmful substance, compared with 10 new protections offered by EU regulation, including on harmful microplastics deliberately added to products. While REACH has regulated PFAS in the EU, not a single river or water body in England is in good chemical health. Since we left REACH, the EU has initiated 23 risk assessments related to harmful substances, while we have initiated just three. It may be that this is a function of a more vibrant, freebooting approach, or that we have superior data or a more effective methodology, but I fear it may just be that our duplicate body has simply proven less effective, which in turn imperils the safety of people in this country.

Product Regulation and Metrology Bill [HL]

Lord Kirkhope of Harrogate Excerpts

Committee stage
Monday 25th November 2024 Grand Committee

I am concerned that an extension of EU product law, such as the example I just gave, to a wider range of goods than those now covered by CE requirements will stifle innovation, growth and development in our sectors, with these consequences: giving overseas competitors advantages in the UK’s domestic market; making compliance and regulation too complex and costly; depressing market share; decreasing consumer choice; and raising prices at home and abroad. It will have an adverse impact on the potential of our businesses to grow, expand and export. For that reason, putting the growth object first in the Bill—my noble friend Lord Sharpe urges this, as do I in my amendment—will help contain the wider excesses of a political tendency to follow blindly where EU law has led. This was done with effect in Section 26 of the Financial Services and Markets Act, which we passed last year, where a competitiveness and growth object was included for the regulator. However, my amendment puts the duty directly on the Government of the day to legislate for good outcomes and growth in a manner that will help the UK and promote growth.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I came here full of hope and expectation this afternoon; indeed, I even indicated to my noble friend Lord Sharpe that, on this occasion, I was here to support his Amendment 11 and Amendment 11A in the name of my noble friend Lady Lawlor, because, as one reads them on the page, they seem to have a lot of merit. However, I regret that, as my noble friends have spoken, they have in their speeches used these amendments to diminish the importance of our major market in Europe and our relationship with the European Union. Noble Lords will be delighted to know that I am not, therefore, going to concentrate any further on those matters but shall instead turn immediately—to my own relief and that of those parties—to Amendments 104A and 124A.

I want to refer in particular to sandboxes, a very interesting area that most members of the public probably do not have a clue about, other than from their visits to coastal regions during the summer holidays. Of course, sandboxes are terribly important in the context of this Bill. My noble friend Lord Sharpe was right to allude to them and to say how important they are; indeed, there are already in place regulations referring to their use, to how IP can be protected, as has been mentioned to me, and so on. However, I want to broaden this issue out a tiny bit. In winding up on this group, can the Minister clarify the way in which sandboxes are protected and how, from the point of view of UK plc, we can make use of them without danger either to the thinking that goes into innovation in them or to the overall position of this country apropos markets, wherever they may be in the world?

I am particularly interested—I know that other noble Lords present this afternoon may well speak on this—in sandbox use in the development of technology and AI. This is an area in which this country has every opportunity to lead the world. Certainly, sandboxes are one way that one can experiment and bring in new ideas without the risk or danger of them being exploited by others, against the interests of this country. I merely say that I support Amendments 104A and 124A, in the principles that they debate, but I would like the Minister to clarify how we can bring together sandboxes, in whichever field they may be deployed, to the benefit of the country.

[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.

--- Later in debate ---

[Baroness Freeman of Steventon (CB)]

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

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

[Lord Kirkhope of Harrogate (Con)]

My Lords, as one of the unfortunate authors of the GDPR, I am very interested to hear the remarks that have been made about possible abuse of the use of data. First, I thank my noble friend Lord Holmes very much for his amendments because, obviously, without proper consideration of the effects in technology and the fast-moving developments of AI, no legislation, particularly the sort of legislation, will really pass muster, so I support his amendments very much.

However, as far as GDPR is concerned, we brought into all of that a term that many of our European Union friends were not going to include at the time: proportional. In relation to how we deal with alleged data abuse, whether or not it is simply a question of small areas of data that have been used for good purposes or otherwise, it is important that we remember at all times that the heavy hand must be looked at carefully and that proportionality must always be remembered as being relevant to the way in which we deal with the use of data.

[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.