Product Regulation and Metrology Bill [HL]

Debate between Lord Leong and Lord Fox

Committee stage
Wednesday 11th December 2024 Grand Committee

[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.

UK Entrepreneurs

Debate between Lord Leong and Lord Fox

Wednesday 4th December 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, when the Minister answered the noble Lord’s original Question, some of it got missed—happily, that was what I was planning to ask. Most entrepreneurs start as small or medium businesses before they become big, powerful businesses. It is very clear that the rise in NIC has hit those businesses disproportionately. As a result, there is less money for them to invest for growth and innovation. When the Treasury was considering that rise, it must have traded off future growth for short-term tax revenue. Was that the view of the Treasury at the time and why was it the view of the Treasury at the time?

[Lord Leong (Lab)]

My Lords, as much as I would love to indulge the noble Lord with an answer, I had best leave all Treasury questions to my Treasury colleagues. As I said earlier, most small businesses will not be affected by the employers’ national insurance rise. At the end of the day, we need confidence and to attract investment to this country, and to allow small businesses to have access to funds. I mentioned the tax reliefs earlier. The EIS, SEIS and VCT are tax reliefs where investors can gain 30% to 50% tax relief immediately and pay no capital gains tax. Those are the tax reliefs that businesses want; and to scale up, there is access to funding from the alternative market and from crowd- sourcing funds, such as Republic Europe and Crowdcube.

Product Regulation and Metrology Bill [HL]

Debate between Lord Leong and Lord Fox

Committee stage
Wednesday 27th November 2024 Grand Committee

[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.

--- Later in debate ---

[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?

--- Later in debate ---

[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.

Product Regulation and Metrology Bill [HL]

Debate between Lord Leong and Lord Fox

Committee stage
Wednesday 20th November 2024 Grand Committee

[Lord Fox (LD)]

I think the Minister is trying to have it both ways. On the one hand, this committee is so long-winded that important and breathless regulation could not be made and, on the other hand, the regulations will be so small and insignificant that this committee does not need to observe them. It is either one thing or the other—and if there are emergency regulations, I am sure that we can put in place a process to necessarily short circuit and get that before your Lordships’ House quickly. So, the idea that somehow this would hold up vital regulation that that the country is waiting for overnight is something of an overstatement of the process of regulatory development.

[Lord Leong (Lab)]

I said earlier that we will look at this on a case-by-case basis. Some regulations will relate to very minor technical changes, so it really would be taking up too much parliamentary time for that, whereas other regulations may need a full scrutiny, and we will have avenues for that.

On the amendments from the noble Baroness, Lady Lawlor, although parliamentary oversight is crucial, requiring the sunsetting and renewal of regulations under Clause 1 would create legislative gaps and undermine regulatory certainty. This is particularly for essential product regulations that protect consumers or for products where their design, production and installation may take over a year. Ensuring consumer safety is a constant, ongoing concern. We also have to ensure that businesses have certainty. Having a sunset clause will not give certainty to businesses.

As I have explained, these are also highly technical regulations, covering matters as detailed as the formulae for measuring outdoor noise, for example, and I am not sure it would be a good use of parliamentary time to re-examine such specific matters on an annual basis.

Similarly, Amendments 40, 41, and 131 from the noble Baroness, Lady Lawlor, ensure that regulations incorporating EU law will be subject to parliamentary debate, with consideration of constitutional impacts. As Members of the House will be aware, a duty to assess the impacts of any new legislation on trade between Northern Ireland and Great Britain already exists, and the responsible Minister must make a statement considering any impacts on trade between Northern Ireland and the UK internal market. To provide additional assurances, it is considered that the powers set out in Clause 5(2) provide a proportionate and appropriate parliamentary scrutiny process, where the regulations will often be highly technical and routine in nature.

Noble Lords, including those on the DPRRC, have questioned the Government’s intentions as regards consultation on changes made under the Bill’s powers. Amendment 126, tabled by my noble friend Lady Crawley, for example, proposes to establish a duty for the Secretary of State to publish regulations in draft form, and consult such persons as the Secretary of State considers appropriate.

I fully appreciate the importance of consultation and industry engagement. My department and the Department for Business and Trade have excellent relationships with industry and consumer groups and will continue to engage regularly with any stakeholders before changes are introduced. Indeed, we currently have two calls for evidence in circulation seeking stakeholder input, one on the introduction across the UK of a common charger for all our mobile phones and other portable electrical and electronic devices, and the other on measuring noise from outdoor equipment.

We have not included a statutory consultation requirement to allow for proportionate engagement with industry and consumer groups depending on the significance of the changes. This ensures agility in responding to emerging risks or market developments to protect UK consumers, as mentioned by the noble Earl, Lord Lytton. But I give a firm commitment to noble Lords that the Secretary of State will engage and consult with relevant stakeholders before legislating.

Amendment 33, in the name of the noble Lord, Lord Jackson, and mentioned by the noble Lord, Lord Fox, refers to supply chains involved in products and the extent we need to regulate them. This can be complex, and it is important that we get it right.

Clause 2(3) sets out examples of the persons on whom product regulations may be imposed. However, this is not always clear. Depending on the nature of the product or its supply chain, product regulations may need to cover a whole variety of other actors involved in a product journey. For example, our regulations on the safety of lifts need to cover the people involved in their installation as well as their manufacture, and regulations on recreational craft cover private importers in addition to the usual supply chain actors.

We also need to ensure that rapidly changing business models cannot be exploited, allowing bad actors to exploit good business by defining themselves out of regulation. For this reason, Clause 2(3) is an inclusive list, not an exhaustive list, of persons on whom regulations can be imposed. Clause 2(3)(h) further clarifies that regulations can apply to anyone carrying out activities in relation to a product.

[Lord Fox (LD)]

My Lords, I beg your Lordships’ leave, and I apologise to the noble Lord, Lord Jackson, for taking over his amendment here, but the wording of Clause 2(3)(h) is

“any other person carrying out activities”.

All the other items refer to the activity of the sale and marketing of that product. This does not refer to it but any person carrying out activities unspecified. For example, if I were repairing a product, would I be in the scope of the Bill? I could be, but I do not think that that is the purpose of the Bill. There needs to be some modification of that language—I think the noble Lord, Lord Jackson, is shrewd in putting that up—which focuses on the development and marketing of the product. Otherwise, it is any person doing anything to it.

[Lord Leong (Lab)]

I thank the noble Lord for that point. As I see it, it is the whole manufacturing of the product itself. For example, 3D printers are getting cheaper and cheaper on the market, and anyone can make anything from a 3D printer. So we need a regulation that covers someone who sells the printer, someone who supplies the plastic that goes into the printer and whoever makes that. Unless the noble Lord is mistaken, perhaps I and officials could have a private conversation with him and the noble Lord, Lord Jackson.

[Lord Fox (LD)]

I think we better had.

[Lord Leong (Lab)]

To conclude, I hope that I have been able to provide assurances on all these matters and I assure noble Lords that the Government have carefully considered—

Product Regulation and Metrology Bill [HL]

Debate between Lord Leong and Lord Fox

2nd reading
Tuesday 8th October 2024 Lords Chamber

[Lord Leong (Lab)]

I thank the noble Lord, Lord Sandhurst. I will ask my officials and come back to the noble Lord on that request.

The noble Lord, Lord Foster, asked about lithium-ion batteries. I am pleased to advise that, while we have been in this debate, Minister Madders, my colleague in the other place, is in Paris at the OECD global awareness campaign, which this year focuses on lithium-ion batteries. The UK and the Office for Product Safety and Standards have been leading on this campaign. The noble Lords, Lord Redesdale and Lord Fox, raised additional points about disposal. Ministers are referring proposals to consult on reforms to UK battery regulations before setting out next steps.

The noble Lord, Lord Russell of Liverpool, asked why the UK wished to be able to continue recognising the CE marking. This Bill will allow the Government to choose to recognise updates to EU product regulation to provide continued regulatory stability and avoid extra costs for business where this is in our interests. It will also allow us to end recognition of EU requirements where it is in the interest of business and consumers. We presently recognise current EU regulations for a range of products. Legislation passed in May 2024 to continue CE recognition for 21 product regulations is estimated to save UK businesses £640 million over a 10-year period, largely from avoiding duplicate compliance and labelling costs. Provisions in the Bill allowing us to continue or end recognition of EU requirements will enable us to provide the certainty that businesses need to plan for the future and innovate, supporting economic growth. The UK and EU share information on trade, including changes to the trade and co-operation agreement.

The noble Lord, Lord Foster, and several other noble Lords asked about the disposal of lithium-ion batteries. The Government are committed to cracking down on waste as we move towards a circular economy, where we keep the resources we use for longer and reduce waste. The existing product responsibility scheme for batteries and waste electronics makes producers responsible for the cost of end-of-life treatment. Under existing UK legislation it is already mandatory for all batteries placed on the market in the UK to be clearly marked with the crossed-out wheelie bin.

The noble Baroness, Lady Crawley, asked why there have been no changes to legislation on product safety since our exit from the EU. I can reaffirm that this is real, hence bringing forward powers in this Bill to allow us to make changes before divergence happens and we fall further behind.

The noble Lord, Lord Frost, asked why we cannot use existing powers. The new Bill powers are required to enable the Government to modernise and future-proof product regulation, ensuring that it is tailored to the needs of the UK. The powers in the retained EU law Act 2023 are limited, in that they can be used only to revoke and replace assimilated law and have other inbuilt restrictions—for example, secondary legislation that is made under REUL must be deregulatory. This means that we would not be able to use the powers to increase safety requirements to respond to new and emerging threats through further amendments and legislation which was not assimilated law before.

The noble Lord, Lord Frost, also asked whether the Bill will make the UK a rule-taker or a rule-maker. We are definitely not a rule-taker. We are a rule-maker, and the Bill will provide powers to give the UK greater flexibility in setting and updating its own product-related rules, as well as enabling the UK to choose whether to recognise relevant EU products requirements. Any further changes made using these powers will be subject to appropriate parliamentary scrutiny. The noble Lord asked whether the Bill protects internal markets. The Bill will give us flexibility to ensure product regulation and metrology now and in the future. It is tailored to the needs of the UK as a whole. It will enable us to make changes to product regulation and metrology legislation that will benefit businesses and consumers.

The noble Lord, Lord Frost, also asked about the Windsor Framework. In updating its regulation, the EU will be seeking to deal with many of the same challenges that the Bill will address: for example, online marketplaces and batteries. The Bill will enable a choice to be made as to whether it is in the interests of UK businesses and consumers for UK regulations to take the same or a similar approach, or indeed a different one.

The noble Baroness, Lady Brinton, asked whether the Government will commit to a policy of alignment with EU chemical protections. This Government are committed to protecting human health and the environment from the risks posed by chemicals. We are currently considering the best approach to chemicals regulation in the UK separately to this Bill and will set out our priorities and next steps in due course. The noble Baroness also asked how the Bill will help the Government respond to emergencies.

[Lord Fox (LD)]

Am I to understand that, if there is to be separate consideration for chemicals regulation, it will not be in this Session because it was not in the King’s Speech? So all those businesses that are currently struggling with where we are now have at least a year, and probably 18 months, to wait before any sense of a Bill—never mind that Bill becoming law.

[Lord Leong (Lab)]

I am coming back to that in the later part of my winding speech.

National emergencies such as Covid-19 highlight the importance of ensuring that our product regulation framework allows for flexibility in times of national emergency. This enabling Bill will allow the Government, in response to an emergency, to temporarily disapply and modify product regulation while maintaining high safety standards, thereby providing a faster process by which critical products are able to reach the market in order to sustain an adequate supply of such products.