Product Regulation and Metrology Bill [HL]

Lord Russell of Liverpool Excerpts

Wednesday 20th November 2024 Grand Committee

[The Deputy Chairman of Committees (Baroness Newlove) (Con)]

My Lords, I must inform the Committee that, if Amendment 4 is agreed to, I cannot call Amendment 6 by reason of pre-emption.

[Lord Russell of Liverpool (CB)]

My Lords, I will speak to Amendments 17 and 127 in my name. I also would like to congratulate the noble Lord, Lord Sharpe, on moving from the calm waters of the Home Office to the much more exciting waters of his new role. I hope he will enjoy the turbulence that will be created, not least perhaps by this group of amendments.

I have tabled this quite deliberately with a cross-party group representing the three principal parties across the House. This is designed, frankly, to try to drain the politics and emotion from this particular issue. The Government have made it quite clear that their primary driver for this Bill is to encourage economic growth and, above all, sustained investment. Having spent 31 years serving all kinds of businesses, including some of the largest companies in the world, as a headhunter, I know that one thing companies hate above all is uncertainty. For the last few years, many of our businesses have lived in a state of more or less continuous uncertainty, which they are not very happy about. That partly reflects our economy not moving as fast as it should and levels of investment which are at the bottom of the league table against our primary competitors.

The recent attempts, since midnight on 31 January 2020, to try to create our own system of regulation have been repeatedly underwhelming. I suspect they have been extremely expensive. I do not know whether the Minister will ever be able to find out quite how much the UKCA exercise has cost. I suspect if he managed to get the noble Lord, Lord Callanan, into a bar and plied him with enough drink—possibly Scotch whisky—he might find out. I suspect it was a considerable and rather embarrassing sum.

That has created a state of uncertainty. This Bill gives us a change to try to calm the situation down. Above all, what I want to do, and what I persuade and implore all noble Lords to do, is to drain the emotional and ideological swamp around some of these issues, and to get away from arguments which, frankly, most businesses have very little time or respect for—however important they may seem to the people for whom it is important—about sovereignty and rule-taking, and all those things. Most businesses are as interested in those issues as the general public is in your Lordships’ House and what goes on here. Most of them have no idea at all and have very little interest. Frankly, that is the same attitude that most businesses have to some of the wrangling that has gone on around these issues. Above all, they want certainty.

To start, I quote the head of trade policy at the British Chambers of Commerce, Mr William Bain, on the Bill:

“We would encourage the Government to bring forward an indication of the policy it intends to follow under the bill in terms of whether it would be the default that there would be alignment with relevant EU measures in scope of this or whether they will look at it on a case-by-case basis. But the BCC in its report and surveys and evidence has the data from our members to say that they think for traded goods, having as much alignment as possible is beneficial for trade with the EU”.


Other bodies, such as the Engineering and Machinery Alliance, said the same. CHEM Trust said the same on chemicals and REACH. I think I can rely on the noble Baroness, Lady Bennett, to weigh in on the environment, and we have already touched on some sensitivities about trade with Northern Ireland and trying not to upset the Windsor agreement and the DUP any more—it seems to be in a state of habitual disarray and alarm, which I do not want to exaggerate.

Secondly, the Government themselves, in their Explanatory Notes on the Bill, say that it is

“ensuring that the law can be updated to allow a means of recognising new or updated EU product requirements”

including CE marking, where appropriate,

“with the intention of preventing additional costs for businesses and provide regulatory stability”.

At this point, I return to the theme of Scotch whisky. I thought it was interesting to find a paper from the Scotch Whisky Association, with which certain noble Lords may be familiar. It says that business certainty and consistency by transposing EU market legislation of relevance to Scotch whisky in the UK is of extreme importance and that:

“A pragmatic, non-disruptive transition will be fundamental”.


We are looking for a Bill that gives the degree of certainty that business is craving and looking for. The result of the recent election in the United States of America is a cause of some alarm for some businesses, with perhaps increased uncertainty. I would not be surprised if the President-elect does not again hold out the prospect of a glittering trade deal between us and the United States. I suspect it might never be forthcoming or, if it is, the price we would pay would certainly benefit America first and us last.

The amendments that we are putting forward are in no way, shape or form driven by ideology; they are driven by business pragmatism. I also point out that the Government recently published an industrial strategy Green Paper, from which I quote:

“This government believes it is our role to provide the certainty that inspires confidence, allowing businesses to plan not just for the next year, but for the next 10 years and beyond”.


In essence, this is what we are trying to encourage the Government to articulate during the passage of this Bill, in such a way that business will not have to read between the lines to understand what the Government understand, as it is straight up there—either in the Bill or in comments made at the Dispatch Box that make the Government’s hopes and intentions very clear.

I gently remind some of those who might perhaps take issue with these amendments that it was the new leader of the Conservative Party, in her previous role as a Cabinet Minister, who effectively blew the whistle more than once on some of the attempts by her party to put in place a variety of measures to try to replace some issues that affect trade and regulation with the UK. She found disfavour with some members of her own party for doing so, but I would be interested to know whether the noble Lords who find fault with these amendments have spoken to the new leader of their party to see what her view of this is.

I will finish by firing some questions at the Minister. They are mainly aimed at the Bill team, because I do not expect an immediate answer, but I would be grateful if the noble Lord could come back to us in writing.

First, what calculations have been made by the Government of the impact of divergence in product standards from the EU going forward on our exports and our imports?

Secondly, what engagement have the Government had with industry on the impact of aligning with the EU on product regulation? I know from a meeting that the noble Lord, Lord Kirkhope, and I had, thanks to the Minister, with him and the Bill team that there has been considerable engagement throughout the past year with all kinds of areas of business. It would be helpful to know how extensive that was and what level of detail it was able to go into.

--- Later in debate ---

[Lord Jackson of Peterborough (Con)]

My Lords, I rise to support the amendment in my name and primarily that of my noble friend Lord Frost, particularly Amendment 4. It would not be fruitful to relitigate the Brexit wars, and certainly, those of us who have tabled these amendments do not wish to do so. We are looking at this Bill and its proposals. It is notable to remember that it is not the Government who are moving Amendment 17 and its consequent later amendment, but other noble Lords.

I shall just specifically talk about the amendment to Clause 1(2). It is actually quite a loose and opaque concept to talk about tabling an amendment to the Bill which talks about mitigating or reducing the “environmental impact of products”, because there is quite a degree of confusion about that specific phrase. There is also a significant question as to why there is a specific carve-out for this in the Bill. My noble friend Lord Frost raised this issue specifically with the Minister, the noble Lord, Lord Leong, in his letter of 16 October, and asked why it was necessary to have a separate provision to deal with this. My concern about this clause is that there is the prospect, if it remains in the Bill, not only that we may replicate very narrowly drawn product safety regulations as regards the environment, but that, due to mission creep, it can develop a lot of other particular areas. That may be music to the ears of the noble Baroness who represents the Greens, but it may extend to a supply chain’s due diligence, or to vehicle standards, artificial intelligence or deforestation. Those are all very wide areas where there would be a significant impact from what looks like a pretty innocuous clause. Therefore, I would like the Minister to address that particular issue, because it is very important.

To go back to the clause that is referenced in the amendment from my noble friend Lord Kirkhope of Harrogate and the noble Lord, Lord Russell, I am not sure that they have been witnessing the same situation with the regulatory regime and this Labour Government since 4 July. We are already seeing de facto alignment. We are seeing alignment on a common charger for electrical devices, the vote to leave the energy charter treaty and rules on organic pet food. We are seeing delayed divergence on Section 6 of the retained EU law Act, which is about paying due regard to European Court of Justice decisions vis-à-vis the UK courts; recognition of CE-marked construction products; the suspension of mandatory recycling labels; changes and delays to the implementation of the Windsor Framework; delays to the border target operating model; regulation on deforestation-free products delayed; and entry and exit schemes delayed.

The idea that this Government are presiding over a mass large-scale divergence is completely not the case. For a speech that was meant to take the political heat out of the debate, I think it was quite a political speech by the noble Lord, partly relitigating the long battles over Brexit we had. I do not think it is an ignoble aim for us, in laying these amendments in Committee, to make a point about the geopolitical changes in the United States with the election of President-elect Trump and the focus on deregulation and fewer and more flexible regulations. There are economic difficulties in the European Union, particularly in Germany, which has had some significant encumbrances in terms of all manner of economic data. To tie our regulatory regime to just one market—the European Union, where we have no control, no say and no voice—in a Bill in which there are huge numbers of Henry VIII and discretionary powers to be exercised by Ministers that are effectively unamendable is a risk. That is the risk, and it is the risk of this amendment.

The fundamental flaw of this amendment is that it is asymmetrical and unbalanced. My noble friend Lord Kirkhope used the word balanced. I do not think it is balanced; it is incongruous because there is an inherent presumption—a requirement in this amendment —for us to accept dynamic alignment. At least the noble Lord, Lord Browne of Ladyton, was honest that it is dynamic alignment. It is Chequers 2.0. In this amendment, we are being asked to support Chequers enunciated in primary legislation. I believe that is wrong.

The reason I think that there is a flaw and that it is incongruous is that if noble Lords look at Amendment 17, in subsection (3) of the proposed new clause there is a requirement to lay a statement before Parliament within 14 days about why a decision not to replicate EU law under proposed new subsection (2) is necessary. Funnily enough, there is not a similar requirement to lay a statement if it is decided to diverge from European Union regulations. I say to my noble friend and the noble Lord, Lord Russell, that the amendment would have been a lot stronger and a lot more robust to criticism by this side and perhaps even Ministers if that had been in the amendment. It is not, and for that reason it is a regrettable amendment. It seeks to tie us to a shrinking market which, by dollar denomination, will be about 14% of world trade within the next 10 or 12 years. That is not something we can put in the Bill. For that reason, I will not support it.

[Lord Russell of Liverpool (CB)]

I shall quickly respond to the noble Lord. One of the reasons why I asked the Minister for some detail about the breadth and depth of the consultation his department has had with business was to find out what business really thinks. I would say, in riposte to the noble Lord, that the key thing that should drive decisions on whether we align with the European Union or any other jurisdiction should primarily be what business is telling the Government. Businesses have a far better idea of the economic state, presently and potentially, of the markets they do business with. In fact, they have a much better idea than either Ministers or civil servants. From my point of view of trying to speak on behalf of business, listening to them on what they think should be the priority would seem the sensible thing to do.

[Baroness Lawlor (Con)]

My Lords, I thank the Minister for his generous allocation of time the other day to discuss some of the issues; I am very grateful for that and to his officials. I apologise for missing the debate on group 1 because of train delays for hours, but I rise now because my Amendment 6 cannot be called if Amendment 4 is agreed. I will speak to Amendment 9, which would disallow regulations that disadvantage the UK under its trade treaties. I will highlight the CPTPP and the UK’s main bilateral trade agreements with Australia and New Zealand. I support Amendments 15 and 37 in the name of my noble friend Lord Frost, and I add my Amendment 39 to prevent dynamic alignment with the EU.

The aim of these amendments is to ensure that the UK can help shape and promote free trade globally to the benefit of free trade under a rules-based agreement at international level. That is inconsistent with locking the UK into the EU’s protectionist arrangements, even on a case-by-case basis, I fear. They are different; they are under code-based legal systems and they are shaped by different legal thinking from that underpinning UK law, which is more pro-entrepreneurial and innovation-open. I do not believe we should saddle UK producers and consumers with the cost of complex EU protectionist law rather than be open to the best and most similar arrangements elsewhere—foreign laws—or our own laws that can benefit our economy.

I shall give an example of what I mean by protectionist and inward-looking EU law and then look at how it affects growth figures and jobs; I disagree with noble Lords who suggest otherwise. One illustration comes from the EU’s digital commerce and AI sector. The damage was annotated in a September 2024 study, Rules Without End: EU’s Reluctance to Let Go of Regulation, by two EU-friendly economists, Guinea and du Roy. They concluded that,

“the EU rulebook added 562 new pages and 511 new articles on Data & Privacy; as well as 271 new pages and 247 new articles on E-commerce and Consumer Protection”,

amounting to nearly 2,500 new restrictions for data and privacy and 1,200 for e-commerce and consumer protection. The cost was highlighted former MEP Luis Garicano, who concluded that this coincided with a 50% drop in the number of new apps coming onto the market. Meanwhile, the report said, a study by the Bank of Spain,

“found that each additional regulatory provision was associated with a 0.7 percent decline in the employment rate of the affected sector”.

Other noble Lords with whom I disagree have tried to draw our attention to employment rates. The Ernst & Young investment monitor for 2024 indicated that the UK had the largest number of jobs created by FDI in 2023. The UK was at 52,000, France was at 40,000 and Germany was at 14,000. Project numbers in the UK were increasing; in France and Germany, they were falling.

The other indicator to which I would like to draw your Lordships’ attention—I hope the Minister will look sympathetically on these amendments—is GDP share. The EU’s declining share of global GDP is mirrored in its recent growth figures. Whereas UK growth in the year ending June 2024 was 0.7%—yes, that is disappointing—the eurozone’s was behind that, despite having three G7 members among its number. In the third quarter—that is, since June—figures for UK growth are up by 0.5% and the eurozone’s by a disappointing 0.2%. For those reasons, there is a strong economic case for not locking us into the EU’s protectionist arrangements. Despite the best will in the world in Brussels to move out of them, the EU seems to get stymied each time by ever greater protection, as these studies suggest.