My Lords, in the unlikely event of a Division, the Committee will be adjourned for 10 minutes. Much more likely is that some Members may have been adversely affected by Storm Bert and may not be able to join us for this session.
11: Clause 1, page 1, line 21, at end insert—
“(4A) The Secretary of State must also by regulations make provision aimed at promoting investment, fostering innovation, and encouraging economic growth in relation to the marketing or use of products in the United Kingdom.(4B) Regulations under subsection (4A) must support—(a) the creation of economic incentives for businesses that contribute to economic growth, and(b) the alignment of product regulations with the strategic aim of positioning the United Kingdom as a global leader in innovation”Member’s explanatory statement
This amendment ensures that the regulations in the Bill prioritise economic growth and the United Kingdom’s role in innovation and economic expansion.
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.
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.
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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.
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.
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.
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.
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.
12: Clause 1, page 2, line 3, leave out “item that results from a method of production” and insert “or intangible item, whether or not interconnected to other items, that results from a method of production, is supplied including in the context of providing a service, or made available on the market, whether in return for payment or free of charge”
Member’s explanatory statement
This amendment would broaden the definition of items subject to the new regulatory framework of product regulation to ensure that all digital as well as non-digital products are within scope.
My Lords, in moving Amendment 12 in my name and those of the noble Earl, Lord Lindsay, and the noble Lord, Lord Foster of Bath, I also support the amendment from the noble Lord, Lord Fox. I welcome the noble Lord, Lord Sharpe of Epsom, to his new post and thank my noble friend the Minister for his courtesy in organising several meetings for Peers and organisations interested in this Bill; it was remiss of me not to do so earlier.
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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.
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, in 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”.
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.