Product Regulation and Metrology Bill [HL]

Report (1st Day) (Continued)

20:30:00

Amendment 8

Moved by

8: Clause 1, page 1, line 12, at end insert— “(2A) The Secretary of State may not make regulations under subsection (2) that will disadvantage the United Kingdom or its trade under—(a) the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,(b) the Japan Economic Comprehensive Partnership Agreement,(c) the UK-Canada Trade Continuity Agreement,(d) the UK-Australia Free Trade Agreement,(e) the UK-New Zealand Free Trade Agreement, or(f) any other trade treaties to which the United Kingdom is a signatory, including any free trade agreement with the United States of America.”

My Lords, Amendment 8 is a vital safeguard to ensure that the UK’s regulatory decisions do not inadvertently disadvantage our trade relationships with some of the world’s most dynamic economies. The global economic balance is shifting. Others have alluded to the statistics in previous debates, but they are very straightforward and bear repeating. The US economy is growing while the EU’s share of global GDP is shrinking. Fifteen years ago, the US and the EU each accounted for around 22% of global GDP; today, the US share has grown to 26.3% while the EU’s has declined to 17.3%. These are simple facts, not qualitative judgments. The economic future lies with markets that are expanding, not contracting; for the record, that is not the same as arguing that it may not still be in our interests to align with some of those in certain cases. Britain’s membership of the CPTPP, for example—one of the fastest-growing trade blocs—will soon be under way, creating immense opportunities for British businesses. With the US, our largest single trading partner, which accounts for about 16% of all UK exports, Britain trades under its own laws. It is essential that our regulatory framework reflects this reality and does not impose unnecessary constraints that hinder our ability to capitalise on these agreements. The importance of strengthening our economic ties with the US cannot be overstated. On 20 January, the Minister acknowledged that: “The US is a country that we have to deal with, and our businesses ask us to work with the US”.—[Official Report, 20/1/25; col. 1474.] We agree. We recognise and acknowledge that the slow progress is no fault of the Government’s, and there will be more to say on that in the months to come; but alignment with the EU, for example, as President Trump’s advisers have made clear, would make a free trade deal with the US all but impossible. Stephen Moore, a senior economic adviser to President Trump, recently stated that Britain must decide whether it wants to follow “the European socialist model” or embrace the US free market. His warning is clear: if the UK continues to shift towards EU-style regulations and economic policies, the United States will be far less inclined to pursue a free trade agreement with it. This amendment ensures that our regulatory framework does not create barriers to securing future trade deals or diminish the competitive advantages that we have gained because of Brexit. This amendment is about ensuring that our trade policy remains aligned with our national interest and therefore supports jobs, investment and economic growth on the global stage. I draw attention to a serious concern raised about deep regulatory alignment with the EU, particularly in the context of the UK’s position with the CPTPP. When the UK acceded to the CPTPP, it underwent a regulatory review to ensure that its domestic regulations complied with CPTPP obligations. This included scrutiny of various sectors, including agri-food, where Canada raised concerns about the UK’s precautionary prohibition on hormone-treated beef. The UK was ultimately allowed to accede despite this issue, but significant uncertainty remains about how the UK’s alignment with the EU’s regulatory model in the agri-food sector, among others, would be received by other CPTPP parties. Regardless of whether it is better for the UK to align with the EU or the CPTPP, can the Minister confirm that this should be a matter for debate in Parliament? The potential implications of such a decision are far-reaching, and Parliament must have the opportunity to engage in a thorough and informed discussion on this matter. As the Government have put forward a Bill that has done nothing but provide uncertainty to this House, my Amendment 64 introduces the basic yet crucial requirement of accountability. If their No. 1 priority is truly growth, they must give serious consideration to this amendment. All it does is ask them to conduct an impact assessment on future economic growth—in other words, it allows room for manoeuvre. Businesses need stability, consumers need confidence and Parliament needs clarity. As we have discussed at some length, unnecessary ambiguity about the future regulatory framework risks deterring investment and slowing economic progress at a time when we can least afford it. To be clear, growth is not achieved through vague promises or by blindly introducing sweeping powers without accountability. It is achieved by ensuring that every piece of legislation contributes positively to our economy. That is an aim we believe this Government should share, and for that reason I beg to move.

My Lords, I will speak to Amendments 8 and 64 in the name of the noble Lord, Lord Sharpe. We are playing on a similar set of variations that we have already played on in several groups. These two amendments are intended to impose additional restrictions on the implementation of this Act. As we have heard, Amendment 8 prevents the Secretary of State making regulations that could be seen as disadvantaging the UK, or conflicting with its trade agreements. The amendment goes on to list a range of trade agreements, which assumes that if you agree with one of them, you are going to agree with all of them. There is a nature where you have to choose; there are puts and takes. All those trade agreements have varying conditions, and the Government’s job is to try to choose the best option, in a sort of 3D chess game, to make sure that they do the best for this country, as the noble Lord, Lord Sharpe, pointed out. But there is a sort of “cake and eat it” idea, that if we do not do the EU, then we can somehow do all those in the list set out by the noble Lord, Lord Sharpe. His example then illustrates exactly that we cannot, because there are issues in all of these that we will agree and disagree with. The Government’s role is to have a sufficient tool that enables them to move in the right direction. I am surprised that the noble Lord chose an agri-food example because, as far as I am aware, that is not in the scope of the Bill, but I may be wrong. Perhaps there are other examples but, using his example, I do not see the banning of the hormone boosting of beef as being something the Europeans imposed on me. I am very pleased we have it, and if I am not in the European Union, I still expect the United Kingdom to uphold those kinds of standards for rearing meat in this country. If the Minister is proposing a wholesale change in the United Kingdom’s animal husbandry processes, techniques and security, then perhaps he should tell your Lordships what other things he expects to change about our food, because they are there to protect consumers from the effects of hormones and antibiotics leaking into our system. I know the noble Baroness, Lady Bennett, will probably have lots of statistics, but I hope she does not use them at this time of night. Neither of these amendments is helpful to the process, and in both cases—particularly the second— I question how an impact assessment of what I think the Minister is proposing can be done. The impact will happen through the regulations that the Act is used to implement. Until we know what the regulations are, we do not know what the impact will be. It is perfectly reasonable for the Minister to say that when the Government are tabling a new regulation, we want to know what the impact of that regulation will be on the economy, the environment and other things. We cannot do a holistic analysis of the impact of the Bill without taking into consideration all the regulations that the Bill will cause to happen. I hope he understands what I am saying. With that in view, it seems to me to be deliberately slowing up the implementation of the Act, and we do not see that the nation benefits from that.

My Lords, I thank all noble Lords for their contributions to this debate. The UK Government remain firmly committed to maintaining and enhancing our international trade relationships, ensuring that the UK remains an attractive and competitive trading partner and creating opportunities for UK businesses. This is an enabling Bill; it does not override or contradict any of our trade agreements. Instead, the Bill provides the flexibility needed to ensure that our regulatory framework can keep pace with international developments, supporting both businesses and economic growth. This will support our current and future trade agreements. Regarding Clause 1(2), the UK Government would not use this power, or indeed any Bill powers, in a way that would disadvantage the UK or its trade agreements, including those, as mentioned by the noble Lord, Lord Sharpe, set out in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—CPTPP—or, for that matter, any other trade deals the UK has signed since our exit from the EU. Any use of Clause 1(2) would also be subject to the usual process relating to secondary legislation, such as impact assessments and relevant parliamentary scrutiny. In developing our trade strategy, we are clear that free trade agreements, while not the only tool, are an important lever for driving growth. The Government have announced their intention to publish an ambitious trade strategy that will consider the range of trade tools to drive economic growth, in addition to announcing their intention to deliver a UK free trade agreement programme. The Government are committed to meeting their obligations under the free trade agreements and nothing in the Bill contradicts that. The powers will be used to make changes to legislation where that is in the UK’s best interests. The noble Lord, Lord Sharpe, mentioned agri-food. Food is excluded from the scope of the Bill, under the Schedule. Agri-food is in our FTAs. This Government will not sign deals which undermine UK standards. The Government have consistently stated that all changes to UK product regulation will be made in a way that upholds our international obligations, including our commitments in FTAs, as well as supporting UK businesses. This amendment seeks to solve a problem that does not exist. To be absolutely clear, the Bill is compatible not only with our existing FTAs but with our ambition to sign further agreements. Nothing in the Bill will prevent us signing ambitious agreements in our ongoing negotiations with partners, including India and the GCC; nor would it prevent us pursuing agreements with other partners, such as the United States of America, should the Government decide to launch additional FTA negotiations in the future. I turn to Amendment 64. The Bill as drafted allows the Government to update domestic legislation, keep pace with global changes and ensure that UK product regulations keep pace with evolving technologies and emerging risks. These powers will support the interests of UK businesses and consumers, providing regulatory certainty and creating the conditions for investment, innovation and economic growth. Regarding the economic impacts of the Bill, it has already undergone a comprehensive impact assessment, which considers economic and business impacts. It is available to noble Lords via the Bill page on the UK Parliament website. The impact assessment will also be updated and republished when the Bill moves to the other place to reflect any changes made to the Bill since it was introduced to this House. All secondary legislation made under the Bill will be subject to the statutory and non-statutory assessments set out in our code of conduct. The code of conduct sets out the current framework, as well as how the Government intend to use the Bill to provide that product safety measures brought forward are proportionate and effective. Product regulation that is proportionate will protect consumers, support responsible businesses and drive growth across the economy. I hope that I have been able to provide reassurance on this matter and the Government’s wider commitment to supporting economic growth. I therefore respectfully ask that the amendment be withdrawn.

20:45:00

I thank both noble Lords for their responses. I will answer some of the specific questions asked by the noble Lord, Lord Fox. First, I am very grateful for him calling me a Minister on more than one occasion; I would that were the case.

It is Stockholm syndrome.

Secondly, I point out that the amendment does not prevent; it just says that it should not “disadvantage”. That is not mere semantics but a very substantive point which, I would argue, invalidates the noble Lord’s arguments. To both noble Lords I would say that the reason I chose the agri-food example—I am well aware that it is not covered in the scope of this Bill—is that it is highly topical and relates to a current trade agreement. I say to the noble Lord, Lord Fox, that I did not say that we should not have a ban on hormone-treated beef; I said merely that the merits of such a ban should be debated in Parliament. I thank the Minister for his response. It was very comprehensive, but it is disappointing that the Government will not accept Amendment 8. We believe this is a proposal that does nothing but strengthen the Bill. It promotes the very growth that Ministers are claiming to prioritise. Given the importance of this issue, I think we have not found agreement and therefore I would like to test the opinion of the House.

3|20:46|86|167|Division on Amendment 8|Amendment 8 disagreed.||0|0

20:56:00

Amendment 9

Moved by

9: Clause 1, page 1, line 21, at end insert— “(4A) The Secretary of State must publish a statement setting out how they expect to identify and assess risks presented by products for the purposes of this section.(4B) A statement published under subsection (4A) may be amended or replaced from time to time.”Member's explanatory statement This amendment requires the Secretary of State to publish a statement setting out how the Secretary of State expects to identify and assess product risks.

Amendment 9 agreed.

Amendment 10

Moved by

10: Clause 1, page 2, line 6, at end insert “, and includes production reliant on software or artificial intelligence.”

My Lords, I shall speak also to Amendments 27, 34 to 37 and 40, also in my name. In a Bill that is completely absent of AI and silent on technology, how fortunate it is that we have a group of amendments dedicated almost exclusively to the subject of artificial intelligence. In measure of the hour, I will speak in depth only to three of the amendments, but the themes run through all of them—the sense of consumer protection through consumer awareness, and clarity for consumer, investor and innovator. Products are currently on the market that have been developed using AI, contain it and are controlled by it but with no ability for consumer or citizen to know that that is the case, nor is there any labelling or protection. I shall speak particularly to Amendment 34, which would not in any sense cut across any of the Government’s plans for their AI journey and their potential AI Bill. It simply suggests that it would make sense that where AI is in a product, there is a label on that product to say that that is the case. Further, it says that a QR code should be deployed to give the consumer more detail on the power used in the AI in that product, and the energy and other natural resources used. It is simply a case of labelling a product so that consumers, citizens and all of us can be in the know that AI has been used. On Amendments 36 and 37, I reserve the right to test the opinion of the House when we come to them next week. Amendment 36 is critical, as was demonstrated by the actions of musicians at the end of the Government’s consultation on IP and copyright. Musicians on Tuesday released a completely silent album to demonstrate the impact that AI is having and can have on music and all creative products. On tracks 1 and 2, there was complete silence, making the point that our creatives are currently having their works taken by AI with no remuneration, consent or respect.

21:00:00

This amendment would not offend the Government’s approach to AI. It does not even suggest changing anything from this Bill per se. It would just put a simple change into the Consumer Rights Act 2015. There is a wonderful symmetry. If you are a betting person, you would have to say that this is a good sign. My relevant amendment has been numbered 36, and it would amend Section 36 of that statute, simply to say that digital products created using AI would have to make it clear that this was the case—nothing more, nothing less, and certainly not cutting across anything that the Government may have in mind for AI. It is a simple approach, so that people can know whether, for example, music has been created solely using AI. The consumer—the citizen—can then know that and determine how or whether they want to interact with or purchase that product.

Amendment 37 goes to a critical question of inclusion. Currently, products can be brought on to the market which exclude small sections or huge sections of our community—not just disabled people but older people and people from different geographies and backgrounds, and who speak different languages. Currently, there is very little redress or ability to see how inclusive or accessible a product is. Amendment 37 simply asks the Government to launch a consultation to bring about an “inclusive by design” mark. What a great standard it would be for the UK to have an “inclusive by design” mark, physically or electronically, on every product in the UK market? If any product that is currently accessible is then made inaccessible through an upgrade or change, that would trigger immediate action and potential sanctions through regulations.

I will give one quick example. For years, card payment machines were accessible and able to be used independently by all members of the community; then, flat screen card payment machines came out, which are inaccessible and unusable for me and for huge swathes of our community. What redress has there been? Nothing. It would be on us to bring a case under equalities legislation. Why should it be the person on the wrong end of exclusion who has to suffer that and then to bring the case themselves? What a great thing this Government could do—through consultation and a national conversation—by bringing about an “inclusive by design” standard. I look forward to the Minister’s response. I beg to move.

My Lords, I will speak to Amendments 34, 35, 36 and 37, in the name of my noble friend Lord Holmes, and Amendment 43, in the name of my noble friend Lord Sharpe. I draw noble Lords’ attention to the fact that I am not doing so from the Front Bench on this occasion. On my noble friend Lord Holmes’s amendments, I will address two key issues: first, the labelling of AI-generated content, including music; and, secondly, the promotion of inclusive design in AI products. On labelling AI-generated content, the Government’s Explanatory Notes rightly highlight the need to adapt to new technologies such as AI. This amendment supports that goal in, I think, a sustainable and sensible way. During the passage of the Data (Use and Access) Bill, I spoke about the importance of digital watermarking, and particularly the development of internationally accepted technical standards to support this. These labelling amendments are an excellent illustrative pair of use cases where such watermarks can and should be applied. The noble Lord, Lord Vallance, at the time expressed his positive views towards such standards. I hope that, on the back of the Government’s consultation, they will pursue this energetically. Consumers have to be able to distinguish between human-generated and AI-generated content—for their own sanity, among other reasons. This is particularly important in sectors such as music, where the line between human creativity and AI involvement may not always be clear. My noble friend has proposed a characteristically sensible way to bring this about, but if the Government have an even better idea then I look forward to hearing it. Next, I will address my noble friend’s amendment on inclusive by design. This principle is vital in ensuring that the products developed and marketed in the UK, especially those leveraging advanced technologies such as AI, are accessible to all, regardless of disability or other factors. This improves designs not just for those who would otherwise be excluded but for everyone. My noble friend rightly emphasised the importance of acknowledging accessibility and inclusivity at the design stage, and this amendment will create a framework for that. There is a story—I do not know whether it is true—that the first seat belt design teams had no women in them, to the enormous detriment of all their eventual users. In fact, early seat belts did not work at all not only for women but for men. By making inclusive design a key part of the development of AI technologies in particular, we have the opportunity to ensure that the benefits of AI are shared more widely. Before I turn to my noble friend Lord Sharpe’s excellent amendment, I will make a broader point about AI in the Bill. The Minister said earlier that this is not an AI Bill. That is fine, but where is the AI Bill? The party opposite, both in opposition and in government, have told us we will have an AI Bill, but I am sad to say that we still know next to nothing about it. We do not know its scope, its timing or its purpose, let alone any of its contents. This uncertainty is a real problem for everyone involved in AI in this country. If the plan is to distribute AI laws across different Bills, that is fine, but we need to know. Either way, I urge the Government to share their thinking on AI regulation, because we urgently need to understand at least the direction of travel. I strongly support my noble friend Lord Sharpe’s Amendment 43. We need to address the gaps that he rightly identifies, to ensure that we are setting clear expectations for the development and regulation of AI technologies. Without such clarity, we risk stifling innovation rather than promoting it, and creating unnecessary regulatory burdens for businesses, especially SMEs, working in this sector. Finally, as we look to develop the technical standards and regulations for AI, we must consider the risks posed by foreign actors who may seek to manipulate AI systems or to exploit them for their own malicious purposes, whether for economic advantage or geopolitical leverage. The security and sovereignty of our AI systems must be paramount. The establishment of the robust regulatory framework set out in these amendments should include safeguards to prevent undue foreign influence, ensuring that UK businesses and consumers are protected.

My Lords, briefly, I thank the noble Lord, Lord Holmes, for bringing this up. It was a good idea to have these amendments, and clearly the issue comes in two different parts. I was happy to vote for the amendment in the name of the noble Baroness, Lady Kidron. The issue of what I would call piracy is one that we should all be very concerned about, having as we do a national creative industry that we need to protect and preserve. I am going to throw myself on the mercy of the Government, because I am not 100% sure that some of the products being mentioned in connection with music fall into this category. Consumer products can do, or not, so to some extent we may find that the noble Lord’s suggestions fall into categories that do not necessarily get covered by the Bill. I will be interested to hear from the Government on that, because I should know the answer, but I do not. My sense, having heard what the noble Lord had to say on his Bill, is that we should have another conversation with the Minister about the code of conduct. There is quite a lot of work to be done on the pre-scrutiny of products process to understand where AI has come in. To single out the energy use of AI from any other energy use is a little strange. If you are buying a product and you care about energy use, it is not just a question of the energy consumed by AI technology. If it is made of steel, a large proportion of the energy came from somewhere else, and that is still important if energy is important to us. On subjects like energy use, there is one set of considerations, and on the use of other people’s intellectual property there is another. That is where we should have a conversation with the Minister. On the issue of design for accessibility, I agree with the noble Lord. Again, when we have that conversation, the Minister can suggest what the best route might be to take that forward. Perhaps there is more work to be done, and I am happy to join the noble Lord, Lord Holmes, and the Minister if they want me there.

That was an interesting, if brief, debate. Before speaking to my amendment, I thank my noble friend Lord Holmes for his important amendments. As has been pointed out, Amendment 37 deals with the concept of “inclusive by design”, which is obviously vital in creating products that cater for everyone. It ensures accessibility, usability and fairness across all sorts of diverse populations. By designing products with inclusivity in mind from the start, we acknowledge the varied needs of consumers, including those with disabilities, elderly users and so on. Through his Amendment 36, my noble friend has raised an important issue. Labelling AI-generated content, including music, is crucial to ensuring transparency and consumer protection. This subject is growing in prominence and importance, and I have little doubt that we will return to it. In a world where AI-generated works are becoming more prevalent, it is essential that consumers can distinguish between content created by humans and that created by AI. In addressing my Amendment 43, I begin by referencing the Government’s Explanatory Notes, which, as my noble friend Lord Camrose has mentioned, state that consideration is given to the need to be able to adapt to new technologies such as artificial intelligence. With that in mind, we have tabled this amendment to promote innovation and investment in the UK’s AI sector, which will continue to be vital in the coming years. I agree with the noble Lord, Lord Leong, that this not an AI Bill, but this is not particularly an AI amendment. It is not about what AI is or does. Many of those discussions, as we have heard in this brief debate, have yet to be had in broader society, never mind in this House. However, we have to acknowledge that the UK has a thriving tech sector that has consistently been a leader in developing cutting-edge technologies, and we want to strengthen it by ensuring that we have sensible, pro-growth AI regulation that fosters innovation while safeguarding consumer interests. That should include a focus on small and medium-sized enterprises, which are vital for generating new ideas and driving technological advancements. International competitiveness is crucial, especially in emerging technologies like AI. We have already seen how overly burdensome regulations such as those proposed in the EU’s AI Act can have a stifling effect on innovation. When the EU’s AI Act was in the works, executives from 160 leading companies in the industry came together and drafted an open letter warning of the potential negative consequences of excessively strict regulations. They highlighted that such an approach could ultimately harm businesses, slow innovation, put Europe at a competitive disadvantage globally and therefore, by extension, aid those in other parts of the world whose intentions are perhaps not so benign as we like to think ours are. We must avoid falling into the same trap here in the UK. It is essential to ensure that AI is developed responsibly and ethically, but we must strike the right balance. Overregulating this vital sector could choke off the growth of our tech ecosystem, discourage investment and drive the innovation that we need here overseas. This amendment aims to protect this growing and vital industry. It is specifically drafted in such a way as to ensure that British industries have their interests taken into account, and that, of course, includes SMEs. I urge the Government to accept.

21:15:00

My Lords, although it has been a short debate it has been a very interesting one that covered areas much wider than the Bill encompasses, but we do take very careful note of the points being raised. I say to the noble Lord, Lord Holmes, that I very much take his point about consumer protection. His amendments require a review of AI and product regulations, regulations on the labelling of AI-related products and musical content, and the role of metrology in artificial intelligence. A number of noble Lords said what I am going to say, which is that this Bill is not an AI Bill. Its powers extend to intangible components such as software and AI systems only in so far as this is needed to keep our product regulations for physical products updated and responsive to new technologies and new risks. In amending the Bill, we make absolutely clear that such intangible components can include software but not AI systems in themselves, digital products or music. I say to the noble Viscount, Lord Camrose, that the Government launched a wide-ranging consultation on AI and intellectual property on 17 December. It is clear that we are receiving many views, very strongly expressed. Obviously, we are looking at them, and taking views on a number of topics which look at how copyright laws interact with AI. We will of course be considering how the growth of AI affects the safety of the products this Bill seeks to regulate, and our regulatory response to that, as a number of the amendments from the noble Lord, Lord Holmes, suggested. Throughout our approach to product regulation —not just things applicable to AI—we are committed to supporting and enabling innovation. For instance, we see AI-supported machine learning in products such as robot vacuum cleaners. A future in which robots that would function as home carers are being developed with AI is just one example of how this is being used, and its potential for the future. It is a fast-developing sector, as we know, and we will obviously continue to work with businesses and consumer groups to understand the needs and development of the AI sector, and what that means for the risks that physical products may present to consumers, before we consider any regulation of products containing AI under this Bill. In defence of the Bill and the way it has been drafted, I would argue that the flexibility we have is essential in relation to this sector. Alas, the noble Lord, Lord Pannick, is not with us to lend support to that. The noble Viscount, Lord Camrose, asked about legislation, and it is a very fair question. He knows that we set our intent in our manifesto. We are developing legislative proposals which will allow us safely to realise the enormous benefits of the most powerful AI systems. We have the consultation and we are engaging with stakeholders, but I cannot really give him any more detail than that. In the light of the very important amendments from the noble Lord, Lord Holmes, and given the lateness of the hour, I would really like to offer a meeting with him, perhaps between now and next week, if he would find it helpful. The noble Lord, Lord Fox, elegantly invited himself to the meeting, and if the noble Lord, Lord Holmes, is willing—and I suspect he is—that would be very welcome too. At that meeting we can also pick up the helpful suggestion from the noble Lord, Lord Fox, about the potential use of the code of conduct to deal with some of these matters. I will pick up the very important contribution from the noble Viscount, Lord Camrose, as well. The noble Lord, Lord Sharpe, raises an important issue in Amendment 43. We cannot support the amendment, but I hope he knows from the Government’s response that we consider the need to encourage innovation and growth to be very important. He will also know that we set out measures to achieve our AI ambitions as part of the AI opportunities action plan. We think it is a bold and forward-leaning position that will establish the UK as a global leader in AI. We have a platform. We have made considerable progress but clearly, we need to go further. I hope the noble Lord recognises that I very much accept the principle of his amendment.

My Lords, I thank all noble Lords who have taken part in this short debate. I fear I might have got the noble Lord, Lord Fox, more on side if I talked about AI lawn-mowers, but perhaps that is for another evening. I thank the Minister for his response and for the offer of a meeting, which I am delighted to accept. I beg leave to withdraw the amendment.

Amendment 10 withdrawn.

Amendments 11 to 13 not moved.

Clause 2: Product requirements

Amendment 14

Moved by

14: Clause 2, page 2, line 28, at end insert— “(aa) the installation of products;”Member’s explanatory statement This amendment clarifies that product regulations may include requirements relating to the installation of products.

My Lords, I will try to be brief on this set of government amendments, as outlined in the Marshalled List. They are largely intended to ensure absolute clarity and that the Bill covers a number of matters raised by noble Lords in Committee. Amendments 14 and 17 make clear that the Bill’s powers are able to set requirements on how products are installed in wider systems and on the people who carry out that installation. Many products do not operate in isolation and their safety can be significantly affected by how they are installed in the wider systems. As I explained in Committee, the Bill already enables requirements to be set on the installation of products. However, I accept that absolute clarity on this matter in the Bill is helpful. Amendment 23 covers a similar matter. The Bill covers tangible products and the risks they present. Software is now a fundamental component of many physical products and can significantly affect their risk profile. Amendment 23 makes clear that software as a component of the physical product is included. Amendments 50 and 51 relate to the definition of online marketplaces. These amendments reflect the points raised by noble Lords in Committee and aim to ensure that marketplaces that are part of a wider platform —such as Facebook Marketplace as part of Facebook—are captured. Our use of a broad and clear definition of online marketplaces in the Bill enables new requirements to be introduced in a flexible and proportionate way via secondary legislation by using the powers provided in the Bill—for instance, by tailoring specific requirements to particular online marketplace activities or business models. On Amendment 67, which addresses aviation, in Committee my noble friend Lord Liddle raised the question of wider products used in aviation. The Department for Transport oversees a comprehensive body of legislation that extends beyond the finished aircraft to the whole system of components that make it up. The Government have no plans to create any kind of parallel regulatory framework. This amendment therefore clarifies that, alongside the exclusion of aircraft, the Bill does not apply to component products and parts in so far as they are used or designed for use in aircraft. As an exception to this, the amendment would allow for the Bill’s powers to be used in relation to unmanned aircraft that are toys, or for radio equipment used to operate or control unmanned aircraft. It is useful to clarify that aviation safety products are exempted from the Bill, but we are aware of questions from industry about several other areas. We will always work closely with all sectors before bringing regulations, but it is not our intention to use the powers under the Bill to regulate where there are existing comprehensive product regulatory regimes—for example, in relation to transportable pressure equipment and ships and their equipment. I hope I have been able to provide assurance to noble Lords and I beg to move.

My Lords, while the Minister recovers his breath, we will all carefully reflect on every word that he has just said but, given the speed with which he delivered that speech, I hope he will forgive me if I do not respond in detail. I shall just deal with what we believe is the overly broad current definition of an “online marketplace”, as the scope could be inadvertent. I speak to Amendments 49 and 53 on behalf of my noble friend. The current definition of an online marketplace would inadvertently capture a number of online services not thought of as marketplaces, such as search engines, online advertisements and price comparison websites. Potentially, even further removed services, such as app stores, could be captured by this proposed definition. This risks placing disproportionate requirements on services whose functionality is not what the Bill is intended to regulate and will require careful drafting of the necessary secondary legislation to avoid confusion and potential challenges. That is not guaranteed, however, due to the extensive delegation of powers and limited oversight provided by the Bill. This broad scope will create unnecessary regulatory burdens on businesses that were never intended to be covered by the legislation. It could also discourage innovation and investment in digital services if companies fear that they will be subject to complex and costly compliance requirements. Our amended definition would therefore capture services that are not meant to be dealt with under the Bill but is more appropriate in its scope when it comes to goods and products, giving greater context and identifying the subjects of the sellers being provided, namely consumers and third-party sellers. I hope that gives an indication to the Minister of why we feel these amendments are required.

My Lords, I thank the Minister and the noble Lord, Lord Hunt, for their comments. The noble Lord, Lord Hunt, in the amendments that he is putting forward, really puts his finger on the problem and the challenge of defining an online marketplace. What was not an online marketplace yesterday can be one tomorrow. You can be looking at what starts off as a chat site where people exchange photographs, which suddenly becomes somewhere you can sell things. The problem that we therefore have, in being very specific in the definition, is that we create the loopholes for other people to use. I am sympathetic to the problem that the noble Lord sets out, which is the inadvertent inclusion of other things, but the more we try to nail it down with a framework, the less likely we are to legislate for what is coming round the corner. I am very happy to have that discussion with the noble Lord. Perhaps there is a way of having something that can flexibly move, but we have all seen the changing world of online selling—it is absolutely changing every day. I am sympathetic, but sceptical that the amendment would do what we need it to do. I co-signed government Amendments 23 and 51, which took on board issues that I brought forward in Committee. I thank the Minister for his reaction to that. Overall, with the exception of that key issue—marketplaces are where this is happening and we need a process whereby liability can be properly attributed, but I am convinced that primary legislation will not be the place to do that because of the changing world that we live in—and with those provisos, I think we need a way of moving forward that gives us that flexibility.

My Lords, before I turn to the substance of the debate and the government amendments, I thank the noble Lords, Lord Hunt of Wirral and Lord Fox, for their contributions. The engagement that I have had has been very constructive; I hope that is reflected in the amendments the Government have brought forward. On Amendment 49, I agree about the need for a clear definition of “online marketplace” in the Bill. One way in which we seek to achieve this is by setting out a straightforward definition that is broad enough to clearly capture the vast range of online marketplace models, as the noble Lord, Lord Fox, said so eloquently. This is important to avoid loopholes where an online marketplace could seek to define itself outside the scope of this regulation. For example, the definition should be clear that online marketplaces include those such as Amazon, which sell their own products alongside those sold by third-party sellers. We therefore believe that specifying in the definition that an online marketplace “typically does not own the inventory sold” could cause confusion. We would also like the definition to be clear that it captures not only online marketplaces that sell to consumers but those that may sell to businesses, such as B&Q Marketplace.

21:30:00

The definition of “online marketplace” has been a topic of interest to many noble Lords. The Government share the intention of ensuring that the definition is able to capture the vast range of different online marketplaces’ business models, now and in the future, to avoid the risk of being subject to interpretation in a very restrictive way. That is why the Government have brought forward Amendments 50 and 51.

Amendment 53 seeks to remove Clause 10(2). We understand Peers’ concern around the use of Henry VIII powers. The power is crucial for us to keep up to date with the ever-changing nature of e-commerce and to close loopholes as they arise; it must be retained. We have included appropriate parliamentary scrutiny via the affirmative procedure. Despite our efforts to create a definition that is inclusive of current and future online marketplaces, we expect that online supply chains will continue to evolve. Even within the past few years, we have seen new entrants and evolving business models for online marketplaces emerge. For example, Temu, which launched in the UK in April 2023, has amassed something like 11 million UK visitors per month. TikTok Shop launched in the UK in 2021 for businesses to sell products directly from social media videos. B&Q launched its online marketplace in March 2022, with a focus on selling via verified sellers. This demonstrates the importance of the power to amend the definition so that we can adapt to future changes and address future models that may arise.

I turn back to the government amendments in this group, which represent important clarifications. We have listened to the issues raised in Committee and are amending the Bill to ensure the absolute clarity in the law that we all seek. Consequently, I ask that Amendments 49 and 53 not be moved.

Amendment 14 agreed.

Consideration on Report adjourned.