Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome Mark McGregor, head of the trade and Windsor framework branch in the Department for the Economy. You are very welcome, Mark. You can present to the Committee when you are ready.

Mr Mark McGregor (Department for the Economy): Thank you, Chair. Good morning, everybody. The evidence today relates to regulation 2026/1744, which is commonly referred to as the digital omnibus on AI. The Committee notification is specifically limited to article 3 of that regulation, so I will keep my remarks focused on article 3 and on the machinery-related changes that are potentially relevant under the Windsor framework. I should note that this is a reserved matter that falls to the Department for Business, Innovation, Science and Trade (BIST), which was formerly the Department for Business, Energy and Industrial Strategy, and specifically its Office for Product Safety and Standards (OPSS).

By way of context, regulation 2026/1744 makes wider amendments to the EU AI act and civilian aviation rules, as well as to the EU machinery regulation. Those wider AI act and aviation elements are not the subject of this notification. The notification is article 3 only, and article 3 relates to regulation 2023/1230 on machinery. That is the element assessed for the purposes of the Committee today. The Department's evidence is therefore limited to the machinery and product regulatory aspect. We are not speaking to the wider EU act framework, wider data or fundamental rights policy, aviation safety or matters outside the article 3 machinery amendment. Those areas sit outside the scope of this notification and, where relevant, fall to the appropriate UK Government policy owners or lead Departments and a potential notification under article 13(4), if there was a request to add those additional elements to the Windsor framework.

The explanatory memorandum confirms that the proposal is primarily a simplification measure. It is designed to reduce overlap between the EU AI act and the EU machinery regulation for AI-enabled machinery while maintaining existing machinery safety protections. The key practical point is that the proposal does not directly extend the AI act into Northern Ireland. Instead, it provides for relevant AI-related safety requirements to be incorporated into the machinery regulation itself for machinery products. The machinery regulation applies in Northern Ireland under the Windsor framework, so the article 13(3) amendments will apply here subject to the article 13(3) democratic scrutiny process. The omnibus sets out that the Commission, using delegated powers, must ensure that the relevant requirements of the AI act are reflected in annex III of the machinery regulation. The delegated legislation for that is due by 2 August 2028.

On impact, the current UK Government assessment is that the practical effect on Northern Ireland business is expected to be limited in the short term. I believe that the term "short term" has been used there because AI is a rapidly evolving area, and we will need to see how the delegated act is drafted by the Commission to understand the implications fully. Stakeholder engagement indicates that relatively few machinery products currently contain AI systems that meet the threshold for classification as high risk. The proposal may reduce duplication for businesses by avoiding parallel AI act machinery regulation requirements, while retaining the sectoral machinery safety regime. DFE's role, therefore, is to speak to Northern Ireland’s interest and the Windsor framework implications. Detailed machinery safety policy, reserved matter competence and the UK-wide legislative approach sit with the UK Government, principally the new BIST and OPSS. The current assessment has not identified a specific significant or persistent impact on everyday life in Northern Ireland that arises from article 3. We have also not identified separate financial, equality or operational impacts for DFE.

The Committee should note that this regulation is a narrow, technical and sectoral article 3 amendment, which is focused on machinery and does not apply the wider AI act in Northern Ireland. It appears intended to simplify the regulatory interface for AI-enabled machinery. The main follow-up for the Department is to monitor the potential delegated legislation, which is due by August 2028, and further assess any implications for businesses in Northern Ireland and the operation of the Windsor framework at that point.

I am very happy to take any questions.

The Chairperson (Ms Ferguson): Thank you, Mark.

Dr Aiken: Thank you very much for your comprehensive briefing. It talks about the EU machinery regulation that governs safety requirements for machinery placed on the market. It goes down through a list, but it uses the words "such as", which means that it can be expanded.

Mr McGregor: There is a definition of "machinery" in the EU legislation. I have written it down, because it is quite complex.

Dr Aiken: You knew I was going to ask about it. Well done.

Mr McGregor: Indeed. It states:

powered by a non-human or animal drive system. It is a broad definition covering any piece of machinery that does not have another specific sectoral regime; it is almost a catch-all clause for anything with a moving part.

Dr Aiken: It amends annex III. The EU regulation talks a lot about:

Basically, anything that has a health and safety requirement would be considered within the scope of the machinery regulation.

Mr McGregor: The machinery regulation has a health and safety requirement, and the enforcement function is carried out by the Health and Safety Executive for Northern Ireland.

Dr Aiken: Therefore, everything that is defined as high risk under article 6(1) of the AI act —. Basically, it is a method of saying that this will apply to everything that is manufactured in Northern Ireland.

Mr McGregor: Yes, and imports as well.

Dr Aiken: Yes. Basically, it covers everything.

Mr McGregor: Unless there is a separate regime or it falls directly under the AI act.

Dr Aiken: One of the questions I raised earlier —. Under the UK regulation, we are still under the Data Protection Act 2018, which has a particular code of practice for the use of AI in manufacturing and health and safety systems across the UK. From my reading of it, there seems to be a considerable divergence between what the rest of our nation is going and what is likely to happen in Northern Ireland, because every piece of manufacturing equipment that has any potential AI involvement will come within the scope of this act.

Mr McGregor: Yes. However, as so often happens in these areas, the UK Government are carrying out an assessment in the area as part of the product safety framework review. AI was specifically raised during some of the round-table sessions I attended, so it has been raised.

Dr Aiken: Thanks. It is pretty clear to me.

Mr Buckley: Briefly, you touched on how the new requirements will impact local manufacturing. How will the changes create differentials with their competitors in GB? What will be the end state?

Mr McGregor: At present, the UK does not have an AI Act. Policy scoping is being carried out in that area, but we do not know where that is going to land because we have no input. We are engaged in the round-table sessions and the stakeholder engagement, but we do not own the policy; it sits in BIST, and we do not know how it will transpire. It will require primary legislation in Westminster.

Mr Buckley: At a very basic level, how will it manifest a differential if we go ahead with this compared to GB, where they currently do not have any —?

Mr McGregor: Yes. GB suppliers into the Northern Ireland market of high-risk goods that will eventually be captured under the 2028 regulation will have to comply with the EU regulation. If GB has not updated its rules at that point, those suppliers may have to comply with EU rules but the GB rules will be slightly less demanding at that point. However, work is being done in the AI space in the UK as well.

Mr Buckley: OK. Thank you.

The Chairperson (Ms Ferguson): No other member has indicated that they wish to ask a question. Thank you, Mark, for your presentation this morning.

Mr McGregor: Thank you.