Two years after exiting, Britain is already beginning to re-think its relationship with the Europe Union. As we approach the second anniversary of the UK’s exit from the European bloc, a growing chorus of criticism is being aimed at the particularly damaging version of Brexit chosen by Theresa May and Boris Johnson, and negotiated by Lord Frost. We need to learn from the last two years. To this end, Yorkshire Bylines has decided to offer our help by publishing a series of linked articles: the lessons of Brexit.
The Conservative government has spent the better part of the last 12 years looking at various red-tape initiatives to weed out ‘burdensome’ regulations thought to be holding back Britain’s productivity growth, with little or nothing to show for it.
Since Brexit, some inconsequential EU regulations have already been repealed. For instance, EU 2019/723 setting rules for the standard forms used in annual reports submitted by EU member states has gone, but hardly qualifies even as low-hanging fruit.
In an attempt to force the issue, the Retained EU law (revocation and reform) bill is intended to clear every remaining EU Law from the UK statute book by the end of 2023 in one fell swoop. At present, the bill is on its passage through the House of Commons.
The Hansard Society has already identified a number of problems with the legislation, especially the wide-ranging powers conferred on ministers to change or scrap EU rules and regulations (REUL) at will across policy areas as diverse as animal welfare, consumer rights, data protection, employment, environmental protection, health and safety, and VAT and subject to very limited parliamentary scrutiny.
The sunset clause
A major problem is the ‘sunset’ clause by which all REUL contained in domestic secondary legislation and retained direct EU legislation will expire automatically on 31 December this year, unless otherwise preserved. There are provisions in the bill giving ministers powers to set different sunset dates for specified REUL up to 23 June 2026 – the date symbolically marking the tenth anniversary of the EU referendum – but not beyond.
The government dashboard sets out 2,417 EU laws but subsequently a further 1,400 were discovered and it is also believed more than 800 other EU laws are so-called ‘orphans’ with no current sponsoring department and therefore not readily identifiable. The total may be even more than the 4,600 identified. So far, just 196 largely irrelevant EU laws have been repealed.
The balance of competences review
After decades of ‘barmy EU bureaucrat’ stories in the press, voters seemed to accept Britain was over-regulated. There was, however, no evidence they were happy to forego their own longstanding employment, safety or consumer protection laws.
During the referendum campaign, UK industry remained firmly on the sidelines, fearing accusations of bias or scaremongering, of going against the ‘will of the people’. The silence from business perhaps created a sense that they had been quietly lobbying behind the scenes for the regulatory burden to be lifted, freeing them to become more entrepreneurial.
This was not true and the government itself was well aware of it. Between 2012 and 2014, UK civil servants had carried out a review of the balance of competences between the EU and national governments. It was a significant undertaking covering 32 reports on different areas of EU competence. A huge number of trade bodies and businesses were consulted. The ‘Single Market: Free Movement of Goods’ report said:
“Some think tanks [The Bruges Group] have argued that the UK would be better off outside of the EU customs union, with the UK focusing on global free trade, rather than prioritising free trade within the European Union. However, the evidence from businesses representatives suggests that the EU customs union and the Single Market require common customs laws and standardised customs procedures. It was therefore considered necessary for the EU to be given competence in this area, because these laws need to be agreed and set at EU level.”
There was no demand at all for an aggressive agenda of deregulation.
UK businesses “not clamouring for a bonfire of regulations”
The position appears unchanged today. The FT reported in November 2022 that over a dozen organisations – including the Institute of Directors, Trades Union Congress and Chartered Institute of Personnel and Development – warned the REUL bill would “cause significant confusion and disruption” for businesses, workers, consumers and conservationists.
CBI director general Tony Danker urged ministers to put aside political motives and seek improvements to the UK’s existing trade deal with the EU.
A survey published at the end of November by The British Chambers of Commerce (BCC) of 938 businesses, mainly small and medium-sized enterprises (SMEs), identified deregulation as a low priority. Over half (58%) said they had no preference for which regulations should be amended or removed completely. Just 14% specified a regulation to remove, while another 14% wanted a regulation amended.
William Bain, head of trade policy at the BCC, said:
“Businesses did not ask for this bill, and as our survey highlights, they are not clamouring for a bonfire of regulations for the sake of it. They don’t want to see divergence from EU regulations which makes it more difficult, costly or impossible to export their goods and services.”
This message was echoed by the Chemical Industries Association’s CEO Stephen Elliott who has warned against hasty deregulation: “We are not in the market for any regulatory bonfire,” he told the CIA’s annual dinner recently, noting that the cost of the UK’s post-Brexit scheme to duplicate the EU REACH database was now expected to hit £3bn.
Even Brexiters are not advocating a bonfire
Mark Littlewood, director general of the pro-Brexit think-tank the Institute of Economic Affairs, writing recently in The Times about the government’s reluctance to scrap EU laws, could only suggest two examples.
These were the Agency Workers Directive and the General Data Protection Regulations. But even he didn’t advocate scrapping either completely. The first he thought might be “reworded” and the second simply “redrafted or relaxed”.
This minimalist approach to deregulation was covered in the balance of competences review which argued:
“While in theory the UK could offer more facilitative procedures and lighter-touch regulation were it not bound by EU regulations, it was strongly argued [by business] that if the EU did not have competence in these areas, the UK would adopt quite similar, if not identical standards and regulations. The majority of business respondents thought that whilst there are pros and cons to EU action at this level, the pros outweigh the cons.”
The scale of the task and the opposition
In November, the Employment Lawyers Association (ELA) responded to a call for written evidence and warned the bill risked creating, “Legal uncertainty [that] can undermine any plan for growth as neither employers nor employees will have clarity as to the meaning of large parts of employment law that affect investment and the cost of labour”.
The ELA called for the business department to be “fully resourced” for the task, which involves ministers creating the same amount of secondary legislation in employment law in one year as they have over the past 50 years. The bill directly affects every employment regulation passed as a result of EU laws since 1972.
A briefing note for the Food Standards Agency board talks of 800 pieces of REUL on which it will need to advise ministers and describes the time frame as “extremely challenging” while calling for “significant and sustained levels of resourcing”.
The Wildlife and Countryside Link, the largest environment and wildlife coalition involving 67 environmental organisations, says the bill “puts at risk thousands of laws that are crucial not only to conserving, and restoring the natural environment, but also to protecting public health, and creating a sustainable economy”. They urge MPs to force the government to withdraw the legislation.
The Trades Union Congress, which represents 48 member unions in England and Wales, said the legislation was “reckless” and could open the door to removing or eroding workers’ rights, including holiday pay, safe limits on working time and parental leave.
The trade and cooperation agreement level playing field provisions
The UK government is not unconstrained in what it can do to repeal or amend EU laws in any case.
The trade and cooperation agreement contains extensive ‘level playing field’ provisions (Title XI) where the parties “affirm their common understanding that their economic relationship can only deliver benefits in a mutually satisfactory way if the commitments relating to a level playing field for open and fair competition stand the test of time, by preventing distortions of trade or investment, and by contributing to sustainable development”.
It also includes a non-regression article (387) committing both parties not to “weaken or reduce, in a manner affecting trade or investment between the Parties, its labour and social levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards”.
Article 392 commits each party not to weaken or reduce its “environmental levels of protection or its climate level of protection below the levels that are in place at the end of the transition period, including by failing to effectively enforce its environmental law or climate level of protection”.
The EU cannot force harmonisation but will take a dim view if the UK attempts to gain a competitive advantage by slashing regulations beyond what it thinks is reasonable.
Lessons learned
It seems unlikely there is anything like the scope for deregulation that voters were led to believe in 2016.
The government looks set to lose the next election whatever happens and removing employment or consumer protection rights would pretty well ensure the Conservatives are wiped out totally. It would be political suicide and MPs must know this.
The contradictory task Jacob Rees-Mogg has set the party looks near impossible. Ministers and civil servants must in the next 12 months, find something they have spent 12 years looking for without success. That is, to find retained EU laws that are:
- unpopular with voters
- considered unnecessary by business and costly to implement
- impeding economic growth, and
- unlikely to provoke an exodus of business or trigger retaliation from the EU if scrapped.
It is a very fine line, if it’s visible at all. Minor tweaks simply to show that Britain can do things differently would be perverse, leaving British industry with the worst of all worlds. Amendments sufficient to permanently cement trade barriers in place but not enough to boost competitiveness.
There is no pressure coming from trade bodies to diverge from EU laws, in fact quite the reverse. Businesses are pleading to keep our laws aligned with Europe.
The retained EU law bill, at a time when Britain is entering a prolonged recession, creates a massive amount of work needing increased civil service numbers to achieve something that almost nobody outside the cabinet is calling for. It is not a rational use of scarce public resources.
Ministers like Rees-Mogg appear to have fallen for the myth pedalled for decades by the British media (not all right-wing), that the UK statute book is full of unnecessary pettifogging regulations forced on Britain by ‘barmy’ EU bureaucrats. They have failed to uncover any, for the simple reason that they almost certainly don’t exist.
The REUL bill is a final clumsy attempt to flush out what isn’t there. The whole deregulation agenda is bound to fail eventually.
The next article, on refugees, is available here.
