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12 May 2023

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UK-EU Relations

Joël Reland analyses the Business Secretary Kemi Badenoch’s announcement of changes to the Retained EU Law Bill, highlighting the questions that will need tackling in the coming months. 

One view which unites many ardent Remainers and Brexiteers is that, up to now, the government has been quite unsuccessful in its pursuit of ‘Brexit opportunities’ for regulatory reform.

For the former, this is evidence of their non-existence. For the latter, an obstructive Whitehall ‘blob’ has been a chief focus of blame.

In truth, there are lots of more nuanced reasons why the pace of change has been slow. Reforming legislation is an inherently slow-burn process, businesses generally prefer alignment to divergence (so finding the areas best-suited to reform takes time), and the government has had quite a lot else on its plate.

Yet, the announcement this week that the Retained EU Law (REUL) Bill has been gutted of a key component is evidence of the fallacy of blaming Whitehall.

The REUL Bill, when introduced, was seen by proponents as a way of kicking a sclerotic civil service machine, instinctively opposed to reform, into gear. Critically, it introduced the idea of a ‘sunset’ deadline, where most law copied over from the EU would expire by default at the end of 2023, unless actively reformed or retained by departments.

This was designed to force the hand of Whitehall officials, to start quickly and systematically reviewing 4,000+ pieces of EU law, whether they liked it or not.

Yet, with just over seven months to go, that deadline has been abandoned. The sunset has itself been sunsetted.

The reasons for scrapping the deadline – business uncertainty, a lack of Whitehall capacity, limited time meaning gaps on the statute book and poor-quality legislation – are clear and well-versed. Yet, in justifying the decision, government has performed a remarkable logical flip.

Whereas, previously, the Whitehall ‘blob’ was accused of being resistant to change and in need of a sharp deadline to work to, now it is blamed for using that self-same deadline to block reform.

Writing in the Telegraph, the minister in charge of the Bill, Kemi Badenoch, argued that the 2023 sunset meant ‘Whitehall departments had focused on which laws should be preserved ahead of the deadline, rather than pursuing the meaningful reform Government and businesses want to see’. The removal of the sunset apparently means officials are ‘freed up to focus on more reform of REUL, and do it faster’. As you were, then.

Yet, in truth, all is not quite as before. The Retained EU Law Bill has not been scrapped in its entirety, and there are still a lot of questions which MPs, officials, and other invested parties will need to get to grips with in the coming weeks and months.

First, Badenoch has made clear that ‘around 600’ pieces of retained EU law will still be set for repeal or reform by the end of this year under the Bill. The immediate task is to understand what exactly that entails.

One change which has already been trailed is to the Working Time Directive, which the government claims can be streamlined to reduce the regulatory burden on employers and employees, and will save businesses an astonishing £1bn. It also argues that reform will not imperil the key rights the Directive enshrines, such as 28 days annual leave and breaks during the working day.

Yet, until we see the inner workings of the proposal (and that £1bn figure), it is not possible to take these claims at face value. It will be vital for MPs, officials, and external groups to properly scrutinise the plans, to ensure that any change does indeed have the benefits promised, and will not lead to a watering down of workplace protections, whether by design or default.

Given there are likely to be around 600 similar cases to look at, there remains an awful lot of work left to do by the end of the year. Otherwise, the streamlined REUL Bill could still lead to gaps on the statute book or unexpected surprises from poorly revised legislation.

Second, the Bill still opens up the possibility of significant divergence from EU law in future, the implications of which need to be properly scrutinised. The Bill will still end the ‘supremacy’ of retained EU law from next year and give domestic courts significant freedom to deviate from established EU case law. Over time, this could significantly alter the way in which retained EU law (which will take on a new title of ‘assimilated law’) is applied in the UK compared to the EU.

Moreover, the Bill gives government significant powers to amend that assimilated law in future, with limited parliamentary scrutiny. This is a significant transfer of power out of the hands of Parliament (whose sovereignty was meant to be restored by Brexit) towards the executive. Members of both houses may still want to challenge those provisions in the draft Bill.

Finally, the removal of the sunset deadline is an explicit acknowledgement from government that regulatory reform needs to be smarter, not faster. In Badenoch’s own words, ‘getting rid of EU law in the UK should be about more than a race to a deadline’. Putting thousands of laws through the shredder at once is likely to simply jam the machine.

Instead, Sunak’s government – with its Patrick Vallance-led ‘Pro-innovation Regulation of Technologies Review’ and focus on reform of ‘growth industries’ – is starting to take a more targeted and strategic approach to divergence. This centres on accepting that alignment is preferable in many cases, and instead seeking smaller niches of comparative advantage which play to UK strengths.

That is a welcome step, but we are still in the early stages. Conversations need to go further and deeper. Perhaps the scrapping of the unrealistic and disruptive 2023 sunset clause will, finally, allow a more mature discussion about what kind of regulator the UK wants to be after Brexit.

By Joël Reland, Research Associate at UK in a Changing Europe.

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