In this second Insight piece following Matheson LLP's most recent Knowledge Insights Series event on 30 March 2023, Brexit Revisited: London Calling, we focus on the controversial Retained EU Law Revocation and Reform Bill and its implications for business.
The Retained EU Law Revocation and Reform Bill
Retained EU law and related interpretive principles were never intended to remain a permanent feature of UK law following Brexit. In September 2022, Mr Jacob Rees-Mogg, then Secretary of State for Business, Energy and Industrial Strategy, introduced the Retained EU Law (Revocation and Reform) Bill (the REUL Bill). He said that “[t]he] Brexit Freedoms Bill will remove needless bureaucracy that prevents businesses from investing and innovating in the UK, cementing our position as a world class place to start and grow a business.”
This Bill has attracted controversy from a number of different quarters. In its report, the Delegated Powers and Regulatory Reform Committee expressed concern over the breadth of the powers afforded to Ministers which they considered offered "…a blank cheque…" in their hands, while the House of Lords Select Committee on Constitution highlighted that this approach "inhibits Parliamentary scrutiny."
The House of Lords was planning to vote on the Bill on 19 and 24 April 2023, however, in the run up to the vote, the Bill was removed from business with no new dates set for the report stage. While there is now even greater uncertainty as to the future of the Bill itself, newspaper reports suggest a change of approach on the part of the UK government.
Sunsetting Provisions and Exceptions
As things stand, the REUL Bill's default position involves sunsetting or turning off secondary retained EU law by 31 December 2023. The Bill does give Ministers powers to save some of the retained EU law either indefinitely or to delay its sunsetting, or to restate or rewrite provisions of retained EU law.
There are some exceptions to these sunsetting provisions. Primary legislation is not covered. This includes Acts of Parliament, such as the Equality Act 2010, which will not fall within the scope of the Bill. A further exception has been made for the areas of financial services, tax and customs. The government also has committed to keeping legislation which is required to fulfill its international obligations. This might save some employment and environmental law.
While this Bill may be seen as the logical consequence of the Brexit vote, there are three practical concerns with the REUL Bill. The first challenge is simply to identify what is retained EU law. A recent iteration of the interactive REUL dashboard unearthed 3,745 pieces of legislation (20 April 2023), although this will continue to be updated during the year. It is not clear how the various government departments will use these powers, or whether there is adequate resource within the civil service to examine each piece of retained EU law in the timescale. Related to this is the reality that many of the regulations are in areas of devolved competence. The devolved administrations have commensurately less capacity than their UK government counterparts and they may adopt different positions. This has wider implications for the application of the UK Internal Market Act 2020. The second challenge is that the Bill engages in potential wholesale deregulation, without stakeholders having a chance to have their say about whether the legislation should be kept or revised in some form. Finally, there is also the danger of unexpected consequences as identified in the case highlighted by the British Safety Council, involving the unknown effects of the removal of the Construction (Design and Management) Regulations 2015 on the recent Building Safety Act 2022.
Implications for Business
Businesses operating in the UK will potentially have to grapple with hundreds of new regulations that replace or restate retained EU law. Although there is a provision in the Bill that replacement legislation should not result in a greater overall net regulatory burden on business, some changes could result in new obligations. Businesses will also have to ensure that they are aware of any changes affecting their compliance burden. The recent Report of the Employment Lawyers Association warns of the" landscape of uncertainty" which may "…[strike] at the attractiveness of the UK as a destination for international investment." The reality of this cautionary tale remains to be tested, as the REUL Bill itself is now elusive and its implications more uncertain than ever.
These changes will have implications for businesses engaged in cross border trade between the UK and Ireland. Please contact your regular Matheson advisor if any of the topics mentioned in this Insight are of interest to you.