Westminster Watch: Why you need to understand the retained EU Law (Revocation and Reform) Bill
- Under the Bill, most EU retained law (EU law that was retained to form part of UK law after Brexit) will be “sunsetted” by 31 December 2023. This means that it will be automatically repealed unless Ministers decide to maintain it before that date.
- The Government can, however, extend this review period to 23 June 2026.
- The Bill gives the UK and devolved governments wide powers to determine the future of each piece of retained EU law. For example, they can amend it instead of repealing it.
- The overall effect of any change must not increase the regulatory burden on business. This is a clear statement of intent that the Bill is designed to help promote growth in the UK economy, this Government’s priority.
- The scale of this review is as enormous as the timetable is short. There are 570 laws relating to the environment alone, of which 437 are yet to be reviewed.
- This gives rise to both risks and opportunities for businesses operating in the UK.
- The risks include legislative changes that are not fully thought through, are overlooked, or lead to divergence between the four nations of the UK.
- Opportunities include businesses being able to make a positive case to government for reform or deregulation which would support their growth, and the growth of their sector.
Our recommendations to clients are to:
- ensure you are aware of which pieces of retained EU law are crucial to the operation of your business, which may be revoked or amended by the Bill;
- engage with the relevant government departments at an early stage of their reviews to seek to mitigate any risks or equally maximise any opportunities for your business; and
- monitor amendments to the Bill made in Parliament.
What does the Bill do?
On 22 September 2022, the Retained EU Law (Revocation and Reform) Bill (the Bill) was introduced into Parliament. The Bill will facilitate the amendment, replacement or repeal of retained EU law (REUL) by the end of 2023 and assimilate all remaining REUL into UK law without the special features of EU law features continuing to apply. Beyond the scope of this alert, the Bill also makes changes to the interpretation of EU law by the UK courts and provides greater discretion to depart from REUL case law.
It is no coincidence that the Bill was published on the day before the Chancellor’s Growth Plan. The comprehensive review of all REUL which the Bill necessitates will be used by the Government as an opportunity to reform policy in a wide range of areas, from environmental standards to employment rights.
It was always made clear by Ministers that REUL would not sit on the statute books indefinitely following the UK’s withdrawal from the European Union. But the task of comprehensively identifying all REUL, evaluating its value and taking a decision as to the future of each relevant instrument will be a significant cross-departmental exercise which the Government has given itself just fourteen months to complete.
The Cabinet Office’s Retained EU Law Dashboard (see here) currently reports 2,417 pieces of legislation to be considered. In his former role as Brexit Opportunities Minister, now Secretary of State for Business Jacob Rees-Mogg suggested that only “perhaps dozens” of REULs should be maintained in the long-term in the UK. This indicates the potential scale of reform that the Bill may precipitate.
That’s why it is critical that businesses and other stakeholders a) understand the REULs which affect their operations and b) consider early engagement with relevant Government departments and the devolved administrations to ensure that their voices are heard while this root-and-branch review of REUL is being conducted.
What is Retained EU Law?
REUL is the EU law that applied from 1 January 2021 and became part of the UK’s domestic legal system under the European Union (Withdrawal) Act 2018. It consists of EU regulations and decisions, legislation passed to implement EU directives, general principles of EU law, directly effective rights and obligations developed in relevant case law of the Court of Justice of the European Union (CJEU).
The retention of significant amounts of EU law at the end of the Brexit Transition Period was done in order to avoid a regulatory cliff-edge and provide legal certainty to businesses and consumers in important areas such as employment law, product standards and environmental regulation.
Key Provisions in the Bill
Under the Bill, the majority of EU-derived subordinate legislation and retained direct EU legislation will be “sunsetted” by 31 December 2023. This means that EU-derived law will be automatically repealed unless Ministers act to preserve it before that date.There are limited exceptions to the sunset, which includes separation agreement law (i.e. provisions which flow from the Withdrawal Agreement), legislation which relates to Northern Ireland and financial services legislation. REUL related to financial services is the subject of a separate Financial Services and Markets Bill which is currently before the House of Commons.
Further, there is an extension period under which the sunset can be delayed until 23 June 2026 (a date chosen as the tenth anniversary of the Brexit referendum). It is possible, given the significant task the Government has given itself, that the use of this power will be necessary for swathes of REUL.Clause 1(2) of the Bill provides relevant national authorities (i.e. a UK Government Minister or respective devolved administration) with a power to exempt REUL, or particular provisions of it, from the sunset.
Empowering Ministers and devolved administrations
Clearly, it would not be feasible or desirable for all REUL to simply fall off the statute book in December 2023 or June 2026. Therefore, the Bill confers wide powers on the Government to determine the future of each instrument, enabling Ministers to:
- Restate REUL, where Ministers decide to re-write relevant EU rules into UK law. Clause 14 clarifies that re-statement can be used to resolve ambiguities in the REUL.
- Revoke REUL, where Ministers decide that there is no need to replace the relevant provisions. Given that, subject to limited exceptions, all REUL will be ‘sunsetted’ by the end of 2023, this power is likely to be relevant where Ministers want to take active steps to revoke REUL earlier;
- Replace REUL, where Ministers decide to replace provisions with regulations that meet the same or similar objectives;
- Replace REUL, where Ministers decide to replace provisions with provisions that they consider ‘appropriate’; or
- Update REUL, where Ministers decide that provisions require amendment to reflect scientific or technological changes.
In areas of devolved competence, it will be devolved authorities who are given the powers to amend, repeal or replace REUL.It is significant that the powers to revoke or replace secondary REUL only apply so long as the overall effect of the changes does not increase the regulatory burden, which includes the “financial cost, administrative inconvenience, obstacles to trade or innovation, obstacles to efficiency, productivity or profitability, or sanctions that affect the carrying on of any lawful activity”. This is a clear statement of intent in terms of the current Government’s use of the powers under the Bill. The review is aimed at reducing and not increasing the overall ‘burden’ of regulation on business.
The Government will, however, be constrained by the “Level Playing Field” provisions in the UK-EU trade agreement, particularly in the field of employment rights, social protection, and environmental law. These provisions are there to ensure that the UK level of legislative protection in these fields is not reduced below the levels existing at the end of the Transition Period (31 December 2020) if that would affect trade or investment between the UK and EU.
Assimilation of REUL
The Bill creates a new body of law, consisting of those REULs which Ministers and devolved administrations decide to retain. After the end of 2023, REUL that remains in force will be known as “assimilated law”.
Under clause 4(1) of the Bill, the supremacy of EU law will end in December 2023. Prior to this Bill, domestic legislation that preceded the UK’s withdrawal still had to be interpreted in the light of EU law in certain circumstances. Under the Bill, domestic legislation, whenever made, will be superior to all assimilated law.
The Bill also abolishes general principles of EU jurisprudence that were previously used to interpret domestic legislation. Examples of general principles include proportionality, legitimate expectation, fundamental rights and subsidiarity.
The scale of the task the Government has set itself under the Bill is enormous. According to the Cabinet Office’s Retained EU Law Dashboard, there are 570 REULs relating to the environment alone, of which 470 are yet to be reviewed. It is likely that once the legislation is effective, departments will have less than 12 months to conduct detailed reviews of REUL in their policy area and introduce the necessary secondary legislation to be approved by Parliament before the end of next year.
While the Government’s broad ambitions in certain areas of policy are clear, there is a risk for business of regulatory uncertainty in the detailed application of specific REULs that affect their operations and limited time to prepare for any changes introduced in secondary legislation. At its most concerning, relevant legislation may simply drop off the statute book for want of time.
Businesses should expect and prepare for potential new divergences between the nations of the United Kingdom. The devolved administrations in Scotland and Wales have already publicly expressed significant concerns as to the scope and effect of the Bill. Scottish Ministers have committed to aligning regulatory standards with the EU in areas of devolved competence.
Such uncertainty, and the absence of formal consultation obligations on Ministers, makes it essential that businesses conduct an impact assessment of REUL and a regulatory horizon scanning exercise of potential changes. But, in the face of such uncertainty there are also significant opportunities for firms to engage proactively with policymakers in Westminster, Edinburgh and Cardiff to make a positive case for reform which would support growth in their sector.