On 29 June the House of Commons passed the Government's legislative plans for the next two years by 323 votes to 309. These plans - announced in the Queen's Speech - provide the clearest sense yet of how Prime Minister Theresa May and her minority administration are preparing the country for the UK's withdrawal from the European Union.
The Queen's Speech included eight separate Bills which will together provide the legislative underpinning for Brexit. The content of these Bills indicate that the Government is still preparing to leave both the Single Market and the Customs Union and to end the free movement of people - what some commentators have dubbed a "Hard Brexit". However, the Bills also suggest that the Government is prioritising the economy and trade in its Brexit preparations. Reflecting the General Election outcome, the Queen's Speech places a new emphasis on building the widest possible consensus - including with business - on the UK's post-Brexit future.
The streamlined legislative programme, which leaves out many of the controversial domestic policies in the Conservative party manifesto and which will unusually run for two years rather than one, re-emphasises that the Government will concentrate its energy, Parliamentary time and most importantly its political capital on delivering Brexit.
The eight Brexit Bills are:
- The Repeal Bill, which will be the main vehicle for implementing Brexit itself. First, it will repeal the European Communities Act 1972 and end the authority of EU law and the Court of Justice of the EU within the UK. Second, it will transfer into UK law the existing provisions of EU law applicable at the point in time of Brexit. Third, it will give Ministers the power to amend any law that does not operate appropriately once the UK has left the EU (eg references to EU institutions which no longer have jurisdiction). The Government says that this Bill has been designed to reassure businesses that there will be no regulatory gaps or "black holes" in UK law on the day after Brexit. In order to provide a basis on which UK businesses can continue to co-operate with EU businesses post-Brexit, the Repeal Bill will need to be supplemented by an agreement with the EU as part of the withdrawal agreement.
- The Customs Bill, which will enable the UK to establish and operate a standalone customs and indirect taxation regime after Brexit, including powers to control the import and export of goods, set duties and collect payments. The proposal for a Bill, however, provides no guide as to what practical arrangements will emerge given that these will be the subject of detailed negotiations over the coming years.
- The Trade Bill, which will equip the Government with the powers to operate an independent trade policy. The Department of International Trade has already established working groups with fifteen countries and other high-level dialogues to explore how to develop the UK's trade and investment relationships. In the short term the priority for business is for the Government to preserve current third country market access arrangements before embarking on negotiations to open up new emerging markets like India and China for UK businesses.
- The Immigration Bill, which will end the free movement of EU citizens and their families and bring them under the UK immigration rules. This provides an opportunity for businesses to advocate what skills they require to support their growth and whether there is sufficient supply within the UK domestic labour market or whether certain visas or categories of work permit may be required.
- The Fisheries Bill, which will establish national management of UK waters and national fishing quotas.
- The Agriculture Bill, which will replace the Common Agricultural Policy and a introduce a new domestic scheme to support farmers and protect the natural environment.
- The Nuclear Safeguards Bill, which will give the Office for Nuclear Regulation the powers to fulfil the UK's safeguard and non-proliferation obligations and ensure continued civil nuclear trade outside the Euratom regime.
- The International Sanctions Bill, which will provide a domestic legislative framework for the Government to impose restrictive sanctions measures on individuals and organisations, as well as to license certain sanctioned activities. Businesses should be aware that these domestic powers may over time lead to divergence in the lists of persons targeted by the EU and UK, which could affect how they carry out their onboarding and compliance processes.
The Repeal Bill is due to be published and introduced to Parliament on 13 July 2017. It is widely expected that the other eight Brexit Bills will be laid before Parliament in the Autumn.
Despite the dominance of the Brexit Bills, the Queen's Speech also contains a number of other measures focused on fiscal responsibility, infrastructure development and improving productivity. The Government confirmed that it will stick to its previous spending trajectory of reducing the structural deficit to less than 2% of GDP and ensuring debt is falling as a share of GDP by 2020/2021. However, it also committed to further infrastructure spending, including the next phase of the HS2 high speed rail project linking the Midlands to the North West. Plans were announced to grow the £13.7 billion space industry including a new regulatory framework to manage space-flight risk, powers to create spaceport infrastructure and the ability for the first time to launch private commercial satellites from UK territory. The Space Industry Bill was introduced to the House of Lords on 28 June.
The Government also reaffirmed its plans to reform technical education through the implementation of its Post-16 Skills Plan published last summer and pledged to increase the National Living Wage to 60% of median earnings by 2020.
The Government will establish a new data protection regime for non-law enforcement data processing, replacing the Data Protection Act 1998 and implementing the EU's General Data Protection Regulation. The Government states that the Data Protection Bill will, when enacted, ensure that the UK can continue to share data with other European countries and internationally after Brexit. For that to take place, however, the EU will have to deem the UK's data protection regime as adequate. Companies should also prepare for increased risks and penalties for inappropriate use or storage of data.
In providing the domestic legislative foundations for delivering Brexit, the Queen's Speech heralds the largest change in the UK's legal system for forty years. If you want to understand its impact on your business or discuss how you might be able to influence the outcome of the Brexit negotiations, please contact the authors.