Stephen Booth is an Associate Fellow in Political Economy at the Council on Geostrategy.
Last week it was reported that the Government is planning to significantly water down proposals to scrap the vast majority of inherited EU laws, sparking a predictably angry response from the most ardent Eurosceptic sections of the Conservative backbenches.
The Government estimates that there are around 3,800 inherited EU regulations covering every part of the economy, including employment rights, intellectual property, health and safety, and the environment. The centrepiece of the Retained EU Law (REUL) Bill, tabled under the Truss administration and subsequently backed by Rishi Sunak in January, is a “sunset” clause, causing most inherited EU law to expire at the end of 2023 (with the option to extend this date to 2026).
The stated political rationale behind a sunset clause was to inject a degree of urgency into the civil service’s review of this body of EU law. That the default would be that inherited EU law should expire, unless explicitly kept, illustrated the intention for the overall effect to be deregulatory. The suggestion is that the Government is now likely to reverse this principle, instead identifying around 800 laws to scrap while maintaining the rest.
But how much difference would this really make in practice? First, not every one of the 3,800 pieces of legislation have become redundant just by virtue of leaving the EU. This was always meant to be a review exercise, not an indiscriminate cull. Ultimately, unwinding 45 years of legal integration cannot be attempted without due consideration and political debate.
As I argued last year, the likely practical effect of such a short timescale was not – as business groups warned – that we would face a sudden cliff edge with gaps in the regulatory framework. The reality was always that removing entire regulations wholesale was extremely unlikely and, given the limited time available, the strong forces of inertia meant that much of this regulation was likely to be kept in its present form, rather than amended and improved.
Second, the Bill would provide Ministers with broad powers to decide which EU laws to ditch and which to keep with minimal parliamentary scrutiny. Critics have pointed to the irony that this is at odds with many Brexiteers’ preoccupation with the restoration of parliamentary sovereignty. But, fundamentally, and constitutional considerations aside, making regulatory changes which have a major economic or social impact on the lives of voters means expending scarce political energy and capital.
We already know where changes to the big-ticket items would make the most impact. Before the 2016 referendum, research by the think tank I used to work for, Open Europe, noted that government impact assessments highlighted the three areas where EU regulation imposed the highest costs on the economy: social and employment rules; environmental and climate change laws; and financial services.
Finance is already being dealt with separately from the REUL Bill, with the Treasury and financial regulators bringing forward amendments to inherited EU regulation. There are individual instances where environmental rules should be altered – particularly where they interact with domestic legislation on planning and the building of infrastructure – but if the broad thrust of UK climate policy remains the same (in some cases it is more green than the EU’s), then the majority of this legislation will be kept. And with the Government grappling with striking unions and inflation hurting workers’ incomes, does picking a fight over employment rights seem like a wise political decision?
Meanwhile, the rest of the world is undergoing a seismic economic shift as governments consider the implications of the US’ new approach to industrial policy, the reorientation of global supply chains, and how to regulate the technologies that will shape our lives in the coming decades. Do we really want our ministers and top officials prioritising what to do with EU rules on hedgerows or product standards for washing machines?
Certainly, there is a worthy job to be done assessing the merits of other individual inherited EU rules, but they are not in of themselves going to move the economic dial. Getting future regulation right, including how to diverge from EU rules, will be of great significance to the UK’s prospects in this more challenging global environment. But the approach set out under the REUL Bill risked becoming a parochial and backward-looking distraction. EU regulation should be considered in conjunction with domestic rules and curent economic and social trends.
Indeed, the Government has put such a programme in place. Led by Sir Patrick Vallance, the Pro-innovation Regulation of Technologies Review is providing recommendations on how regulation can support five key industries: digital technology, green industries, life sciences, financial services and advanced manufacturing. To become a true industrial strategy, this work will need to be supplemented with other policies on infrastructure, skills, and subsidies. Nevertheless, in considering regulation and the role of regulators across entire sectors, policymakers are likely to have a greater impact.
Understandably, the Prime Minister will be criticised if the Government U-turns on the REUL Bill. After all, during the leadership contest last summer in which he came second to Liz Truss, a campaign video appeared of Sunak putting thousands of pages of EU law through a shredder. In January, with the Windsor Framework yet to be agreed, Sunak stood by the REUL Bill, perhaps wisely judging that he should pick only one fight at a time with the ERG. But the rather tame rebellion over the Windsor Framework has only strengthened the Government’s hand.
The Daily Telegraph last week quoted an MP warning that Kemi Badenoch’s future leadership ambitions would be blown if the Government changes course. Frankly, if this level of Brexit detail is still being fought over by the time of the next leadership election, then the Conservative Party will be going backwards, not forwards. The short-lived Truss premiership surely marked the high point of performative Brexit policy, so now it is time to move on.