The Missing Regulation Renewal
Government promises for reform of regulation were lost in the controversy over REUL revocation
The REUL Bill
The Government’s proposal to scrap EU law and regulation that had been retained as part of the Brexit transition was one of the most controversial this year.
Introduced in September 2022 by Brexiteer Jacob Rees-Mogg, the so-called REUL Bill initially proposed a “sunset clause” to slash all remaining retained EU law, except that which was salvaged ahead of time, at the end of December 2023.
The Bill was championed by Brexiteers as part of the opportunity to rethink UK regulation from the ground up after Brexit, removing onerous EU regulation on business, driving growth and innovation in the UK.
However, the Bill met fierce opposition from MPs, the Lords and civil society, with some warning that the proposed sunset clause would create significant costs and uncertainty for businesses.
As with all attempts to reform regulation post-Brexit, proponents argued that the UK can improve economic performance and still retain high standards, while opponents argued that the Government were trying to water down workers’ protections and environmental standards.
When Rishi Sunak replaced Liz Truss as Prime Minister he indicated that he would stick with the controversial Bill, in an attempt to win support from the Brexiteer wing of his party.
The great betrayal
However, in May, the Government announced a major change to the Bill, through an amendment introduced to the House of Lords, which removed the “sunset clause” and instead provided a schedule with a list of specified laws to be scrapped, while EU-related law still retained can be revoked through to 2026.
This reduced the number of statutes and regulations to be scrapped from over 3,000 to around 800.
This was seen as a major betrayal by Brexiteers, with Jacob Rees-Mogg, in typically arcane fashion, accusing the Prime Minister of “behaving like a Borgia” — the notorious family of the Italian Renaissance synonymous with treachery.
Days later, Mr Brexit himself, Nigel Farage, told the BBC’s Newsnight:
To make matters worse, the shift was announced by former darling of the Brexiteers, Kemi Badenoch, who argued that that there was a need to “provide certainty for business” and that the sunset clause was having the unintended consequence of slowing down regulatory reform, as pro-Remain civil servants worked on saving as much retained EU law as possible.
The amended Bill received Royal Assent on 29 June and the stipulated regulations will be scrapped at the end of the year.
From BoJo’s infamous “fuck business” comment to Badenoch’s “I have listened to the concerns of business”: this shift encapsulates the tumultuous changes within the Conservative Government over the course of this Parliament.
Smarter regulation…
While the intra-Tory drama got all the attention, few people noticed that Badenoch made the controversial announcement as part of a wider statement on the Government’s plans for regulatory reform, with the publication of the policy paper “Smarter regulation to grow the economy”.
Was this an attempt to bury the Brexit betrayal in a boring policy paper, or rather to bury the lacklustre regulatory policy paper in a juicy bit of Brexit drama?
In her written statement to the House of Commons, Badenoch said that the new policy paper was part of a “drive for deregulation” and that the Government were
“reducing the regulatory burden and controlling the flow of new regulation. We will no longer tie business up in red tape.”
Badenoch added that the Government had already begun this programme of regulatory reform through the the Financial Services and Markets Bill and the Procurement Bill, as well as the Edinburgh reforms of UK financial services, which
“include over 30 regulatory reforms to unlock investment and boost growth in towns and cities across the UK.”
The regulatory reform update, “Smarter Regulation to Grow the Economy”, said Badenoch,
“will be the first in a series of updates on how this Government intend to reform regulations to support economic growth. It sets out improvements to the better regulation framework to ensure that HMG only use regulation where necessary, and where regulation is used the impacts on wider Government priorities including competition and innovation are understood.”
… to grow the economy
According to the policy paper,
“There is little doubt that governments too often reach for the lever of regulation first, when other ways to improve and safeguard outcomes are available.”
It therefore advocates a streamlined regulatory system, where regulation is not the first port of call, and other levers, such as “standards” and “guidance” will be applied.
The proposal also calls for earlier impact assessments of regulatory implementation under a holistic framework that takes into account broader concerns over economic growth.
The Government want to send
“a clear signal that driving innovation, investment and growth should be at the heart of what our regulators do.”
That is something which the Financial Services and Markets Bill has introduced for the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) through new secondary growth and competitiveness objectives.
The great solution… impact assessments?
However, the promise that where regulations are not working “we will seek to remove or change them”, could be a cause for concern to businesses who rely not so much on this or that regulation but consistency and predictability.
If businesses spend money preparing to implement new regulatory frameworks, they don’t want to have to change everything again six months down the line when the impact assessment finds out the whole exercise was counter-productive.
As the policy paper itself observes, quicker impact assessments mean more reporting requirements, and more reporting requirements means more paperwork for businesses and more civil servants plugging it into excel spreadsheets:
“the new burden reporting… should be proportionate and not distract from the activity of supporting growth.”
Further, creating “holistic” parameters — i.e. taking into account non-immediate or non-economic parameters — for impact assessments is notoriously difficult. How far do you go in assessing potential knock-on and unintended consequences of a single piece of legislation?
Vague goals and little follow through
The goals of the regulatory reform are those laid out in the Benefits of Brexit report, which are predictably vague.
A sovereign approach.
Leading from the front.
Proportionality.
Recognising what works.
Setting high standards at home and globally.
As Badenoch said in her statement, “Smarter Regulation to Grow the Economy” promised to be “the first in a series of updates on how this Government intend to reform regulations to support economic growth”.
The paper itself said the Government would be “launching a reformed [regulation] system in the summer”.
But, with the summer almost over, nothing has appeared to meet that ambition.
The Government have issued a consultation this month on UK product safety, which cites “Smarter Regulation to Grow the Economy” as its basis, but that’s about it.
What happened to the launch of the “reformed system”?
The policy paper seemed to meet the call put out in response to the initial REUL Bill by Dr Roger Barker of the Institute of Directors for
“a regulatory governance process which provides relevant external and stakeholders with the opportunity to scrutinise business impact at an earlier stage”.
However, the “substantial refresh” he was looking for has yet to materialise.
As the end of 2023 approaches, the regulatory reforms promised as part of REUL revocation will be back on people’s minds, so we could see more in this space in the coming months.
But it will bring with it all the old wounds within the Conservative Party of Sunak’s May betrayal over REUL.
