Brexit bills bonanza disguises an absence of strategy

UK Policy Prosperity

Brexit bills bonanza disguises an absence of strategy

Posted on: 11th May 2022
Anton Spisak
Senior Fellow, UK Policy

At last, the wait is over. At the Queen’s Speech this week, the British government has spelled out how it wants to use the freedoms that come with life outside the European Union. It was always part of Boris Johnson’s description – as the man who fought the referendum, won it and took Britain out of the single market – to itemise the opportunities, to make a case for them, and to deliver them.

The government’s legislative programme gives us more clarity on the “dividends of Brexit” than we have ever had before. At the heart of the post-Brexit package, to be pored over by Parliament during the next year, is the Brexit Freedoms Bill, a flagship piece of legislation which will give ministers wide-ranging powers to repeal various bits of EU inherited rules in domestic law.

Among other bills included are a financial services bill setting up a regulatory system to capitalise on new areas such as cryptocurrencies; a measure to reform animal welfare rules; a bill to reform procurement rules; and new laws changing regulations on data and genetic technology. All of them are promising to reform the laws inherited from the EU which were written into the UK’s statute book pre-Brexit but, in the government’s eyes, are no longer fit for purpose.

True, there are ideas in this legislative programme, some of them good and others much less so. But the government’s plans are most notable not for what they include but for what they do not: a strategy for creating an effective post-Brexit regulatory system. They are lacking in honesty about the trade-offs that redesigning the UK’s regulatory architecture entails in practice and a plan for thinking through these trade-offs in a systematic and transparent way.

Take, for example, the proposed Brexit Freedoms Bill. This piece of legislation will make it easier for the government to amend or remove EU inherited laws on the UK statute book. It will give the ministers the powers to amend existing rules without primary legislation. What is less clear is the consistency of such broad powers with the principle of restoring “parliamentary sovereignty". Nor is it unreasonable to ask how legitimate it is to change potentially vast swathes of domestic law without parliamentary oversight, or what kind of a constitutional precedent it sets for the future.

Looking elsewhere, there may be good reasons why the UK should change its approach to regulating food, financial services, or data. This can be because elements of the current system were not made for the benefit of UK companies or consumers, because some regulations may be too costly, or because the government may want to encourage more regulatory innovation. But changing regulations across all these areas requires honesty about the trade-offs that it creates.

One consideration is for the economy. Too much divergence from EU rules means more costs and restricted market access for businesses, especially in those sectors heavily reliant on trade with European countries. Changing existing regulations – like domestic standards on data protection – will put those UK-based businesses that trade with the EU at a disadvantage. There could be some good reasons for change, but do they outweigh the costs incurred by businesses (and consumers) as they have to adhere to two different sets of standards – and to do so at the time when the British economy can ill-afford a further drag on growth?

Another consideration is what these changes means for the integrity of the United Kingdom and its future. A more liberal approach to regulating genetic technologies could, for example, be reasonably justified on the basis of promoting innovation. But if the devolved governments, which have regulatory autonomy in this area, choose not to act in tandem with Westminster, the new laws will create new barriers within the UK’s own internal market.

It is easy to talk up scrapping regulations in theory. But regulatory change is an enormously complicated enterprise. Once trade-offs are presented, the same laws that promise to “unlock the benefits of Brexit” might quickly amount to more business uncertainty, more legal complexity and, unavoidably, more political tension.

Then, there are all the inconsistencies. Many of the newly announced laws are branded as a means of “unleashing” the opportunities for growth in the British economy. Developing better regulation is, indeed, an important (and often underestimated) aspect of growth policy. But if the government is serious about its aspirations, a good place to start is to avoid duplication of regulatory requirements, like the UKCA mark. Nor does it make sense to consistently undermine business certainty by seeking to override aspects of the international treaties that it once voluntarily signed but now dislikes.

Are any of these considerations part of decision-making when the government is choosing where to reform regulation and why? If the ministers are sincere in their goal to develop better regulation, they need more than a set of disjointed ideas branded as “the benefits of Brexit”. It needs a plan for confronting the inevitable trade-offs that these proposals create and a transparent process for deciding where the benefits of regulatory change outweigh the costs.

The government should seize the opportunities where regulatory change is meaningful – areas where the potential benefits are material for competitiveness or regulatory innovation and the constraints are limited. Ministers should proactively seek to minimise pointless divergence – where changes deliver few benefits but raise costs.

Now is a good time to reflect on whether Britain’s regulatory architecture is fit for the future. This is not because Brexit unlocked enormous opportunities to radically depart from the EU’s model – as we argued in our report on post-Brexit regulation published last June – but because the domestic regulatory system is under pressure from rapid technological change, stalled productivity and increasing global regulatory competition. These factors should prompt introspection within the British state about when regulation works best.

The real impediment to finding the dividends of Brexit has never been a lack of ideas. It is always possible to find some regulations to scrap. As it is always possible to have a performative debate that boils down to tired tropes of “sovereignty”. The true impediment has been the absence of strategy within the centre of government. The latest plans have done nothing to change that.

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