The REUL Act and Trade – what’s all the fuss about?

The Retained EU Law Revocation and Reform Act received Royal Assent in late June 2023 after a complex passage in Parliament. This included a negative assessment by the Office for Environmental Protection, a concerted call by environmental and business groups for its abandonment and united opposition from the devolved administrations as well as multiple amendments in both Houses. Why did the REUL Bill raise so many questions? How does the final Act address them? What does it all mean for new UK regulatory powers post-Brexit? And what consequences this may have for both internal and international trade?

One more attack on EU red tape?

As an EU Member State, the UK had repeatedly attacked perceived EU ‘red tape’, i.e. ‘unnecessary’ regulatory burdens. Red tape and regulatory burdens are highly political terms – what is ‘unnecessary’ for one may be critical protection for another. As a Union of diverse states which each have their own regulatory history, it is unsurprising that the EU sees frequent debates about the necessity of certain rules.

UK Conservative governments in the early 2010s agreed targets to cut red tape – but could not touch EU rules in the UK without getting other EU Member States and the European Parliament to agree to cut them, which they failed to do. Brexit changed this: whether EU red tape would be cut would finally be up to the UK.

But who in the UK? And how? Devolution of key areas of policy (such as the environment) has meant that 'cutting red tape’ was not just up to Westminster – at least if policy was to be changed beyond England in areas of devolved competences. Furthermore, who should be doing the cutting? Should it be Parliament (but then there is a risk that revising and cutting old rules takes over all parliamentary time)? Or should it be up to the Government itself (but then, what room for accountability?).

What the REUL Bill proposed vs. what the REUL Act will do

Since the beginning of the Brexit process, the UK regulatory pendulum has been swinging between ensuring certainty and continuity (as seen by the creation of Retained EU Law through the vast copy/pasting exercise of the EU Withdrawal Act 2019) and demonstrating divergence (see for example, the now watered down introduction of the UK CA mark, the creation of the UK REACH system for chemicals).

The REUL Bill, first mooted by Jacob Rees Mogg as a ‘Brexit Freedom Bill’ was intended as a massive divergence exercise – a tabula rasa moment which would remove all items of Retained EU Law contained in statutory instruments by the end of December 2023, unless they were expressly saved. Sunset powers had been used previously, notably on Brexit, to grant extraordinary powers to Government for a limited time. This time, with the REUL Bill, it was not powers but policy instruments themselves being sunsetted. The default position was the sunset – instruments would be cut if they had not been expressly saved by either the devolved or central administrations. This raised fundamental concerns about how law is made in the UK. Would this be too much power for government, how to explain divergence of powers on the same instruments between devolved and central administrations? It also raised practical concerns about how to manage the process in a few months: before they could be cut, REUL instruments had to be mapped, which proved an arduous task.

The REUL Act does not go as far as the REUL Bill. Instead of a sunset by default, there is now a finite list of 600 instruments (Schedule 1) that will be cut in December 2023. There is a very limited window of time to request an amendment to that list (any changes would need to be introduced by a minister and go through both houses by the end of October). The devolved administrations have received assurances that the UK Government would not (always) go it alone: where REUL statutory instruments fall within the remit of a Common Framework, their future would be discussed between the four administrations under the agreed Common Framework procedures.

Hence from tabula rasa, we are back to the more normal politics of a narrow hit list of (mostly) outdated, disused rules. A small tidying up act. But this is not the end of the REUL saga: while the sunset is gone, the extraordinary powers for government to repeal, revoke and replace any existing Retained EU Law via Statutory Instruments remains until late 2026. The Government has promised it will not use these powers to, for example, lower environmental standards – but these are political promises which may be reneged upon, and do not bind future governments. Environmental groups are unsurprisingly extremely wary of these promises as the government’s decision to break free from EU jurisprudence on nutrient neutrality and thus, potentially undermine a key item of REUL, the 2017 Habitats Regulations, demonstrates that maintaining existing environmental standards will be an uphill battle.

How to (mis)use new regulatory powers

While many of the REUL Bill issues have been mitigated, the new Act raises a number of profound concerns about how the UK is using its newly repatriated regulatory powers. First, the Government appears keen to push for divergence for divergence sake – even in the face of widespread opposition from the environment, farming and business sectors as well as the devolved administrations. This makes promises not to change rules difficult to take seriously – and will require that those same stakeholders keep track of what the Government does now that the furor around the sunset is abating and attention (and thus political accountability) is moving on. Second, the Act shows that we are not yet back to ‘normal’ politics in the UK. Such massive regulatory change would of course impact the UK Internal Market, yet the UK Government did not engage with the processes laid out under either the UK Internal Market Act or the many provisional Common Frameworks agreed with the Devolved Administrations to measure and mitigate the impact of such changes. This is particularly significant when comparing the depth of changes planned under the Bill’s  sunset  clause to the limited impact of the Scottish Bottle Deposit Scheme which was quashed using Internal Market rules. For both internal and international trade partners, this raises the alarm bell: not only about the certainty of rules (and the risk that regulatory uncertainty may erode trade), but also the devaluing of agreed processes (even more concerning when these were recently agreed, after much difficulties) which undermines the trustworthiness of the UK as a partner in trade.