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5 December 2022

Predictions 2023 – 6 of 7 Insights

2023 – will the sun really set on EU Retained Law?

Debbie Heywood speculates about (rather than predicts) the future of EU Retained Law.

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Debbie Heywood

Senior Counsel – Knowledge

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Having spent a not inconsiderable amount of time between 2016 and the end of 2020 trying to predict if, when and how Brexit would actually happen, we thought things might settle down for a while.  A pandemic, the war in Ukraine, economic upheaval and several UK prime ministers later, and much seems as, if not more, uncertain than it did at the height of the Brexit negotiations.

The economic impact of Brexit is certainly hard to untangle, but spare a thought for the lawyers as we wrestle with the potential legal impact of the Retained EU Law Bill and what that means for our clients.  Already dealing with the emerging parallel regimes of incoming law in the UK and the EU, we are now potentially looking at parallel regimes for a lot of existing law – apparently by the end of 2023.  Or are we?

What is Retained EU Law?

Much recent law in the UK is EU-derived.  Broadly, for most business (if not legal) purposes, there are three main types of EU-derived law which took effect in the UK under EU Treaties – EU Regulations (like GDPR), which did not require UK implementing legislation, EU Directives (like the Consumer Rights Directive), which did require transposing UK legislation, and court decisions – those of the Court of Justice of the European Union (eg the Schrems decisions), and UK court decisions based on them. 

At the end of the Brexit transition period, under the European Union (Withdrawal) Act 2018 (EUWA), the majority of EU-derived law was retained in the UK, becoming retained EU law.  To a degree, this law was given supremacy over some domestic law. 

Effectively, this meant that the promised 'bonfire of EU red tape' got pushed down the road at the point of Brexit.  Given that the government had quite a lot to do at the time, this was unsurprising, but for many, it meant that Brexit was incomplete.

What is the Retained EU Law Bill?

In January 2022, Boris Johnson's government set out its plans to change the status of EU retained law, and Liz Truss's ill-fated, short-lived government subsequently introduced the Retained EU Law (Revocation and Reform Bill) 2022-23.  It gives the government the power, largely through amendment of the EUWA, to repeal, amend or "assimilate" all Retained EU Law (REUL) (subject to certain exemptions including for financial services and tax).

The REUL Bill provides that:

  • retained EU law (EU-derived subordinate legislation and retained direct EU legislation) will be automatically revoked unless otherwise preserved, on 31 December 2023 under a 'sunset clause'. Powers are included to enable preservation of specified legislation or provisions, or to extend the revocation date to 23 June 2026 at the latest
  • powers are given to restate secondary retained EU law
  • after the end of 2023, any remaining retained EU law will be known as "assimilated" law and will be stripped of EU interpretive features
  • after the end of 2023, domestic law will take precedence over assimilated law but powers are included to allow supremacy of EU law in specified circumstances
  • directly effective rights and obligations derived from EU Treaties and Directives and general principles of EU law will lapse after the end of 2023, but powers are included allowing the preservation of their effect where expressly specified
  • domestic courts will have greater discretion to depart from retained case law with a new test for departure from retained EU case law and retained domestic case law. In areas of conflict, there will be powers for UK and devolved law officers to refer or intervene in cases involving retained case law.

Crucially, most of these powers are to be exercised under secondary legislation which means changes will not have to be introduced by Acts of Parliament but may be carried out by Ministers with a lower degree of scrutiny and debate.   

What does this mean for us?

The short answer to this question is that nobody really knows.  Potentially, the REUL Bill allows for the majority of REUL to simply fall away if it isn't actively assimilated or replaced by the end of 2023 (or 23 June 2026 if explicitly extended.)

For starters, even identifying REUL is a challenge.  The government published what turned out to be an incomplete dashboard of around 2400 laws, subsequently reportedly 'discovering' an additional 1400 pieces of the Bill creates a considerable legal uncertainty for a number of reasons including that:

  • we don't know which of the laws which might change will actually change
  • we don't know the extent to which they may change
  • we don't know when the laws will change
  • we don't know what will happen if the sunset clause kicks in and no provision has been made for replacements.

In addition to the legal uncertainty, many commentators have pointed to constitutional issues.  The scope for so much law to be amended by the relevant Secretary of State using secondary legislation with reduced Parliamentary scrutiny is highly controversial.  There is also the question of what happens in the devolved nations.

Medium to longer term potential consequences include:

  • poorly drafted law pushed through in a hurry with insufficient scrutiny in order to make the sunset clause deadlines
  • gaps where REUL has fallen away but not been replaced
  • inconsistencies where inter-dependent law has been dealt with in different ways (for example, been subject to an extended sunset period in one case, but changed in another)
  • increased litigation as parties seek to overturn the impact of currently binding CJEU decisions.

The Impact Assessment (IA) for the Bill published by the Department for Business, Energy and Industrial Strategy, has been given a formal red rating by the independent Regulatory Policy Committee.  The RPC scrutinises how proposed government regulation could impact business and civil society organisations. Its report on the IA for the REUL Bill is damning.  It concludes the IA is not fit for purpose and criticises the level of analysis carried out by the government. It is particularly scathing of the sunset clause, and is also concerned about the failure of BEIS to commit to providing impact assessments for each piece of changed or sunsetted REUL during the government's decision-making process, saying "As the independent Better Regulation watchdog, it is our view that those affected by regulatory change should reasonably expect the Government to properly consider the impacts of such changes. We are not assured that the impact of changing or sunsetting each piece of REUL will be calculated or understood under proposals currently in place - particularly where no related secondary legislation is required".

Will the REUL Bill really become law?

The Sunak government may now be drawing the conclusion that the process of reviewing all REUL, deciding what to keep, what to amend, and what to let go, all by the end of 2023, is a big ask.  In fact, it's very difficult to imagine it is achievable.  Reports suggest that even if civil servants were to focus exclusively on the issue, massive recruitment would be needed.  And Ministers simply won't have time to make the necessary decisions. Jacob Rees-Mogg has admitted that he was told the Business Department would need 370 officials for a period of a year to work on 318 pieces of legislation (although he is highly sceptical about that). External legal and consulting support would also likely be required.

Grant Shapps, the latest business secretary, is reportedly keen to slow down the review and an ally suggested the government would "slow things down to a sane pace".

However, the Bill completed its committee stage in the House of Commons on 29 November and a revised version was published.  Proposals to add an exclusion around worker and consumer protection legislation, and a requirement to set out a complete list of laws to be revoked were rejected, but some changes were agreed to, mostly to add clarity.  While there was no change to the sunset clause, provision was made to enable transitional, transitory or saving provisions in relation to any law sunsetted under clauses 1 or 3.  The Bill now moves to report stage and will return to the floor of the House of Commons for further debate, and, potentially, further amendment.

There is clearly a political balancing act going on.  The pressure is on the government from the right wing of the Conservative Party to push ahead with reform, not least because there is a very real possibility that the Tories will lose the next general election which must take place by January 2025. But this has to be balanced against the practicalities of such a massive undertaking during a fraught economic period. 

What will really change?

There are a few aspects to this question.  It's not simply a matter of identifying a long list of what is susceptible to change.  Nor even of picking off the 'easy targets'.  Much was made during the build up to the Referendum of the impact of bureaucratic and sometimes pointless EU laws, and some outdated and simple laws may be easy to identify and drop.  An indication as to the government's plans may be gleaned from the government's 'Benefits of Brexit' paper, published in January 2022, but a lot has changed since then.

For many, the greatest concern is that it will be employment and environmental regulations which will be the focus of change. As we discuss here, some employment regulations have been widely discussed as targets and are potentially vulnerable, subject to a political and public backlash against any erosion of rights.

The UK's EU-derived GDPR is another often-cited example of unnecessarily burdensome EU-derived legislation and the Johnson government published the Data Protection and Digital Information Bill to replace it. While the DPDI Bill has been paused as a result of the various leadership changes, it's informative to look at this process as an indication of what the government is realistically likely to do and how.

The truth is that the UK cannot depart too radically from the UK GDPR without jeopardising frictionless EU-UK data transfers, something businesses cannot countenance.  This means that the basic EU standards of data protection remain intact in the replacement legislation.  In many cases, while the government set out proposals to reduce the compliance burden during the consultation process, the changes as eventually introduced, tend to be somewhat cosmetic, often focusing on slightly different requirements or different terminology.  And businesses operating across EU borders will have to comply with GDPR anyway.  Owen Rowland, Deputy Director, Domestic Data Protection Policy at DCMS, recently said at a Westminster eForum event, that any business complying with the GDPR would effectively comply with the UK replacement law.  This suggests either that the EU will maintain higher privacy standards than the UK, or that the changes under the DPDI Bill will be largely minor and consequently have a minimal impact.  Having said that, the DPDI Bill is going back to a limited consultation period and may yet change more radically. 

This only illustrates how complex it is departing from the existing 'acquis' of REUL. There are similar issues relating to product liability, consumer protection, online regulation and IP protection to name a few.  Depart too far from the inherited EU model and we may risk damage to an already weakened UK economy, as the government will be only too well aware.  

How should we prepare?

It is very difficult to prepare based on the information we currently have (aside from mentally).  UNISON's Head of Legal Services, Shantha David said when giving evidence in Parliament in November: "We need to have a comprehensive list of the legislation that is due to be affected" but even this may not be available within the space of a year.  While there will be some legislation which can disappear without much impact, there are also hugely important pieces of REUL which impact our daily lives and our rights.  It does seem ambitious to expect that they could be reviewed and either amended, restated, discarded or retained under an extension, all by the extended sunset period of 23 June 2026, let alone by the end of 2023.

As things stand, it does look likely that the REUL Bill will pass early next year.  The government has a big enough majority to get it through it in the face of opposition from the other major political parties.  Given the pushback on timing and the criticism by the RPC, however, it is very possible it will be further amended before enactment. While there may not be major changes to the body of the Bill, the most likely target for revision is the sunset clause which may well be extended, despite the timing of the next general election.  As such, we don't envisage that the upcoming bonfire of EU-derived law will burn brightly enough to keep the supporters of the REUL Bill warm this time next year.

The best advice we can offer right now is to stick with us as we watch developments closely.  2023 stands to be another busy and disruptive year, whether or not the sun sets on REUL.

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