1. Retained EU law and post-Brexit regulation

1.1 ‘Brexit Freedoms Bill’

The Government is planning to introduce a ‘Brexit Freedoms Bill’ to end the special domestic legal status of EU law and make it easier to amend or remove retained EU law. The Prime Minister announced the bill in January 2022, on the second anniversary of the UK’s departure from the EU. The Government also said a cross-government drive to reform, repeal or replace “outdated” retained EU law would cut £1bn of red tape for UK businesses.

‘Retained EU law’ is a concept created by the European Union (Withdrawal) Act 2018 (EUWA 2018). The act (amended in 2020 to take account of the Brexit transition period) took a ‘snapshot’ of EU law as it applied to the UK at the end of the transition period. It provided for this body of retained EU law to continue to apply in domestic law. EUWA 2018 also sets out how retained EU law can be modified (whether primary or secondary legislation is required depends on the type of retained EU law) and how the courts should interpret it.

Retained EU law has already been amended in multiple ways. The Government has used primary legislation to implement major post-Brexit policy changes. For example, the Immigration and Social Security Coordination (EU Withdrawal) Act 2020 ended EU free movement rights in the UK and repealed the main provisions of retained EU law relating to free movement. Section 8 of EUWA 2018 gives ministers the power to make regulations to correct ‘deficiencies’ in retained EU law. The Government has made hundreds of regulations using this power, for example to remove references to “other member states” from domestic law. This power expires at the end of 2022. Depending on the status they are given under EUWA 2018, some types of retained EU law can also be modified through other delegated powers, not just the section 8 power. In terms of the powers of the courts to interpret retained EU law, the Government introduced secondary legislation in 2020 to allow the appellate courts, not just the Supreme Court and the High Court of Justiciary in Scotland, to depart from retained EU case law (decisions of the Court of Justice of the European Union made before the end of the transition period).

Although the ability to amend retained EU law exists, the Government’s view is that further, more systematic, changes are needed. It set out details in a policy paper entitled ‘The Benefits of Brexit’, published on the same day the Prime Minister announced plans for the bill. The Government said its intention was to “amend, replace or repeal all the retained EU law that is not right for the UK”. It identified two key strands: reviewing the substance of retained EU law to meet the UK’s new regulatory priorities and reviewing the status of retained EU law to allow changes to be made more easily.

The policy paper said the new legislation would “clarify the status and operation of retained EU law”, “simplify the complex status provisions” in EUWA 2018 and ensure retained EU law could be amended “in a proportionate and sensible way”. It said the Cabinet Office was currently reviewing questions including:

  • Revising the status of certain types of retained EU law for the purposes of amendment, to “normalise” their status in domestic law and make them easier to repeal or replace.
  • Creating a “targeted” power to enable the amendment of retained EU law for certain purposes without requiring primary legislation. The Government argued it was “not a good use of finite parliamentary time” to require primary legislation to amend retained EU laws that currently have a status equivalent to primary legislation when it comes to making amendments to them.
  • Removing the continued effect of the supremacy of EU law over domestic law that was made before the end of the transition period.

Lord Frost, who was then the minister with responsibility for Brexit, originally launched the review in September 2021. In December 2021, Lord Frost set out a more detailed explanation of EU law concepts that still affect UK domestic law through the operation of EUWA 2018, which he said were being looked at in the review.

Lord Frost also announced a review into the substance of retained EU law in September 2021, following on from the work of the Taskforce on Innovation, Growth and Regulatory Reform (TIGRR), chaired by Sir Iain Duncan Smith. Lord Frost said the intention was “eventually to amend, replace or repeal all retained EU law that is not right for the UK”. He suggested the Government would set up a standing commission to receive ideas from the public on how to repeal or improve regulation. He explained the review would provide an authoritative government assessment of which sectors of the economy and which policy areas were most affected by retained EU law.

In the Benefits of Brexit policy paper, the Government set out how it believed reviewing retained EU law would give “the best platforms to capitalise on our regulatory freedoms for the long term”. It argued that although EUWA 2018 was needed to ensure continuity and certainty immediately after Brexit, it was never the intention for all retained EU law to remain on the statute book without review. The Government intends to prioritise reform of retained EU law in areas that will deliver the greatest economic gain. The policy paper suggested that the Government wants to use the ability to diverge from the EU regulatory approach to build on the UK’s international competitiveness in sectors such as financial services and fintech, automotive, digital, green energy and the creative industries. It aims to cut £1bn in business costs by removing “retained EU red tape”, arguing that previous government initiatives to reduce regulation were not able to amend obligations the UK had to comply with as an EU member state. The paper also laid out how the Government’s regulatory approach would be based on five new principles: UK sovereignty; leading from the front; proportionality; recognising what works; and setting high standards at home and globally. It set out the Government’s ‘vision statements’ for the future of policy areas where it planned to change its approach following Brexit, in science, data and technology; business and industry; infrastructure and levelling up; climate, the environment and agriculture; and a ‘Global Britain’.

Speaking about the progress of reviewing retained EU law, Jacob Rees-Mogg, the new Minister for Brexit Opportunities, said in March 2022 he had received over 1,800 suggestions from the public in response to articles he wrote in the Sun and Sunday Express asking readers to identify EU regulations they would like to abolish. The Government’s review has identified almost 2,000 EU regulations in retained EU law, but as of February 2022 Mr Rees-Mogg said no decisions had been taken about which pieces of retained EU law would be amended by the proposed bill.

In April 2022, Mr Rees-Mogg suggested the ‘Brexit Freedoms Bill’ would be ready by the summer. He said that it would “provide the mechanism for the most fundamental reforms” to retained EU law. He argued that since much EU law was introduced on to the UK statute book via secondary instruments, “most of it can reasonably be removed by secondary instrument”.

The House of Lords Secondary Legislation Scrutiny Committee has urged that “Parliament’s role in scrutinising legislation—especially as regards secondary legislation—should not be in any way weakened by the Government’s ambitions for reform” of retained EU law.

1.2 Procurement Bill

The Government has also confirmed that it intends to make some policy changes to retained EU law through separate pieces of primary legislation. Speaking in April 2022, Jacob Rees-Mogg said he would be responsible for a Procurement Bill, which he described as “a major Brexit opportunity to simplify the processes of procurement within the United Kingdom”. The Government had already announced a Procurement Bill in the 2021 Queen’s Speech, but did not introduce it in the last session. It said then that the purpose of the bill would be to “consolidate and streamline the 350 plus EU-derived regulations and make our procurement regime quicker, simpler and easier to use”. It also said the bill would make it easier for small businesses and voluntary, charitable and social enterprises to win public contracts.

Further details of what the bill is likely to cover are set out in the Government’s response to a consultation it ran on transforming public procurement, published in December 2021. Mr Rees-Mogg confirmed in March 2022 that the Welsh Government and Northern Ireland Executive had decided the bill should extend to public contracting authorities in Wales and Northern Ireland, but Scotland had decided to remain outside the framework of the bill.

At present, the UK’s public procurement regime is largely based around EU directives and the domestic regulations that implemented them. Some technical changes have been made to the relevant retained EU law, such as specifying threshold amounts in pounds rather than euros and requiring contract notices to be published on a UK electronic system rather than the EU one.

1.3 Data Protection Bill

Mr Rees-Mogg also confirmed recently the Government is planning to introduce a Data Protection Bill, “superseding and repealing things that have been done under the EU”. Currently, the UK’s data protection legislation is based on the retained EU law version of the EU’s General Data Protection Regulation. The Benefits of Brexit policy paper said the Government wants to reshape its approach to data regulation to “secure an even better data protection regime that will help to drive growth, innovation and competition across the UK”. The Government ran a consultation on a “new direction” for data in late 2021. It expects to publish its response to the consultation in spring 2022, before it introduces a bill.

Labour has questioned whether reforming the UK’s data protection regime could pose any risks to the UK’s future data adequacy status with the EU. The EU makes unilateral ‘data adequacy decisions’ about whether non-EU countries offer what it considers an adequate level of data protection. If so, personal data can be transferred between that country and the EU without any further safeguards. The EU adopted ‘data adequacy’ decisions covering the UK in June 2021. In a report published before the EU adopted its decisions, the House of Lords European Union Committee highlighted the “vital importance” of an EU data adequacy decision for a wide range of service providers. It cautioned that a positive adequacy decision is not guaranteed to be permanent. It therefore called on the Government to maintain close dialogue with the EU to support the long-term stability of EU-UK data flows. The Government said in April 2022 that it will continue to engage with EU counterparts on data protection issues, but noted that exact alignment to EU law is not a requirement for EU data adequacy.

1.4 Financial Services Bill

Mr Rees-Mogg also confirmed there would be a Financial Services Bill, to replace some retained EU law provisions. The Benefits of Brexit policy paper said the Government was implementing “an ambitious programme of reform” to make financial services regulation work better for the UK now it is outside the EU. The Government said it was doing this by “actively seeking out opportunities to tailor the regulation of our financial services sector to better suit our markets, improve competitiveness and deliver better outcomes for consumers”. Financial services reforms are considered further in the Lords Library briefing ‘Queen’s Speech 2022: Economic affairs and business’.

2. Protocol on Ireland/Northern Ireland

There has been recent press speculation that the Queen’s Speech may include a bill to override parts of the Protocol on Ireland/Northern Ireland. The Financial Times reported in mid-April 2022 that proposals had been drawn up to give ministers “unilateral powers to switch off key parts of the protocol in UK law”. This would reportedly cover articles 5 to 10 of the protocol, which govern areas including customs, the movement of goods, VAT and excise, the single electricity market and state aid.

Ministers have suggested that the UK is contemplating taking action on the protocol. Responding to the Financial Times reporting, Prime Minister Boris Johnson said the protocol “does not command the confidence of a large, large component of the population in Northern Ireland” and the Government needed to “fix” this. He said he did not rule out “taking further steps if that is necessary”. When asked specifically if that included bringing forward legislation, Mr Johnson said: “Of course. That goes without saying”. Jacob Rees-Mogg has said there could come a point at which the UK decides to reform the protocol by itself if the EU will not agree to making changes. He suggested that “wheels are in motion” on the issue.

However, the Government has not confirmed if this means a bill will be announced in the Queen’s Speech. When asked in late April 2022 if legislation on the protocol would be included, the Prime Minister’s official spokesperson said the Government wanted to move as quickly as possible, but remained of the view that a negotiated settlement would be “the right approach”. However, the spokesperson said the Government did not rule out “taking further steps if solutions cannot be found”.

The protocol was agreed by the UK and the EU in October 2019 as part of the Withdrawal Agreement governing the UK’s departure from the EU. Under the terms of the protocol, Northern Ireland has a unique status. It is part of the UK’s customs territory but is subject to the EU’s customs code, VAT rules and single market rules for goods, including sanitary and phytosanitary (SPS) rules to protect animal, plant and public health. The EU and the UK have disagreed over how to implement some of these rules, particularly for goods moving from Great Britain to Northern Ireland. Discussions between the two sides about how to implement the protocol have been ongoing since before it came into force on 1 January 2021.

The Government’s position is that the protocol needs to be amended. It set out its case for reaching a “new balance” in a command paper published in July 2021. It argued the protocol was not delivering on some of its core objectives, “notably the explicit commitment to protect Northern Ireland’s place in the UK internal market and to avoid disruption to everyday lives”. In response, Maroš Šefčovič, Vice-President of the European Commission, said the EU would continue to engage with the UK, but would “not agree to a renegotiation of the protocol”. Since then, talks have been going on between the UK and the EU. There has been some progress—for instance, the EU recently adopted legislation intended to ensure the continued supply of medicines to Northern Ireland. However, the talks have not resolved the main issues the UK raised in the command paper.

The protocol itself contains a mechanism that allows either side to take ‘safeguards’ measures in certain circumstances. This is set out in article 16, which states that if the application of the protocol leads to “serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade” then either side can unilaterally impose “appropriate safeguard measures”. The Government maintained in its command paper that it was “clear that the circumstances exist to justify using article 16”. It pointed to “significant disruption to longstanding trade flows between Great Britain and Northern Ireland”; “exacerbated […] perceptions of separation and threat to identity within the unionist community”; societal and economic impacts of the protocol on consumers and businesses; and political and community instability.

However, the Government said it had concluded “that for the time being it is not appropriate” to exercise the UK’s rights under article 16, because of the limitations on the actions that can be taken under the safeguard mechanism. Article 16 states that safeguard measures “shall be restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation”. The Government noted that any unilateral measures under article 16 would be temporary and “subject to the uncertainty of an as yet untested dispute settlement process”. However, it emphasised that “such action remains on the table as a possibility for the future if circumstances justify it”. More recently, both the Prime Minister and the Foreign Secretary have said they would implement article 16 if a negotiated solution could not be found.

Article 16 does not specify what form “appropriate safeguard measures” might take. The House of Commons Library has suggested that possible safeguard measures might try to change the ways in which the protocol is applied in Northern Ireland. It has also noted there is “a tension […] between the fact that safeguarding measures are designed to tackle serious problems caused by the protocol, and that the party using these measures is still obliged to adhere to the protocol”. It has been suggested by some that if the Government decided to implement measures under article 16 that would otherwise be in breach of the protocol, in order to avoid domestic legal challenges, it might pass legislation to modify the provisions of EUWA 2018 that give the protocol legal effect in domestic law. Others reject the line of reasoning that this might be necessary.

It is not clear how the EU would respond if the UK took safeguards measures under article 16 or legislated unilaterally to set aside parts of the protocol. When the Government included measures in the United Kingdom Internal Market Bill in 2020 to enable it to unilaterally determine the interpretation of the protocol’s provisions on state aid, the European Commission launched infringement proceedings against the UK for breaching the Withdrawal Agreement. The EU would have the right to introduce ‘counterbalancing measures’ if any article 16 safeguards imposed by the UK created an “imbalance between the rights and obligations” under the protocol. Either side could ask an arbitration panel to rule on whether safeguard measures or counterbalancing measures had met the requirements of article 16. If a party is found not to have complied with the ruling of an arbitration panel in relation to the Withdrawal Agreement, the other party can take cross-retaliation measures under the Trade and Cooperation Agreement (TCA) that covers the UK-EU trade relationship. It has been suggested, including by Simon Coveney, the Irish Foreign Minister, that the EU could withdraw from the TCA altogether if the UK invoked article 16.

In response to the recent press reports about a possible bill, an EU spokesperson emphasised the need for joint, rather than unilateral, solutions and said the EU was ready to work further with the UK over the coming weeks.

The impact of the protocol on recent political developments in Northern Ireland, including the resignation of First Minister Paul Givan in February 2022, is considered in the Lords Library’s briefings on the ‘Impact of the Protocol on Ireland/Northern Ireland on recent political developments in Northern Ireland’ and ‘The Union between Great Britain and Northern Ireland: UK Government policy’. Elections to the Northern Ireland Assembly are being held on 5 May 2022. Sir Jeffrey Donaldson, the leader of the Democratic Unionist Party (DUP), has said it would be “difficult” for his party to re-enter the Executive after the election unless issues arising from the protocol are resolved. The DUP is calling for the removal of the protocol. The Secretary of State for Northern Ireland, Brandon Lewis, has expressed his hope that whatever the election result, nationalist and unionist parties would nominate first and deputy first ministers. Under the newly passed Northern Ireland (Ministers, Elections and Petitions of Concern) Act 2022, Executive ministers must be appointed within six weeks of an election, extendable in six-week increments up to a maximum of 24 weeks. If the Executive has not been formed by this point, the secretary of state must call another election.

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