EU-UK flags cooperation

Now the UK has left the EU it would be free to diverge from EU regulations on workers’ rights and social and environmental protections. The Government has said the potential for regulatory reform presents opportunities for the UK to promote innovation in new technologies. The 2019 Conservative general election manifesto committed to maintain “high standards” of workers’ rights and environmental protection. However, critics have argued that leaving the EU could allow the Government to weaken workers’ rights in the future.

The Prime Minister, Boris Johnson, has announced the formation of a Taskforce on Innovation, Growth and Regulatory Reform (TIGRR). It has a remit to “scope out and propose options for how the UK can take advantage of our newfound regulatory freedoms” outside the EU. The TIGRR is the subject of an oral question in the House of Lords on 17 March 2021. Lord Hendy (Labour) is due to ask the Government:

[W]hether the terms of reference of the Taskforce on Innovation, Growth and Regulatory Reform include (1) reviewing existing employment rights, and (2) making recommendations for reform; whether trade unions will be consulted as part of any such review; and when they expect the review (1) to be completed, and (2) to be published.

Taskforce on Innovation, Growth and Regulatory Reform

The TIGRR was announced by the Prime Minister on 2 February 2021. Its terms of reference state that its purpose is to consider options to “stimulate business dynamism and innovation”, to ensure that “businesses can scale up unencumbered by any unnecessary administrative burdens”. The Government says it will identify reforms to “drive innovation and accelerate the commercialisation and safe adoption of new technologies, cementing the UK’s position as a global science and technology superpower”.

The membership of the taskforce comprises three Conservative MPs:

  • Sir Ian Duncan Smith, the former Secretary of State for Work and Pensions, who will chair the group;
  • Theresa Villiers, the former Secretary of State for the Environment, Food and Rural Affairs; and
  • George Freeman, formerly a minister at the Department for Transport and a minister for life sciences.

The only direct reference to employment rights in the TIGRR’s terms of reference is the statement that it will consider options to “reduce administrative barriers” to scaling up businesses, whilst “maintaining the Government’s commitment to high environmental standards and worker protections”.

The TIGRR is due to report back to the Prime Minister in April 2021. There is no commitment in the terms of reference for the report to be made public.

Recent debate about the Government’s plans for workers’ rights

Separate to the TIGRR, the Financial Times reported in January 2021 that the Department for Business, Energy and Industrial Strategy was reviewing the EU working time directive “as part of a post-Brexit overhaul of UK labour rights”. The report said the review would consider:

[E]nding the 48-hour working week, tweaking the rules around rest breaks at work and not including overtime pay when calculating some holiday pay entitlements.

Kwasi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy, later confirmed that a consultation was being planned by his department. However, he subsequently announced that the review had been cancelled, saying “there is no plan to reduce workers’ rights”. The Labour shadow business secretary, Ed Miliband, said in the House of Commons:

It is pretty clear: they were looking at whether to scrap these rights […] The very fact that they were considering taking away vital rights, including the 48-hour limit on the working week, from nurses, ambulance drivers, lorry drivers and supermarket delivery drivers speaks volumes.

What have the TIGRR’s members said about regulatory reform?

Sir Ian Duncan Smith published an article on the TIGRR on 31 January 2021. He said when the UK was in the EU “regulations were constricting our key industries”. Adding that:

We can now firmly ground ourselves into a common law system where the assumption is to allow things rather than prohibit them. The state should not be directing what businesses do—we should generally favour allowing things unless Parliament explicitly says no.

He told the Financial Times (FT) on 17 February 2021 that the TIGRR would not be advocating a “slash and burn” of EU regulations but would propose “fast and sensible” regulatory reforms. In response, Ed Miliband told the FT that “the red tape [businesses] are most concerned about is the new bureaucracy at the border”.

In an article on the Conservative Home blog, George Freeman said the TIGRR would report “directly to the Prime Minister and the Chancellor’s cabinet committee on deregulation”. He said the taskforce would “recommend ‘quick wins’ to use our new regulatory sovereignty to unlock high growth sectors of the economy”. Mr Freeman also said the TIGRR is “emphatically not […] about cutting workers’ [rights] or environmental rights that we rightly guaranteed in the 2019 election manifesto”.

In the Conservative Home article, Mr Freeman gave an example of his views on biotechnology regulation by referring to the report EU Impact on Life Sciences: Avoiding the Global Slow Lane, which he had produced with the Open Europe think tank. He summarised the findings of that report, which had recommended:

[A] shift away from the increasingly widely used risk-based ‘precautionary principle’ and greater freedoms around data protection, using public healthcare systems to help accelerate early access to medical innovations, and for the UK to be able to ‘go it alone’ in designing appropriate regulatory frameworks for GM [genetically modified] crops.

What regulatory divergence does the UK’s trade deal with the EU allow?

Now the UK has left the EU it no longer has to adopt EU-derived laws and regulations. However, the Trade and Cooperation Agreement (TCA) that the UK agreed with the EU contains ‘non-regression’ clauses, which commit both parties not to lower their levels of labour and environmental protections below that which existed at the end of the Brexit transition period on 31 December 2020.

Article 6.2(2) of the TCA states:

A party shall not weaken or reduce, in a manner affecting trade or investment between the parties, its labour and social levels of protection below the levels in place at the end of the transition period.

Article 7.2(2) provides for non-regression in environmental protection. If the EU believed the UK had breached these clauses it could impose ‘rebalancing measures’, subject to certain consultation and arbitration procedures. These measures could include the imposition of tariffs.

The TCA sets a higher bar for imposing rebalancing measures if the UK diverged from EU regulations on labour and social protections in the future. Article 9.4(2) states that rebalancing measures could only be imposed for “significant divergences” which had a “material impact” on trade and investment.

On the potential implications of the TCA for worker’s rights in the UK, Catherine Barnard, Professor of European Union and Labour Law at the University of Cambridge, has stated:

The UK Government’s recent change of heart regarding revision of employment law highlights the lack of clarity over what the future policy direction may be […] The UK Government now has the option to engage in a deregulatory agenda, if it chooses to do so […] Yet, as the Government knows, it was elected in 2019 not on the basis of a deregulatory agenda but on the basis of levelling up. Widespread deregulation of employment standards does not fit this mould.

The Government’s explainer document on the TCA said that the non-regression clauses are “very much in line” with similar clauses in other free trade agreements and with “international norms”. It continued:

The provisions are clear that both parties have the freedom and ability to make their own decisions on how they regulate—meaning that retained EU law [eg on workers’ rights] will not have a special place on the UK’s statute books.

Read more

Cover image by Starline on Freepik.