25 March 2023
The Retained EU Law (Revocation and Reform) Bill represents a significant step in the government’s intention to remove retained European Union (EU) law from the UK statute books. The government has identified 2,400 pieces of EU law that still apply in the UK following its withdrawal from the EU.
The Bill provides for a sunset mechanism whereby the following items of legislation could be revoked.
- EU-derived subordinate legislation – broadly, this relates to EU legislation enacted by way of secondary legislation only (eg a Statutory Instrument) and not by an Act of Parliament.
- Retained direct EU legislation – this includes regulations, decisions, and tertiary EU legislation. Notably, this term does not extend to UK legislation derived from EU treaties or directives.
Process and timetable
Potentially with some exceptions relating to financial services, legislation within these categories will be automatically revoked on 31 December 2023 unless the government chooses to retain it after that date, has already repealed it prior to that date, or sets a later revocation date that must be no later than 23 June 2026. The Bill requires that the government must specify each piece of legislation it wishes to retain.
There are concerns, however, that the government may have underestimated the amount of legislation that needs to be considered – some estimates suggest there are more than 3,800 relevant laws. The Bill has had its committee stage in the House of Lords, and is subject to several amendments, many of which aim to carve out certain specific legislation that would otherwise be within scope. It therefore seems likely that these amendments will be passed back to the House of Commons for further consideration.
In principle, the Bill provides the government with the opportunity to rationalise and update those areas of UK legislation that are within scope. Whilst there is a general acceptance of this intention, there have been significant challenges in Parliament regarding the way in which the Bill provides for the achievement of these objectives. This has focused, in particular, on the arbitrary nature of the sunset dates, and the extent to which the government will be able to devote the necessary resources to considering the wider implications of sunsetting each specific piece of EU law. In principle, detailed consideration would need to be given to the following questions in each case.
- What practical purpose does the legislation serve?
- Would sunsetting create a gap in the UK law that could provide scope for abuse?
- Should the relevant legislation be replaced by new and updated UK law, specifically enacted for the required purposes, or should the EU law simply be retained to allow for further consideration?
Fast-tracking the revocation of a significant body of legislation as proposed by the Bill shows determination to move forward on the part of the government, but it must weigh up the advantages of achieving its ambition against the potential unforeseen and adverse consequences of going too far, too fast.
What it means for UK business
Although the restricted scope of the current draft of the Bill means that its tax-related implications may be somewhat limited (on the grounds that there is no stated intention to change tax rules and most direct and much indirect tax legislation is enacted by primary legislation; i.e. Acts of Parliament), the Bill nevertheless has the potential to cause far-reaching implications for indirect taxes as VAT, customs and excise duties all derive from EU law, only some of which has been enacted in primary UK legislation. The in-scope legislation also includes a significant body of law relating to such fundamental matters as employment rights, as much of the key underlying legislation in this area was enacted by way of statutory instruments, such that it falls within the definition of EU-derived subordinate legislation.
To enable them to manage the impact of the Bill, many businesses will want the government to provide a clear pathway for the revocation of each piece of in-scope legislation, together with a clear indication of what, if anything, will replace that law. In a period of ongoing global economic upheaval, it is to be hoped that the government will take the necessary steps to avoid creating further uncertainty.
For more information, please get in touch with Suze McDonald or your usual RSM contact.