The UK Retained EU Law Bill: legislative havoc or promised post-Brexit deregulation?

Could thousands of regulations disappear from UK law on 31 December 2023? Yes – possibly! – if the Retained EU Law (Revocation and Reform) Bill is passed in its current form. 

What is the background?

When the UK left the European Union, an important policy decision was taken at an early stage: that all law derived from the EU which was already on the UK statute book, all EU law which was directly applicable in the UK, and EU case law, would remain part of UK law after Brexit. This duly happened at 11pm on 31 December 2020, at the end of the Brexit "transition period".

The result was that UK law remained consistent and coherent after Brexit. The same rules and laws applied on the day after the end of the transition period as on the day before; otherwise, in the words of the government at the time, "significant gaps" would have opened up overnight in the UK statute book, creating confusion for businesses and citizens.

This body of law is broadly called "retained EU law" (here's a bit more of an explainer). It was always understood that – once retained EU law had been brought on to, or preserved on, the statute book – it would then be open, as the then-prime minister Theresa May wrote, "for democratically elected representatives in the UK to decide on any changes to that law, after full scrutiny and proper debate".

What has changed?

Until the summer of 2022, there was a broad consensus on this "gradualist" approach of letting this and subsequent governments review, and if thought necessary, amend or remove retained EU law. A process that could take many years, if not decades.

The appointment of Jacob Rees-Mogg as Business Secretary in the late summer of 2022 challenged this consensus. His view was that retained EU law lacked democratic legitimacy; that it had not faced "the same levels of Parliamentary scrutiny as domestic legislation and was subject to key compromises made in Brussels"; and that consequently its removal from UK law should be made much easier.

These views were given legislative form by the publication of the Retained EU Law (Revocation and Reform) Bill in the brief twilight of the Truss administration. It is this bill, which we call more snappily the Retained EU Law Bill or acronymically the "REUL Bill", which contains extensive powers to amend or remove retained EU law, and which we discuss here.

So… what does the Retained EU Law Bill do?

The bill (the latest version of which is here) does some profound things to retained EU law, and empowers ministers in an extremely sweeping way. It provides for each of the following to happen by the end of 2023:

• retained EU law, within a defined scope, to be automatically repealed ("sunsetted");
• the principle of the supremacy of EU law to be abolished;
• the general principles of EU law in UK law to be abolished; 
• directly effective EU law rights and obligations in UK law to be repealed; and
• the facilitation of the domestic courts to depart from retained case law.

In addition to these fundamental changes to the post-Brexit legislative settlement, it also – and controversially – gives ministers very extensive powers to revoke, remove, replace, restate or update retained EU law.

What does the 'sunsetting' of retained EU law by the end of 2023 mean, and can it be delayed?

The sunset provisions of the bill mean that qualifying legislation will be automatically revoked by the end of 2023. Qualifying legislation is: 

• EU-derived subordinate legislation – that is, secondary legislation that was made to implement the UK's EU obligations during its period of EU membership and the Brexit transition period. This was typically secondary legislation made to implement EU directives; and 
• Retained direct EU legislation – that is, EU regulations, EU decisions directed at the UK or EU Member States generally, and EU legislation that supplements rules set out in regulations, decisions and directives (so-called EU tertiary legislation).

This means that EU-derived primary legislation will not be sunsetted under the bill. Nor will any legislation that is not EU-derived.

Can the 2023 sunset date be extended?

Yes, the deadline for sunsetting a specific piece of legislation can be extended to 23 June 2026 (see what they did there?) at the latest. But this requires a proactive act by a minister.

Can legislation be excluded from the sunset provision?

Yes, a specific piece of legislation or specific provisions can be proactively preserved and therefore excluded from the sunset provision. This would need to be done before the legislation is automatically revoked at the end of 2023 (or any extended date).

This automatic sunset at the end of 2023 sounds potentially dramatic…how much and what sort of law are we talking about?

It could potentially be dramatic…! In the summer of 2022, the government released its first iteration of the "Retained EU Law Dashboard", which catalogued over 2,400 pieces of legislation that it had identified to be retained EU law in over 300 policy areas across 21 sectors of the UK economy. The dashboard shows legislation broadly considered to be retained EU law rather than legislation specifically falling within the scope of the bill, and it does not give an insight into potentially affected case law.

The dashboard highlighted the Department for Environment, Food and Rural Affairs, the Department for Transport, and HM Treasury as being the government departments with the largest amount of retained EU law.

In January 2023, the government released its second iteration of the dashboard, which now contains over 3,700 pieces of legislation.

However, questions remain about the completeness of the dashboard. For example, a review conducted by the UK Intellectual Property Office highlighted 70 pieces of IP-related retained EU law, whereas the dashboard still only shows 42. Indeed, the guidance to the dashboard states that future updates will take place throughout 2023.

The upshot is that there is no comprehensive and reliable list of the retained EU law which would be affected by the bill.

Nevertheless, it is clear that it has the potential to affect regulations in policy areas from health and safety, food hygiene and safety and environmental regulation to employment regulation, intellectual property and pensions.

The bill will not affect most retained EU law relating to financial services and tax as those areas are outside its scope.

In what sense are the supremacy of EU law, and the general principles of EU law, being 'abolished'?

The bill ends the principle of supremacy of EU law in UK law after the end of 2023. This means that retained EU law will no longer take priority over "domestic" law, and domestic law will not have to be read to give effect to retained EU law. It institutes a new rule of legal priority, namely that retained direct EU legislation will, as far as possible, be interpreted to be compatible with domestic law and, where there is conflict, domestic enactments will take priority.

General principles of EU law, which currently form part of retained EU law, will also be done away with. There is no definitive list of these general principles but they have been developed by the Court of Justice of the EU over time and are used to interpret EU treaties and legislation. Examples include proportionality, legal certainty and respect for fundamental rights.

The bill also sunsets preserved (that is, currently preserved in UK law) directly effective EU rights at the end of 2023. These are sufficiently clear and precise rights, powers, obligations and liabilities contained in the EU treaties themselves, and in directives that were not implemented but whose implementation deadline had passed. A good example is article 18 in the Treaty on the Functioning of the European Union, which prohibits discrimination on the grounds of nationality.

Will the UK courts be free to depart from retained case law?

In certain circumstances. The bill stipulates that the Court of Appeal and the Supreme Court will not be bound by any retained EU case law, except where domestic case law has modified or applied the retained EU case law and that domestic case law is binding on the court.

If the Court of Appeal or Supreme Court wishes to depart from retained EU case law, it must, among other things, consider the extent to which the retained EU case law restricts the proper development of domestic law. This potentially gives the courts broad authority to depart from retained EU case law.

The bill then goes further by broadening those courts' authority to depart from existing case law to encompass domestic case law that has been influenced by retained EU case law. The Court of Appeal or Supreme Court will be able to depart from retained domestic case law where they consider it right to do so. The courts would have to consider, among other things, the extent to which the retained domestic law was influenced by retained EU case law that it has or would depart from, and the extent to which the retained domestic case law restricts the proper development of domestic law.

Although the Court of Appeal and Supreme Court will be able to depart from retained EU case law, lower courts will still be bound by it. The bill does, however, allow lower courts to make referrals of points of law on retained case law to a higher court if the points are of general public importance.

What powers are ministers given to restate retained EU law?

Ministers will be able to restate any secondary retained EU law before the end of 2023. Secondary retained EU law means any retained EU law that is not primary legislation and any retained EU law that is primary legislation where the text of which has been inserted by secondary legislation.

A restatement cannot include a restatement of the principle of supremacy of EU law, general principles of EU law or the old test for courts to depart from retained EU case law. However, an equivalent effect of these may be produced. And, any restatement is not "retained EU law" so it is not subject to other ministerial powers of revocation or replacement, and restated law does not become assimilated law (on which, see below).

What discretion will ministers have over the contents of restated law?

Counterintuitively, and controversially, ministerial restatements can use words or concepts that are different to those in the law being restated, meaning that ministers have substantial discretion in the contents of the restated legislation.

What is the new concept of 'assimilated law' introduced by the bill?

It also introduces the new terminology of "assimilated law" to refer to any retained EU law that may still exist after the end of 2023. This could include any primary domestic legislation that is EU-derived, and any EU-derived subordinate legislation or retained direct EU legislation that is preserved or postponed from sunsetting. Ministers are also given restatement powers with respect to secondary assimilated law.

And ministers also have very broad powers to revoke or replace retained EU law?

Correct, ministers are given sweeping revocation and replacement powers by the bill. Until 23 June 2026, with respect to secondary retained EU law (which may have become assimilated law) ministers can revoke the legislation without replacement, revoke it and replace it with something achieving the same or similar objectives, or even revoke it and make alternative provision.

Any provision made with these powers must not increase the overall regulatory burden in a particular subject area. But it follows, the provision could be deregulatory.

Ministers would also be able to make consequential amendments to other enactments to accommodate any replacement provision, including to the bill itself.

It also sets out a fast-track procedure for making any regulations under the bill, which means that these powers can, in reality, be exercised with little or no Parliamentary scrutiny. These powers are highly controversial, affording ministers substantial discretion, and raising questions on the constitutional acceptability of the reduced or possibly non-existent oversight by Parliament.

What still needs to happen for it to become law, and what is a possible timetable?

The bill has passed through the House of Commons and received its first reading in the House of Lords on 19 January 2023. It is due to receive its second reading in the House of Lords on 6 February 2023, which should give the first real insight into the issues the Lords will raise about it and areas where compromise might need to be reached between the Houses. 

After this, it will need to pass through the Lords Committee and Report stages and have a third reading. But, all of this could happen relatively quickly and it could be enacted as early as Easter 2023.

However, it is likely that it will "ping-pong" between the two Houses. Amendments made in the House of Lords would need to be considered and accepted, rejected, amended or alternatives suggested by the House of Commons. The bill would then ping-pong between the two Houses until an agreement is reached.

However, if no agreement is reached then the bill could be pushed to "double insistence", where the Houses insist on disagreeing without any alternative proposals. If this happens then the bill would fall. This would be extremely rare. It is likely, then, that some compromise will be reached between the two Houses and the political reality is that the bill may well be passed into law in something like its current form.

What might happen once it becomes law?

It is hard to overstate the potential impact of the bill. Given that it operates to automatically sunset all relevant retained EU law by the end of 2023, this does not leave government departments long to consider the law in their policy areas and decide whether to take proactive steps to preserve things as they are (that is, through restatement), allow legislation to be sunset or extend the sunset deadline.

The big question will be how do government departments actually carry out this extensive task in the tight timeframe. Is there enough qualified personnel in-house? Or will the review have to be outsourced – to whom, when and on what basis?

There has been pressure from business and lobby/interest groups for the government to proceed cautiously with its powers under the bill, and for the government to consider very carefully the potential legislative uncertainty which may be caused by a mass sunset of retained EU law at the end of 2023.

This raises the question – will there really be such a mass sunset at the end of 2023? Although some pro-Brexit MPs have suggested that ministers should use their powers to extend the sunset deadline only sparingly, there have been press and other reports that some departments are considering using their extension powers more sweepingly.

It is also not clear whether government departments and regulatory bodies intend to run consultations with relevant stakeholders on any proposed legislative changes that may be caused by the bill. On the one hand, this could be time consuming and impractical within the impending sunset deadline. But, on the other, it could allow those affected by any proposed changes to give feedback, potentially highlighting previously unforeseen consequences, and provide informed views that could help shape any departures from the (retained) EU law position.

Are there any international implications?

The bill also has the potential to affect the UK's international obligations under the EU-UK Withdrawal Agreement (the "divorce" deal with the EU) and the Trade and Cooperation Agreement (TCA) (the "future relationship" deal). 

The TCA in particular contains obligations that are intended to create a level playing field between the EU and the UK so that businesses in one place or the other do not benefit from a less stringent regulatory environment. If deregulation is a result of the bill, then there will be careful analysis by the EU of whether those level playing field provisions are breached.

Osborne Clarke comment

The bill seeks to scrap Theresa May's gradualist approach to reforming retained EU law. The scope of the review of retained EU law that will need to be conducted to see what the effect of the bill's sunset provisions would be is potentially vast, and the timeframe short.

There are already a number of concerns as to the practicality of the task at hand. First, there is not yet an authoritative list of legislation affected by the bill; the Retained EU Law Dashboard is on its second iteration and more updates are expected throughout this year. This means that there is the potential for unintended sunsetting and, as a consequence, the creation of unintended legislative holes.

Second, any review of retained EU law seems likely to be too extensive to be conducted by the end of 2023.

Third, the bill's 2023 sunset deadline has been broadly criticised by the opposition, industry, public interest groups and commentators alike, with attention focused on the legislative uncertainty and confusion which could be caused by the automatic disappearance from the statute book of hundreds, or thousands, of retained EU law provisions.

Fourth, the abolition of the principle of the supremacy of EU law, and of the general principles of EU law, may create interpretative problems across some areas of UK law, with the consequent risk of the re-litigation of seemingly-settled issues.

Leaving aside these practicalities, the very broad powers afforded to ministers under the bill give rise to constitutional concerns, and these are likely to be raised in the House of Lords.

The bill is highly politicised, and – despite the very wide concern among the business community around it – the prime minister is under pressure from some in his party to deliver this legislation in its current, sweeping, form.

What is certain is that Brexit has lived up to one prediction in particular: it has been a process and not an event. The existence of this bill, seven years after the Brexit referendum, demonstrates the point. At the time of writing, it seems likely that the sun will set on a substantial part of the UK's legislative inheritance from the EU by the end of year.