The UK has long been subject to Europeans laws that it worked to influence as an EU member state for nearly 50 years – from environmental and animal protections, hazardous substances, competition rules, workers’ rights, to food and product standards and much more.
In 2018, the UK Parliament passed the EU Withdrawal Act enabling the UK to essentially ‘copy and paste’ EU law in preparation for EU-Exit. Thereby, avoiding the chaos and uncertainty that would have followed as a result of an en masse ‘falling away’ of critical legislation post-Brexit. Thousands of pieces of EU legislation were kept – known as EU Retained Law (REUL).
However, since a Bill introduced by Jacob Rees-Mogg last September, the UK Government aims to undertake the mammoth task of either repealing or replacing all of the thousands of pieces of retained EU law by the end of December this year or risk them falling away.
Important, but problematic…
The REUL Bill could have provided an opportunity to streamline and tailor legislation to better fit the UK. In its current form, however, it would unravel large amounts of critical legislation in a short timeframe. This threatens to cause unprecedented disruption to UK consumers, regulatory authorities, and businesses. These risks are compounded by the absence of an economic impact assessment which would have quantified the legislation’s likely effects. The removal of REUL by 31 December 2023 (if not extended) also creates significant timing and resource implications for British Civil Servants. If the process goes ahead, we risk government departments’ time being dominated by reviewing and amending laws at an unprecedented rate, with limited scrutiny. This risks trade-offs between speed and effective regulatory reform. And indeed, this may lead to ‘gaps’ in UK legislation which could result in EU sanctions imposed upon the UK if alternative legislation is not put in place either prior to the 31 December or shortly after.
Impacts on UK Energy Sector
To reach Net Zero by 2050 by building a homegrown clean energy sector, investor confidence and regulatory certainty will be key. The proposed legislative changes or repeals could create gaps in the regulatory regime and have adverse impacts on the UK’s security of energy supply. Government proposals are clouded with uncertainties, and the complexity of the potential implications of the EURL Bill adds to our concern about how it may impact the energy sector. So far, we believe this Bill could impact a wide range of policies and legislation specifically applicable to energy, such as network codes, planning regulations, State Aid rules, REMIT (I.e., the EU Regulation on Wholesale Energy Market Integrity and Transparency), the Third Energy Package, environmental regulation, rules around chemical usage and much more. Given that Government is still unsure of exactly how many EU laws will fall under this legislation, the impact on the sector is hard to determine. Originally identified at 2400, the number of retained EU laws impacted continue to grow.
What changes does the Bill need to see?
After passing through the House of Commons, the Bill has had its second reading in the House of Lords and is now awaiting the first reading at committee stage on 23 February – where it is expected to receive significant pushback. During this time, we would argue that to support any effective changes to existing regulation, Government would need to engage with stakeholders early and to have clear evidence backed assessment framework for any and all proposed changes. There needs to be careful consideration of each piece of REUL to ensure that its removal does not lead to unintended or undesirable consequences for the UK energy sector and consumers. All of this cannot be done in under a years’ time.
Removing the sunset clause would allow more time for Government departments to conduct the review without taking substantial resources from other matters of urgency. A specific date creates a potential cliff-edge, with insufficient industry and Parliamentary time to mitigate or address the risks that this Bill could create.
In the midst of an energy and cost of living crisis, the timing of this Bill is particularly poor. The attention of Government should not be focused on rushing to repeal or replace existing UK legislation, but rather on reforms and policies that help the most vulnerable, create certainty for investors, and help facilitate our energy transition. The sheer lack of information and clarity on the implications of this Bill is deeply problematic, and there are serious concerns about what this could mean for the UK energy sector, and the economy more broadly. With the fate of the Bill now resting with the House of Lords, the future of EU retained regulation is still to be seen.