The idea that ‘freeing the UK from EU red tape’ is an argument for Brexit is spurious.
There are strong arguments for improving EU regulation, something that the UK was rather good at doing when it had influence in the EU institutions. But there are no strong economic arguments for exiting from it. And even the sovereignty arguments are largely illusory.
The Brexit government often cites astronomical costs of EU regulation. But all regulation has a cost (though often less than the cost of non-regulation). And the Brexit government often leave out the enormous benefits of deciding on common regulation at EU level, for example:
- If the rules are the same everywhere within a market of 450m people, there is no need for red tape and border checks, with the related delays and costs for businesses ultimately hitting consumers - that we are seeing now that the UK is outside. A 4-5% hit to GDP is predicted by several respected analysts, including the government’s own Office for Budget Responsibility);
- Having such a large single market gives the EU enormous clout in trade negotiations with other jurisdictions. The UK has now lost that clout, hence its bad deals with for example Australia and New Zealand, which will damage UK farmers.
In addition, the vast majority of EU regulation is consensual and uncontroversial, with technical standards based on science and on wide consultation with business and NGOs across the EU. Where there is controversy, a process of negotiation and give and take invariably leads to compromise where the value of having common rules outweighs for each member the concessions made to achieve agreement. Moreover, all EU legislation is kept under regular review.
Many advocates of extreme deregulation also fail to take into account:
- Inadequate environmental legislation puts both the planet and local quality of life at risk;
- Inadequate employment and product regulation facilitates exploitation and fraud, puts health at risk and undermines consumer interests. For example, regulating toys costs money – but unsafe, unregulated toys cost children’s lives;
- The financial cost of non-regulation: inadequately regulated employment and product markets lead to accidents and long-term health damage, which are disastrous for individuals and carry major economic costs. Inadequate regulation also leads to loss of consumer confidence at home and abroad and therefore to lost sales, exports and jobs;
- Businesses of all sizes welcome proportionate regulation – they want certainty and market access, which single market regulation provides on a historically unprecedented scale.
While it is true that EU regulation involves some pooling of sovereignty, the regulatory sovereignty of a medium-sized jurisdiction is in practice very limited, in the face of the three big blocs: the EU, the US and China, who have huge clout in global level regulation and whose examples are often simply followed by others, because:
- manufacturers will either not make products to the sole specification of smaller jurisdictions at all, or will charge much more for them;
- in the increasingly global and digital world of services, it is very difficult for smaller jurisdictions to make regulation – e.g., of big tech companies – stick.
Retained EU Law Bill
Democrats need to be vigilant about talk of ‘Brexit opportunities’ and especially the Retained EU Law Bill tabled on 22 September 2022 and passed by 280 votes to 225 at its second reading on 25 October.
This Bill and a series of related measures to remove or weaken protections provided by EU law looks like cover for stripping away democratic rights and high EU standards for food and other products, as well as employment, environmental, health and consumer protection. For example, holiday and sick pay, parental leave, pension guarantees and safe limits on working time could be scrapped by Ministers using ‘secondary legislation’, i.e. without full debate in the Commons. Such protections could even just disappear from the statute book overnight, without any debate, as a result of an irresponsible ‘sunset clause’ set for the end of 2023.
This is a bonfire of laws that work, to replace them either with a vacuum or with laws that make life worse. TUC leader Frances O’Grady has said: “If this bill becomes law, vital protections could disappear overnight.”
This process is also set to:
waste vast civil service time, with Britain in the worst economic crisis in decades;
create chaos in courts and employment tribunals, as long-established case law is invalidated;
cause massive uncertainty for businesses;
create additional trade barriers with the EU, by weakening UK regulation so that products for the UK market may not meet standards needed for export to the EU;
potentially provoke a trade war with the EU, by breaking the level playing field clauses in the Trade and Cooperation Agreement, intended to prevent a deregulatory race to the bottom;
fail to respect the rights of the devolved nations to legislate for their jurisdictions.
Many argue that the government will have no choice but to accept amendments watering down the Bill – for example by extending the sunset clause to 2026 – given the intense criticism from business, trade unions, consumer organisations, environmentalists and apolitical mass movements like the National Trust and Royal Society for the Protection of Birds.
But simply removing the worst aspects of this Bill would not end the Brexit government’s dangerous overall agenda of doctrinaire deregulation and divergence from tried and tested EU law.
A ream of other legislation is in the pipeline, on areas such as data protection, financial services, public procurement and many more. All of it will need to be scrutinised and fiercely opposed in any areas where it poses risks to individual rights, the economy or the environment.
The government has not identified any significant, credible opportunities from Brexit. Jacob-Rees Mogg’s nine-point list - he obviously couldn’t find a tenth – was ridiculed even by many on his own side. For example, his proposal to allow energy inefficient vacuum cleaners in the UK was a charter for manufacturers to dump stocks of obsolete goods that they are no longer allowed to sell in the EU and that they are not interested in making, or making parts for, in the future.
Despite a biased consultation, businesses and consumer organisations have given an emphatic thumbs down to the government’s nostalgia-fuelled idea of allowing products to be labelled solely in old imperial measures. Imperial measures were already used perfectly legally alongside metric ones when the UK was in the EU. Many younger Brits do not even understand imperial measures. Their sole use would prevent products from being exported and inhibit trade.
But the fanatically deregulatory government is interested only in empty Brexiteer gesture politics rather than real opportunities that would bring genuine benefits.