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The new Prime Minister should look again at today’s EU Law Bill

  • Rishi Sunak has shown signs of understanding the need for certainty for business and the markets

While the new Prime Minister settles in at Downing Street, Parliament has been quietly getting on with preparing for today’s Second Reading of the Retained EU Law (‘REUL’) Bill.

This legislation “sunsets” (i.e. repeals, absent intervention) vast swathes of rules stemming from EU Directives by the end of next year. As this applies to sensitive areas like environmental protection, the proposal has wound up plenty of lawyers and greens, while the Scottish and Welsh governments also seem pretty upset.

Some might be perfectly OK with that, seeing validation in the frustrated complaints of political opponents and the stakeholder-melange known as ‘The Blob’. But business – though distracted of late by “market developments”, inflation, wobbly trade statistics and potential winter blackouts - has also got some worries.

While those more imminent crises have been prioritised in discussions with Ministers and the press, there is now increasing worry about REUL’s impact on industries’ ability to plan and invest – particularly in sectors like water that need predictable, long-horizon regulation for projects that have lead-in times of, sometimes, decades.

Something like 80% of water legislation exists as a legacy of our previous membership of the European Union, which means the potential arbitrary termination of EU Directives hangs a swinging sword of Damocles over thousands upon thousands of requirements and clauses protecting rivers, seas and drinking water - many of which are currently shaping specific bits of projects being planned across the country.

Worse, the legislation requires government to confirm its view of those standards at a pace that is obviously unachievable. Government will privately admit that they have nothing like the number of civil servants needed to properly weigh each piece of regulation; nor can they understand the fine detail and original analysis, options and mitigations for regulations originally worked on by people who are frequently now dead or retired. Getting agreement from Treasury for a compensatory staffing surge seems, well, unlikely.

The legislation’s deadline of 2023 (or slightly longer if needed), coupled with government’s lack of analysis of the value or otherwise of the regulations, is like handing that Damocles sword to a blindfolded Minister with an invitation to ‘only stab the bad bits – but quickly’. It cannot end well.

Indeed, with current deadlines, then one (or more) of three outcomes seem likely:

  1. Some theoretical benefits will be identified that are quick and easy but have little real impact (the deregulation of pit ponies springs to mind). Remaining rules are then ‘nodded through’ as ‘essential to retain’
  2. The government, quite possibly by accident, eliminates one or more important pieces of protection for the water environment. This may or may not be obvious at the time – often the nuances and interactions of regulation, including with case law, can be exceptionally hard to trace.
  3. The government offers last-minute ‘essay crisis’ extensions to current regulations with a promise of meaningful change in some hypothetical future in which the civil service has enough capacity to creatively but unilaterally design superior alternatives.

The first of these would be fruitless; the second a disaster; and the third, deeply damaging.

This third scenario is potentially so damaging because, based on other examples we’ve seen of government being unclear or delaying standards, it is possible that planners, engineers, funders, regulators and others will have to consider building plans around multiple different scenarios reflecting a variety of different possible requirements, depending on the strength of political signals from a government that has theoretically committed to changing underpinning goals and methods.

This in turn can seriously extend the time needed for activities like modelling and design work (because now multiple different objectives need to be prepared for), as well as potentially introducing delays to planning permissions (because it may not be clear which solution needs to be proposed). The supply chain may also need to price-in additional contingency costs to protect against last-minute changes.

The frustration is that the government’s instinct is right – of course improvements can be made, and some kind of political device may be needed to generate the focus required to achieve them. There is lots of opportunity – from modernising the Bathing Water Directive (for example to accelerate applications for new designated areas) to enabling more catchment and nature based schemes (sometimes made harder by the Urban Wastewater Treatment Directive), to embedding stronger action on storm overflows. There are ways of doing things cheaper, faster and better that were not foreseen when Directives were first put in place decades ago – for example, by targeting regulation at clearer environmental outcomes.

So what should Government do? It seems unlikely they will withdraw it, however impassioned NGOs’ warnings about the risks. But we would call on it to do two things:

  • First, for sectors like water, where the volume of legislation is so huge, they must extend the deadline to allow for proper review and the avoidance of unforeseen consequences. Setting this at 2030 would allow enough time for us all to consider the best way of improving what is about forty years of legislation, guidance and case law.
  • Second, rather than encouraging ad-hoc revisions to individual slices of regulation depending on who is free within government to look at it, there needs to be a systematic review of legislation taken on a system-by-system basis. For example, rules about housing development affect both demand for clean water and volumes entering sewers – so planning law should not be considered in isolation. This kind of review would need to be much more open than the closed-door approach envisaged by the current Bill, involving not just civil servants or industry but also green groups, the devolved nations, academics and others, supported with dedicated resource in government to think hard about the kind of protections we want in place in the second half of this century.

Such an approach could still be written into law if politicians are concerned about backsliding, but would ensure a legacy that actually improves the impact and efficiency of environmental regulation and avoid some of the risks of the current approach.