WIREDGOV

The government put regaining regulatory freedom at the centre of its Brexit strategy, but a new Institute for Government reports warns that an incoherent government approach to the UK’s post-Brexit regulatory freedoms risks creating new costs for businesses, harming its international trade ambitions and destabilising the union.

There are good reasons why the government might want to do things differently to the EU: to better reflect the UK’s specific circumstances or strengths in particular sectors, to promote innovation in emerging technologies such as fintech and life sciences, or just to reflect different policy choices, as with the live animal export ban. But the government should avoid divergence for its own sake and instead weigh up – and be clear on the costs as well as the benefits of its approach.

Published yesterday, Taking Back Control of Regulation, sets out the steps the government should take to deliver the promised benefits of regulatory freedom from the EU and avoid the risks that freedom brings. The paper’s recommendations include an overhaul of cross-departmental handling of regulatory changes, clear guidance to departments, and a system for keeping informed about and responding to changes in EU rules.

However, the current weakness and confusion around these mechanisms means the government is poorly placed to make the necessary trade-offs and avoid unintended consequences.

Regulatory changes could trigger rows with the EU, undermine the UK’s international obligations, make British exporters less competitive and upset relations with the devolved administrations. Critically, moving away from EU rules also risks deepening trade barriers between Great Britain and Northern Ireland.

The prime minister said his Brexit deal allowed the UK to ‘take back control of every jot and tittle of regulation’, but making trade-offs is the difficult part of regulatory divergence. The government is still learning. In many areas it is trying to develop a post-Brexit regulatory agenda without having properly assessed the pros and cons of divergence.

The IfG report recommends that the government:

• Sets out clear guidance on how departments should exercise the UK’s new regulatory autonomy
• Reforms cross-government processes and structures for assessing regulatory proposals
• Develop a system to keep track of regulatory developments in the EU that will affect the UK
• Work constructively with the European Scrutiny Committee and Lords European Affairs Committee to agree what information about new EU rules that affect the UK (and the government’s response to them) will be provided to parliament.

IfG senior researcher and report author Joe Marshall said:

“The government is approaching regulatory divergence like a game of Space Invaders – played blindfolded. Gaining the ability to do things differently from the EU was a key aim of Brexit – and there are clear benefits to be won. But the government’s siloed approach to regulatory reform risks ad hoc changes and unintended consequences that threaten businesses with new costs and could destabilise the union.”

IfG senior fellow and report author Jill Rutter said:

“The prime minister charged the Taskforce for Innovation, Growth and Regulatory Reform to come up with ways for the UK to exercise its new regulatory freedoms. As we await the outcome of the review, the government must ensure it invests the time and effort needed to make the necessary trade-offs involved and avoid unintended consequences.”

Notes to editors

1. The full report can be found on our website.
2. The Institute for Government is an independent think tank that works to make government more effective.
3. For more information, including data to reproduce any charts, please contact press@instituteforgovernment.org.uk / 0785 031 3791.

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